Greenhouse-gas tax could inflate airfares

— -- A European program to charge airlines for their greenhouse-gas emissions could raise round-trip ticket prices from the United States by more than $30 starting next year.

Environmental groups and some travelers praise the European Union's Emission Trading Scheme as a way to curb climate change. The goal is to spur airlines and manufacturers to build more efficient planes like Boeing's 787 Dreamliner.

"Hopefully, this will help them do that a lot faster," says Thomas Buchen, 65, who has flown 4 million miles by traveling as far as Dubai from his home in Williamsburg, Va., to build golf courses. "We're trying to be as environmentally friendly as we can."

But airlines are fighting the program aggressively in court and in the political arena. The meter starts running Jan. 1 on fees that U.S. airlines estimate will cost them $3.1 billion over the next decade.

The U.S. House voted Oct. 24 to prohibit airlines from participating in the program.

And a vote is expected Wednesday in Montreal by an international group that sets policy for aviation safety and environmental standards. The International Civil Aviation Organization (ICAO) is expected to oppose the European scheme, amid growing outrage in China, Russia and India.

"If imposed on Jan. 1, this tax could close down direct travel from most central and western U.S. airports to Europe, and remaining airline ticket costs would skyrocket," says Rep. John Mica, R-Fla., head of the House transportation committee. "This ill-conceived EU aviation tax scheme is a violation of international law."

The debate will play out over the next few months. A European court will decide whether the program should proceed. If successful, Europe could forge ahead despite international opposition. Or an international political compromise could be negotiated.

What's at stake

The European program caps carbon-dioxide emissions at 2006 levels and allows airlines to fly 85% of that amount for free in the first year. The free amount would drop to 82% after that.

But airlines must pay for the rest — and any increase in fuel burning — by buying what are called allowances from other industries burning less. That's where the costs and the grumbling come in.

At a Sept. 30 meeting, representatives of 20 other countries including India, Russia and China issued a joint statement opposing the European law and calling it inconsistent with international law.

Luo Chaogeng, co-chairman of China Airlines, calls the scheme "a violation of human values" and promises "unremitting efforts" to oppose the program.

Separately, even Italy has complained that short- and midrange routes are penalized in comparison with long-range flights and warned of possible retaliation from China and the United States.

"Finally, we believe these are real, urgent problems that call for urgent assessment before the system comes into force," the Italian delegation to the Council of the European Union wrote Sept. 29.

Meanwhile, the Air Transport Association, an industry group representing U.S. airlines, filed a lawsuit with United, Continental and American against the program in the United Kingdom's High Court.

In the rough equivalent of an appeal, the case is pending in the European Court of Justice.

But the court's advocate general, Juliane Kokott, prepared a non-binding opinion for the court Oct. 6 that framed the issues in the case and disappointed U.S. airlines.