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EU turns the screws on Indian airlines

The war of words between India and the European Union (EU) over the latter's controversial emissions trading tax that could increase airfares by $50-250 (Rs 2,600-13,300), is all set to escalate. Tushar Srivastava reports. Turbulence in India-EU airspace

india Updated: Jan 09, 2012 01:13 IST
Tushar Srivastava

The war of words between India and the European Union (EU) over the latter's controversial emissions trading tax that could increase airfares by $50-250 (Rs 2,600-13,300), is all set to escalate.

The EU has asked the three airlines flying to Europe - Air India (AI), Kingfisher (KFA) and Jet Airways - to submit carbon emission details and has fixed a deadline for them to open a carbon trading account with the EU.

The EU tax, known as the Emissions Trading Scheme (ETS), which is likely to cost domestic carriers billions of dollars in airspace emissions fees, has evoked strong protests from India, the US and China. Chinese carriers last week refused to comply with the rules.

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AI has submitted emission details "under protest" with KFA and Jet was likely to follow suit, sources said. The EU has set January 15 as the deadline for the three to open a carbon trading account including their flight details to Europe, fuel consumption, emissions details.

India is considering levying a retaliatory tax on European carriers and has termed the ETS as an "extraterritorial imposition" of the EU's policies on other countries.

EU plans to tax airlines on the basis of carbon emissions. Local carriers, which fly to Europe, would need to pay taxes for landing in and taking off from European airports based on the type of aircraft. Under the ETS, airlines using EU's airspace will have to pay a fee for carbon emissions that exceed a set cap.

European carrier Lufthansa expects to incur an additional expense of 130 million Euros in 2012 because of the EU tax and has asked passengers to brace for higher ticket prices.