Isra-Mart srl: Asia airline body raps EU plan for carbon tax

"Essentially, it's Europe versus the rest," said Andrew Herdman, of the Association of Asia Pacific Airlines (AAPA) which is holding its annual meeting in Seoul.

But Herdman called for caution by governments contemplating retaliation, saying a trade war would hit aviation especially hard.

The European Union from January 1 plans to compel all airlines travelling to and from the continent to buy carbon permits to offset their emissions.

The plan has sparked protests from numerous nations, and US legislators are proposing a bill which would effectively make it illegal for their country's airlines to obey the directive.

Herdman told a briefing that airlines including US carriers are ready to comply with the EU Emissions Trading Scheme "because the penalties for non-compliance don't bear thinking about".

But foreign governments had woken up to the development and were starting to make their own objections heard.

"We hear a number of governments contemplating retaliatory measures of one form or another," Herdman said.

"Personally I don't look forward to a trade war, especially in aviation, because we'll be getting hit by both sides."

He described the dispute as "high-stakes" and political. "I don't think it will be resolved in the courts... one way or another it will end up as some sort of political negotiation."

Herdman said the EU "over-reached" in extending the carbon tax to all outbound and inbound flights.

"When you are going to design an international emissions trading scheme, the idea -- that you can design it to cover international airlines without getting the consent of foreign governments -- doesn't fly," he said.

The AAPA director-general said airlines did not rule out market-based measures including emissions trading to help the industry meet its own commitment to cut greenhouse gases.

But Europe should have followed the example of New Zealand and Australia and started the system domestically, to show it was workable, he said.

The AAPA said traffic results for September showed sustained growth in international passenger traffic, but a slowdown in European and US demand for Asian exports had seen international air freight traffic continue to decline.

It said in a statement that Asia-Pacific airlines flew a total of 16 million international passengers in September, a 5.4 percent increase over the same month in 2010.