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Airline passengers to pay for EU Carbon tax

Airline passengers to pay for EU Carbon tax
The new European regulations on carbon emissions by airlines comes into force this month, and the Russian Transport Ministry thinks it’ll add up to 40 Euros to every ticket on flights to EU destinations.

The European Emissions Trading Scheme (ETS) requires all airlines flying into an out of the EU to pay for the carbon dioxide created during the flight over its whole duration.

The scheme is being implemented on a gradual basis: in 2012 carriers will have to pay only 15% of the EU Carbon tax. In subsequent years the free quota will be gradually downsized.

Vitalij Saveljev, the CEO or Russia’s biggest airline Aeroflot, says the tax will cost the company about 40 million euros this year. For comparison the net income for the first six months of 2011 made up 490 million euros. By 2025 Saveljev expects the carrier to be spending 800 million euros a year on the CO2 tax.

All airlines, including Russians, will have to pay the Carbon tax by April 1 2013. The program allows airlines to trade quota permits among themselves.

As Aeroflot has the majority of flights to Europe it will feel the effects of the measure the most, with about 80% of Russian Carbon tax payments falling on the company”, says Andrey Rozhkov the senior Metropol analyst. “According to our estimation Aeroflot will have to increase ticket prices by about 7 Euros, or about 3%. If the Carbon tax grows next year then it will influence the ticket price even more”, he adds.

The Russia Government along with the US, China and other countries are considering ways of stopping their carriers paying the carbon tax to EU, but at the moment only China has officially stated it would not pay.

According to the ETS airlines which do not comply with the new tax will be fined 100 euros per tonne and even prohibited from flying into EU in the case of systematic violations.