New report indicates further airfare increases due to emissions tax
January 11, 2012, 08:03 pm
An in-depth report from OAG examined the likely scenarios and impacts of the EU emissions trading scheme on airline operators, airports and the European economy. The scheme has been put into effect in 30 countries, 27 EU member states and Iceland, Liechtenstein and Norway.
The report said initial estimates of the total cost international airlines would absorb from the new tax could increase 5.2 percent on long-haul routes, thus forcing airlines to increase their prices for consumers. John Grant, executive vice president of UBM Aviation, said the ETS will increase airline operating costs as well as possibly slow or eradicate airport network driven economic growth in the European Union. If more airlines start to boycott the tax, the European economy will be hit hard.
The report suggests that the effects of the tax could increase airplane tickets by 3 percent on average and create new costs throughout the aviation industry. This could lead to demand suppression on certain markets due to travel restrictions, Bloomberg reported.
According to the European Commission, it would much rather develop a worldwide solution to help cut greenhouse gasses from the aviation industry, and not focus on only taxing planes landing and taking off from European Union States. But until all nations are on board to implement such a solution, this is the current plan. The new law does, however, offer a possibility of exempting incoming flights from certain countries if the nation has equivalent measures in place to reduce carbon emissions, the source reported.
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