Dubai Airline Plans To Offset EU Carbon Tax

by Lorys Charalambous, Tax-News.com, Cyprus

21 February 2012

Dubai-based Etihad Airways has plans to increase the fuel surcharge on flights to Europe in an attempt to minimise the damage caused by the EU's new carbon tax.

The airline plans to increase the charge by USD3 per passenger for flights in and out of the European Union with USD0.03 per kilogram being added to cargo shipments. The charges will be in effect from March 1, 2012.

According to the airline, the charges are calculated based on the additional cost to Etihad for the carbon credits the airline will be required to purchase for 2012 in order to comply with the EU ETS. Etihad said that this cost may need to be adjusted from time to time as carbon prices fluctuate.

Etihad President and Chief Executive Officer James Hogan said:

“As an airline we are strongly opposed to the unilateral measures imposed by the European Union on our flights into and out of Europe, especially as they include areas outside European airspace."

“We have invested many millions of dollars to ensure we operate a young and highly efficient fleet but are still being penalised."

“Our efficiency is reflected in the relatively low additional charge and we will continue to be transparent in keeping our customers fully informed of this carbon charge.”

Under the ETS, starting from January 1, 2012, airlines operating into and out of the EU, regardless of how long that flight is in EU airspace, will be required to surrender varying emission allowances, and will be required to purchase any additional permits outside of their free allowance. Non-EU nations' airlines would also be required to pay such an emissions tax to the EU member state to which they most frequently fly, without any requirements that those EU countries use the funds collected in emissions reduction efforts.

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