Isra-Mart srl : European carbon tax to clip Canadian airlines’ wings

www.isra-mart.com

Europe’s fight against global warming could soon mean Canadian flights across the Atlantic will get more expensive or disappear altogether.

The European Union is imposing its Emissions Trading Scheme (ETS), which taxes companies for emitting large amounts of carbon dioxide, on airlines as of Jan. 1, 2012.

Under the scheme, airline from countries like Canada, which doesn’t have a carbon tax or credit-trading scheme, would pay penalties for flights to and from Europe.

The longer the flight, the higher the penalty would be.

“The industry has been planning for this for years and, of course, ETS will translate into additional costs,” said Air Canada spokesman Pierre Tessier.

Tessier couldn’t say how much Europe’s penalties will cost Air Canada or what effect they’ll have on airfares.

“As a public company announcing it’s quarterly results on June 9, we are in a blackout period, which means that we can’t give any financial information,” he said.

The International Air Transport Association opposed the ETS, which would come on top of other European environmental taxes on air travel.

“To start with, it’s a bureaucratic nightmare,” said IATA spokesman Anthony Concil. “The monitoring that airlines are required to do for this is extremely complex.”

Even worse is the financial impact, added Concil.

“You’re adding, basically, a tax to the aviation industry, so somehow, that needs to be recovered by the airlines,” he said. “Either they absorb the cost or they’re able to pass it on to the customer.”

In a price-sensitive industry, more expensive airfares might not be an option.

“The person that suffers is the passenger, who somehow, at the end, either faces higher costs for air travel or reduced options because the airlines can’t afford to fly with the costs that are being imposed.”

Australian carrier Qantas has already said the ETS will force it to raise European airfares next year, but it hasn’t calculated the full impact yet