'EU carbon tax will have significant impact on air-fares'

The impact of carbon tax on fares of all Indian flights to and from Europe would be "quite significant" if it is imposed by the EU, official sources said today.

India has joined the US, Russia, China and several other major nations in opposing the EU's Emissions Trading Scheme (EU-ETS) which requires the carriers flying to or from Europe to pay for emitting carbon in European skies.

The EU-ETS, which came into effect this January, also makes it mandatory for all airlines to submit emission data to the European authorities to enable calculation of the carbon tax that should be paid. However, no Indian carrier is abiding by it due to the opposition of the government here.

"The likely impact on air fare is expected to be quite significant as all airlines will be forced to pass on the burden to the passengers. However, no Indian carrier is submitting the trial data (on emission) in view of the government's stand to oppose the scheme," a source said.

Global airlines body IATA, at its Beijing AGM in June, had warned of a trade war between Europe and nations opposed to EU-ETS over imposition of carbon tax on all air travel.

"The last thing IATA wants is a trade war or a tit-for-tat activity.

We want to avoid that situation. It depends on how the governments react. But all parties involved in this, see a potential solution emerging. EU is still seen as holding 'a pistol to the head' of other nations," Paul Steele, IATA's Director Aviation Environment, had then said.

At a meeting in Washington earlier this month, a group of major aviation countries, including India, Russia, China and the US, decided to chalk out a common strategy against EU-ETS. The strategy could even include retaliatory measures like limiting flights or overflights by European carriers and slowing down buying of aircraft from European plane manufacturers.

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