In the couple weeks since I wrote about the EU’s Emissions Trading Scheme (ETS)
, the controversy hasn’t died down at all.
On Monday, Delta Airlines announced that they are adding $3 to the fuel surcharge on USA-Europe flights to help cover ETS costs. Different groups have anticipated very different costs to comply with the ETS. The European Commission (the executive body of the EU) has estimated that the plan could increase the cost of a single trip ticket by between €2 and €12 (roughly between $2.75 and $15.50), depending on the length of the flight. In contrast, various industry analysts have expected an increase of $50 to $90 to comply with the scheme. That’s a pretty major difference. If the European Commission is correct, Delta’s fare increase may more or less cover the costs. However, I am inclined to believe that the costs are much higher. That means that more surcharge increases are coming soon. Lufthansa also announced on Monday that they plan to increase fuel surcharges to cover costs as well. Yesterday, Emirates and Etihad also announced
that they will be increasing fares soon.
While the American, Gulf, and European airlines are grumbling about the ETS, they are complying with the rule and instead trying to pass on the costs to consumers. In sharp contrast, China’s airlines, fully backed by the Chinese government, have decided that they won’t comply at all.
“We deeply regretted that the United States lost the lawsuit,” China Air Transport Association deputy secretary Chai Haibo told the Economic Observer this week. “China will continue to steadfastly pursue a lawsuit.” In another interview, Chai Haibo made it clear that Chinese airlines don’t plan to pay a dime for the ETS. Deciding not to comply opens China up to penalties, many of them severe. However, the EU may find that the pressure is too much to keep fighting. The USA and India have also announced that they will be fighting the lawsuit, and India’s regulator, the DGCA, has also threatened to publish an executive order banning Indian carriers from submitting Emissions data.
It’s clear that the EU has jumped into a heated battle by trying to charge airlines more at a time when the aviation industry is already in quite a bit of trouble. It will be interesting to watch who will blink first indeed.