Isra-Mart srl: New EU emission norms will lead to airfare rise

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Air India, Jet Airways and Kingfisher, which have daily flights to Europe, will be affected.

Airlines flying to Europe will have to incur an additional cost of at least Rs 260 per passenger on a round trip to comply with the European Union’s proposed emission trading norms.
EU-ETS, as the scheme is known, will come into effect from January 2012 and was being opposed by airlines and governments outside Europe.

The scheme, which has the approval of the European Parliament requires all airlines flying within and into Europe to cap their emission at a particular level and purchase additional carbon allowances if exceeding the limits.

Air India, Jet Airways and Kingfisher, which have daily frequencies to Europe, will be affected.

The European Union’s India office issued a statement today, saying the impact of the emission norms will be minimal on air fares and significantly lower than the extra costs airlines have passed on to consumers due to rise in oil prices.

“Including aviation in the EU ETS will not directly affect or regulate air transport tickets. However, aircraft operators may have to buy emission allowances in the market in addition to those allocated to them. With a carbon price of some €13 per tonne and majority of emissions rights allocated for free to airlines, the average extra cost to airlines will be less than $6 or Rs 260 per passenger for a London-Delhi round trip,” EU statement said.

“Aircraft operators may have to invest in more efficient planes or buy emission allowances in the market in addition to those allocated to them. The impact on ticket prices will probably be minor. Assuming airlines fully pass on these extra costs to customers, by 2020 the ticket price for a return flight within the EU could rise by between €1.8 and €9, the statement said adding the hikes on long haul flights will be higher.”

“Clarity on the extent of financial impact of the EU ETS on airline will emerge sometime by October. The extent of the impact shall depend on the amount of the carbon allowances that would be allocated by the administrating EU state,” Jet Airways said in a statement.

The airline said it is monitoring emission data since 2009 and has adopted several measures to control emission. The airline is developing a carbon-dioxide emissions calculator which will be made available on its website with an option to compensate for the emissions due to travel of the guests.