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Fyfe attacks EU carbon tax on flights

By Owen Hembry

International airlines have been included in the EU's emissions trading system this year. Photo / Thinkstock
International airlines have been included in the EU's emissions trading system this year. Photo / Thinkstock

The European Union's inclusion of international airlines in its emissions trading system has come under fire from Air New Zealand boss Rob Fyfe amid talk it could trigger a trade war.

The EU added flights to its cap-and-trade carbon programme this year, under which airlines must monitor and report emissions on all flights into and out of Europe each year and buy carbon permits to cover the discharges.

"If we don't collaborate globally on creating the right solution to managing emissions and managing the impact of carbon on our environment then we won't be successful," Fyfe told the BBC.

"And I think the unilateral imposition of a tax as has occurred in the EU is not the right path forward."

Air New Zealand said its investment in more fuel-efficient aircraft replacing planes on its two London routes meant an initially limited cost exposure to the EU scheme "and as a result there is currently no change to London airfares".

Tourism Industry Association policy and research manager Simon Wallace said that in the context of wider taxes such as the British air passenger duty, the emissions scheme created more of a barrier for visitors travelling long-haul. Britain's air passenger duty was £93 ($175.56) per adult travelling to New Zealand or Australia - the most expensive of four bands of charges.

"I think when you then add the levies that are being imposed under the EU emissions trading scheme, it's just adding so many more taxes to the ticket price," Wallace said.

"And what the tourism industry says is that anything that's going to add more taxes to the overall ticket price is a barrier to travel."

The number of short-term visitors from Britain fell 1.7 per cent last year to 230,316, although visitors from Europe overall rose 2.6 per cent to 468,942.

Airlines were investing heavily in fuel-efficient aircraft and bio-fuels were being trialled, Wallace said.

"We should be creating the incentives for people to travel and you have to wonder sometimes whether because of the financial situation within the EU that this is just not another way to raise revenue."

House of Travel retail director Brent Thomas said the UK departure tax meant more people flew from continental Europe to avoid the charge.

"Will it [emission trading scheme] stop tourism? No," Thomas said. "However it can change behaviours in terms of where people come and go from."

The range of pricing heading to Europe, depending on time of travel, ranged from about $1900 up to $3000, Thomas said.

At least 27 countries, including the United States, Russia and India, are expected to attend a meeting in Moscow this week to discuss counter-measures against the EU's emissions trading system.

China and India have asked airlines to rebuff demands from the EU for data needed to fix emissions payments.

A China aviation body said the move could cost Chinese airlines as much as 800 million yuan this year.

Markus Ederer, the EU's ambassador to China, said based on the fact that airlines would get free permits for some emissions, the system would lift Beijing to Brussels ticket prices by 17.50 yuan ($3.30).

"I leave it to you to make a judgment on whether this is too much for saving the Earth," Ederer said.

Singapore Airlines chief executive Goh Choon Phong said the issue was that the EU was charging based on the whole journey and whether they should be imposing anything out of the European airspace.

"The whole principle doesn't make sense," Phong said.

Tom Enders, chief executive of Airbus SAS, said what started out as an environmental solution had become a source of potential trade conflict.

"That should be a worry for all of us."

- Additional reporting: Bloomberg

- NZ Herald

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