Asian Airlines Mull Fare Increases For ETS

January 4, 2012

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Airlines in the Asia Pacific region may impose surcharges or increase airfares following the imposition of the European Union's new Emissions Trading Scheme (ETS), a move that could deal another blow to an industry already facing weak demand.

The possible increases would come after Delta Air Lines in the United States added a USD$3 surcharge each way on tickets purchased for flights between the United States and Europe.

"It is inevitable that increased costs will be passed on to the passengers. We will share the details at appropriate time," said Carolyn Leung, a spokeswoman for Hong Kong's Cathay Pacific Airways.

Cathay's chief executive, John Slosar, said previously that the ETS would add about HKD$50 (USD$6.44) to a ticket between Hong Kong and Europe.

Singapore Airlines said it will try to mitigate the impact of the ETS by improving fuel efficiency and reducing its carbon emissions, which would lower the carbon charges.

"However, we are not yet ruling out any options for recovering the additional cost," SIA's spokesman Nicholas Ionides said in an email.

Tony Tyler, director general of the International Air Transport Association (IATA), has said the ETS would cost airlines EUR€900 million (USD$1.15 billion) in 2012 and the industry will not generally be able to pass this on to consumers because the market is too weak.

The IATA, whose 230 members carry more than 93 percent of scheduled international air traffic, forecast a 49 percent fall in 2012 industry-wide profit to USD$3.5 billion on the back of a weak global economy and high fuel prices.

(Reuters)