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

Europe's biggest airlines have urged the European Union not to extend its Emissions Trading System to cover international flights, warning the move would raise ticket prices, a letter seen by Reuters showed.

The European Commission is considering expanding the scheme to emissions from flights departing the EU as part of a review due next month. At present, the ETS only covers flights within Europe.

The system requires airlines, along with factories and power plants and others, to buy permits for greenhouse gas emissions, while capping supply to drive reductions over time.

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In a letter to Commission President Ursula von der Leyen, seen by Reuters, airline bosses from Air France-KLM AIRF.PA, British Airways-owner IAG ICAG.L, Lufthansa LHAG.DE and Ryanair RYA.I opposed widening the scheme.

"Expanding EU carbon pricing to extra-EEA (European Economic Area) flights will further penalise European passengers and businesses by increasing the cost of airfare and cargo," they said.

The letter was also signed by the heads of 15 companies, including AirBaltic, easyJet EZJ.L and TUI TUI1n.DE. It comes as airline leaders meet in Rio de Janeiro for the annual meeting of the International Air Transport Association (IATA).

The letter said EU action would undermine global efforts to decarbonise aviation, notably the United Nations' CORSIA scheme, which requires airlines to buy ​CO2 offsets to cover growth in emissions from international flights, but does not mandate absolute cuts.

"Any extension of EU ETS will hamper the legitimacy of CORSIA," the letter said, urging Brussels to reduce ETS costs to CORSIA levels.

The Commission says extending the ETS would ensure equal treatment across airlines and avoid disadvantaging short-haul carriers relative to those operating longer international routes.

Brussels is also sceptical that CORSIA alone can drive decarbonisation. A 2021 ‌study for the Commission warned the U.N. scheme was unlikely to cut emissions and could undermine Europe's climate goals.

-Reporting by Kate Abnett and Joanna Plucinska. Editing by Mark Potter/Reuters