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With India, China, Russia and others opposing Europe's Emission Trading Scheme (EU ETS), this matter could result in a trade war, the International Air Transport Association (IATA) has warned.
EU ETS proposes a tax on flights to and from Europe from January 1, 2012. Money collected through the tax will be used for improving the environment. Airlines fear this will impact the financials and at the end of the day, will be passed on to passengers.
Mr Paul Steele, Director (Aviation Environment) of IATA said, “The new system is triggering concerns in several areas, but specifically those of sovereignty of airspace.” IATA feels that such or equivalent measures have significant potential for unfair treatment and market distortion. The European Commission is under pressure from the rest of world on the issue, while the European Parliament has not indicated any change in the directive.
IATA blamed that Europe was trying to window-dress the issue by saying that it will accept equivalent measures, to be defined on a case-by-case basis. This would open the door for duplicate, layered and competing taxes and measures. And this would be unacceptable, it said.
Leaders from 21 countries met in Delhi, a few months back and passed a resolution opposing the move. They termed EU's action as unilateral. “The danger of trade war is still possible with Russia, China and India all raising the possibility, while a bill is making its way through Congress to prevent the US carriers from taking part,” Mr Steele said.
There is also talk about airlines moving to the ‘supreme court' for aviation, the International Civil Aviation Organisation (ICAO), so that EU could follow provisions of Chicago convention. This convention talks about actions on multilateral basis.
The global travel body opined that that even the options offered by EU are problematic. These options include delaying the introduction of the tax, applying the tax on departing flights only or applying it within EU airspace. The only real way to resolve this is for all the governments to get back round the table at ICAO and work towards a global framework, IATA advised.
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