Implications of EU's carbon tax for Chinese airlines

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Its just one week left before the EUs carbon emission tax takes effect. We take a look at the financial implications of the plan for Chinese airlines.

China has joined Washington in opposing a unilateral plan by the European Union to impose carbon emission charges on all airlines in its airspace from the first day of 2012.

Earlier this month, the China Air Transport Association urged the countrys airlines to refuse to take part in the scheme, and not to submit CO2 monitoring plans to EU officials.

But the costs may be unavoidable. Once the scheme kicks in, airlines say theyll need to increase costs - at a budget of around 700 million RMB, or around 100 million U.S. dollars every year.

Li Jiaxiang, director of Civil Aviation Administration of China, said, "As the countrys top civil aviation regulator, we are negotiating with the EU on the carbon emission fees through diplomatic channels. The EU should take the reality of developing countries into consideration, to carry out appropriate plans for different countries according to their current situations."

Under the regime, just one added flight a day translates to an extra 15 million RMB being spent by the airline. And they say, passengers are the ones wholl bear the burden. Analysts say, the price of an economy class airfare to EU countries in 2012 will increase by at least 300 yuan, or around 50 dollars. Smaller airlines will struggle even more. Some are considering giving up their European routes altogether, but will still have to pay for their European-made aircraft to be transported to China.

Wang Zhenghua, chairman of Spring Air! lines, s aid, "We buy most of our planes from Europe. But as the client, we are also charged carbon emission fees, which costs us much more and give us intense budgetary pressure."

Currently, most Chinese airlines use Airbus or Boeing for passenger flights, both on domestic and international routes. Given these planes are produced in Europe, the airlines that use them - like Spring Airlines - are slapped with emissions taxes, even though they dont fly international routes. China says the entire scheme is a green barrier, and says it has the potential to spark a trade war.

Editor:Zhang Dan |Source: CNTV.CN



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