Global Aviation Trade War on the Horizon???

[Left Seater]

As some of you may know the EU is now charging airlines for their Carbon Emissions. Any airline that operates into an EU country must pay for their emissions on each flight. US airlines just passed along the charge to pax who are now paying up to an additional $12 per segment into or out of EU countries. China and India have stated they will not pay any tax to the EU for emissions. Many others including the US, Canada, and Middle Eastern countries have called for a solution thru ICAO. Sec State Hillary Clinton penned a letter "strongly objecting" to the program and outlining many facts about how today's engines are far more fuel efficient and cleaner than a decade ago.

India has passed a law that forbids any airline based in India from paying this tax. Middle Eastern countries have expressed concern that this tax is going to do nothing to limit emissions. They argue that airlines are already using the most environmentally friendly engines available and when better options are available the airlines will use them due to reduced costs. Japan has complained that the tax is going into general revenues, not any program to actively reduce greenhouse gasses or alternative energy research.

Despite 2012 fees not being due until April 2013, China has fired back with the strongest counter so far. Beijing has blocked the sale of 45 Airbus planes to airlines in China and Hong Kong due for delivery in 2012. Of course this has Airbus worried. The first few missed deliveries will prolly just go to airlines in line behind the Chinese. However, if this continues, Airbus is due to deliver 135 planes to China in 2013. That plus the 45 from this year can't be absorbed by other airlines.

EU Commissioner for climate action, Connie Hedegaard is open to a global solution to reducing emissions, but said that any compromise must reduce emissions. She said the EU will not settle on this matter. When pressed on what the reaction would be if Chinese and Indian airlines didn't pay the tax early next year she tried to hedge and say there would be fines and fees associated with late payments. A reporter from the Financial Times pressed with three follow up questions and she said any airlines not paying would be banned from operating into our out of Europe. China and India quickly responded that they would sue the EU and then of course ban EU airlines from operating to their countries.

Clearly this would kick off a huge trade war. If it got that far, the EU would have to end up giving in. They couldn't last even a few months with no trade between them and China and India. The pressure from member states France and Germany due to losing Airbus sales would drive the bus, but all states would be without most of their consumer goods manufactured in both China and India.

My bet is China and India win this round with support from the US and other countries. Some sort of voluntary tax my be the outcome.

[Mikey]

Sounds pretty good for Boeing.

[Left Seater]

Could be very good in the short term, but China and India will bring the EU to their knees long before it became a huge win for Boeing.

[Diego in Seattle]

Whatever. In the end, the US taxpayer will pick up the check.

And why would that happen instead of the usual passing it on to pax through a fee?

[Left Seater]

^^^^^^^^^^^^

Are travelers not tax payers? Take a look at the fare breakdown on your next flight if you have any questions.