New Delhi: The impact of carbon tax on fares of all Indian flights to and from Europe would be significant" if it is imposed by the EU, official sources said on Sunday. India has the US, Russia, China and several other major nations in opposing the EU's Trading Scheme (EU-ETS) which requires the carriers flying to or from Europe to pay for carbon in European skies.

The EU-ETS, which came into effect this January, also makes it mandatory for all airlines submit emission data to the European authorities to enable calculation of the carbon tax that be paid. However, no Indian carrier is abiding by it due to the opposition of government here.

"The likely impact on air fare is expected to be quite significant as all airlines will forced to pass on the burden to the passengers. However, no Indian carrier is submitting the data (on emission) in view of the government's stand to oppose the scheme," a source said.

Global airlines body IATA, at its Beijing AGM in June, had warned of a trade war between Europe and nations opposed to EU-ETS over imposition of carbon tax on all air travel.

"The last thing IATA wants is a trade war or a tit-for-tat activity. ....We want to avoid that situation. It depends on how the governments react. But all parties involved in this, see a solution emerging. EU is still seen as holding 'a pistol to the head' of other nations," Paul Steele, IATA's Director Aviation Environment, had then said.

At a meeting in Washington earlier this month, a group of major aviation countries, including India, Russia, China and the US, decided to chalk out a common strategy against EU-ETS.

The strategy could even include retaliatory measures like limiting flights or overflights by European carriers and slowing down buying of aircraft from European plane manufacturers.

Though details of the decisions taken at this meeting, held under the International Civil Aviation Organisation (ICAO) banner, were not available, it is understood that most of these countries favoured stringent counter-measures against European airlines if the EU went ahead with imposition of the tax.

After the meeting, a US Administration official had said that India and other nations were "strongly opposed to the application of the ETS and have had quite strong and vigorous words concerning the application of the ETS to foreign carriers."

When the EU last year decided on implementing the scheme from this January, a Committee of Secretaries (CoS) was formed by the government. The CoS, among other things, recommended convening of a meeting of non-EU ICAO Council and other non-EU member nations to formulate an
action plan to counter EU-ETS.

The government decided that Indian airlines would not participate in EU-ETS and, accordingly, these carriers were formally prohibited from participating in the scheme and out any emission data to the EU.


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