Airbus CEO warns of coming trade conflict in response to carbon tax

By Alex Kennedy, AP

SINGAPORE–Airbus Chief Executive Tom Enders said Monday he’s concerned that new European Union carbon emission charges for airlines could spark a trade war between Europe and the rest of the world. “I’m very worried,” Enders said at an aviation conference in Singapore. “What started out as a solution for the environment has become a source of potential trade conflict.” The EU imposed the scheme on Jan. 1 in a bid to curb emissions of climate-changing gases but money will not be collected until next year. Under the European system, airlines flying to or from Europe must obtain certificates for carbon dioxide emissions. They will get free credits to cover most flights this year but must buy or trade for credits to cover the rest. Airlines and governments have complained the new tax is too costly and was implemented unilaterally by Europe. Last week, China barred its carriers from paying the charges or other fees without government permission, and Russia and the U.S. have also voiced opposition. France-based Airbus is the world’s largest commercial airplane maker and a subsidiary of EADS. The International Air Transport Association, which represents 240 airlines, is urging the EU to negotiate new carbon emissions guidelines through the International Civil Aviation Organization. “Non-European governments see this extraterritorial tax collection as an attack on their sovereignty,” IATA CEO Tony Tyler said Monday. “Aviation can ill afford to be caught in an escalating political or trade conflict.” Tyler, who previously was CEO of Cathay Pacific Airways, reiterated IATA’s forecast that airline profits will likely fall to US$3.5 billion this year from US$6.9 billion last year as a slowing global economy and high fuel costs pinch earnings.