Airline CEOs warn EU plan to expand carbon costs will raise fares

• The EU ETS currently only covers flights within Europe but is being reviewed for expansion to outbound international flights as part of climate policy, requiring airlines to buy permits for greenhouse gas emissions
• A 2021 European Commission study found the UN's CORSIA scheme unlikely to cut emissions effectively and could undermine Europe's climate goals, as it only requires airlines to offset emissions growth rather than mandate absolute cuts
• The airline industry letter, signed by heads of 19 companies including easyJet, AirBaltic, and TUI, argues that expanding EU carbon pricing will 'further penalise European passengers and businesses' and undermine CORSIA's legitimacy

Summary

Europe's major airlines are urging the European Union to abandon plans to expand its Emissions Trading System (ETS) to international flights departing the EU, warning the move will increase airfare and cargo costs for passengers and businesses.

Key Details:

• The EU Commission is reviewing extending the ETS to cover outbound international flights as part of a proposal due next month
• Currently, the ETS only applies to intra-European flights
• Airlines must purchase permits for greenhouse gas emissions under the ETS, with supply capped to drive emissions reductions over time

Companies Involved:

CEOs from 19 airlines signed a joint letter to Commission President Ursula von der Leyen, including:

• Air France-KLM
• IAG (British Airways owner)
• Lufthansa
• Ryanair
• easyJet
• TUI
• AirBaltic

Main Arguments:

Airlines favor the UN's CORSIA scheme, which requires carriers to buy CO2 offsets for emissions growth from international flights but doesn't mandate absolute cuts. They argue EU expansion would "hamper the legitimacy of CORSIA" and penalize European travelers.

The European Commission counters that ETS expansion would ensure equal treatment across carriers and prevent competitive disadvantages for short-haul operators. Brussels remains skeptical that CORSIA alone can achieve decarbonization goals, citing a 2021 study warning the UN scheme is unlikely to reduce emissions and could undermine Europe's climate targets.

Context:

The letter coincides with airline leaders meeting for the International Air Transport Association's annual meeting, highlighting industry-wide concern over rising climate-related costs.