Gulf Carriers Say ETS May Lift Fares - Report

January 3, 2012

Bookmark and Share

Fast-growing Gulf airlines Emirates and Etihad Airways warned of higher ticket prices on Tuesday as they look to pass on costs of a European Union carbon trading scheme to passengers.

Tim Clark, the president of Emirates, Dubai's flag carrier and the world's largest long-haul airline, told the Gulf News newspaper that the company would spend over EUR€40 million (USD$51.9 million) in 2012 to purchase additional emission allowances.

"Unfortunately, while we always try to make our fares as competitive as possible, the additional costs of the EU Emissions Trading System... will almost certainly have to be passed on to customers, but how this will be done has not yet been determined," he said.

Under plans to tackle climate change that came into effect on January 1, airlines touching down or taking off in the 27-nation European Union must account for their CO2 emissions as part of an expansion of the world's largest carbon market.

Abu Dhabi's Etihad Airways echoed Emirates' views.

Etihad will end up bearing an extra cost of EUR€310 million over the next nine years, Linden Coppell, Etihad's head of environment told the paper.

"It is inevitable that such a cost would have an impact on fare levels. This is why we want to ensure we have a fair global system," Coppell said.

The statements from the Gulf airlines come close on the heels of German carrier Lufthansa warning of higher ticket prices.

The EU says the new scheme, which already applies to other industries, is the fairest way to cope with aviation's contribution to global warming.

However, it has sparked a trade spat, with the United States, China, India and others accusing it of infringing their sovereignty.