Asian airlines may impose surcharges because of ETS

Airlines in the Asia-Pacific region may begin imposing surcharges or increase airfares as a result of the imposition of the European Union’s (EU) new Emissions Trading Scheme (ETS). In the United States, Delta Air Lines, the country’ second largest carrier, imposed a one-way US$3 surcharge for flights between the United States and Europe. Cathay Pacific Airways Ltd. said that it may follow suit soon. “It is inevitable that increased costs will be passed on to the passengers. We will share the details at an appropriate time,” Carolyn Leung, Cathay spokeswoman said. Cathay Chief Executive, John Slosar, earlier disclosed that imposition of the ETS would mean an additional HK$50 (US$6.44) for a ticket between Hong Kong and Europe. Singapore Airlines Ltd. (SIA), the second largest airline in the world in terms of market value, said it will try to mitigate the impact of the ETS through improved fuel efficiency and the reduction of carbon emissions, which would mean lower carbon charges. “However, we are not yet ruling out any options for recovering the additional cost,” said SIA spokesman, Nicholas Ionides. According to Tony Tyler, director general of the International Air Transport Association (IATA), the ETS could cost airlines €900 million (US$1.15 billion) in 2012, an amount which the industry cannot pass on to its consumers because the market is too weak. The IATA expects that industry earnings will have a 49% fall in 2012 because of the weak global economy and increasingly high fuel prices. (January 6, 2012)