June 06, 2007

Greenhouse gas plan will cripple us: EU airlines

BRUSSELS – European airlines claimed Wednesday a European Union plan for a mandatory greenhouse gas cap and trading system would cripple the industry with extra costs of 4 billion euros ($5.71 billion) a year.

Groups representing low-cost airlines such as Ryanair Holdings PLC joined major carriers such as British Airways and Lufthansa in saying the plan would diminish mobility, hurt the overall economy and cut off remote areas from tourist traffic, citing a report the airlines commissioned from global accounting group Ernst & Young and air transport consultants York Aviation.

Buying enough carbon permits to operate between 2011, when the program would begin, to 2022, will cost more than 45 billion euros ($64 billion), the airlines said.

"Airline profits would be reduced by over 40 billion euros ($57 billion) over the period to 2022," the report said. "The introduction of the EU emissions trading scheme will result in a reduction in consumer choice in terms of the range and frequency of air services.''

European airlines said they are committed to a trading system to cut emissions. However, they said they will ask EU lawmakers and governments to consider a higher limit for the carbon trading cap, as the current level – based on 2004-2006 emissions – does not take into account growth in the industry before the program would be initiated in 2011.

Because of stiff competition, airlines say they would be unable to pass costs on to customers, which would in turn prohibit investment in new routes and technology. It could also quash up to 42,000 new jobs needed to handle anticipated industry growth, the airlines said.

Europeans have been flying greater numbers in recent years as low-fare, short-haul airlines pushed ticket prices downward.

As more people fly, the European Union has committed itself to cutting overall levels of carbon dioxide by 20 per cent by 2020. Regulators say the cap-and-trade program would accomplish that without damaging the economy.

Read more from the article's sorce: thestar.com

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