Airlines to pass on emissions trading cost to passengers

SINGAPORE AIRLINES (SIA) has said it may pass on the cost of the European Union (EU)’s emissions trading scheme (ETS) to its passengers. The ETS, which came into effect from January 1, applies to all airlines landing or taking off within the EU.

Although the ETS cuts both ways as a reward or penalty scheme, airlines are more concerned about the additional cost to its operations for failing to meet set carbon emission standards. The more efficient airlines may benefit from trading excess credits.

Lufthansa has followed SIA’s announcement to say it will pass on the ETS cost to its customers, to be included in the existing fuel surcharge. The German flag carrier expects to incur an additional Euro 130 million (US$169) in 2012 because of the ETS.

Australian flag carrier Qantas is expecting to incur an additional A$4 million (US$4.06 million) to A$5 million (US$5.08 million) but has not announced its intention on how it would recover the cost. It (and and other airlines calling at Australian airports) may be doubly hit if Australia goes ahead to implement its own ETS by mid-2012 to also apply to airlines.

The ETS aims to motivate airlines to be more fuel-efficient and conscious about their carbon footprints. But if the ETS becomes a mere matter of passing the cost from legislators to consumers, then it is the sad story of a dog chasing its tail. While the airlines feel not the pinch as intended and as the ETS becomes yet another significant revenue source, it is the consumer that is left carrying the can.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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