Delta, Lufthansa to Pass EU's Carbon Costs on to Customers

Two weeks after the E.U.'s highest court ruled that all airlines must pay for the carbon emissions produced during flights in and out of the bloc, two airlines are moving to pass the expense to customers, and Chinese airlines are flatly refusing to comply.

Delta Airlines has begun adding a $3 surcharge each way for flights in and out of the E.U., but wouldn't comment to several news outlets whether the charge was directly related to being forced into the E.U. Emissions Trading System (ETS). The new rules went into effect Jan. 1.  

Germany's Deutsche Lufthansa AG, however, firmly pointed the finger at the ETS as the reason for including ETS compliance costs in an existing fuel surcharge. Lufthansa raised that fuel surcharge to 10 euros in mid-December, but said this week it doesn't have plans to increase the surcharge in the immediate future.

It's unclear how long Lufthansa will refrain from further price increases, considering that the ETS carbon permits will cost the company 130 million euros (US$166.9 million) this year alone.

The program requires airlines to turn in enough carbon permits next year to cover the emissions produced during flights in and out of Europe in 2012. Although the industry is getting the lion's share of permits for free, the overall cost to airlines could top $26 billion by 2020 as the number of free permits declines.

There's one group of airlines that won't be passing the costs to customers: the Chinese. That's because they don't plan to follow the ETS rules at all.

"China will not cooperate with the European Union on the ETS, so Chinese airlines will not impose surcharges on customers relating to the emissions tax," Cai Haibo, deputy secretary-general of the China Air Transport Association, told Reuters today.

Although aviation is responsible for a small slice of global greenhouse gas emissions, it is a rapidly growing slice, now responsible for an estimated 3 percent of total emissions. The global aviation industry has been working toward a sector-wide approach to reducing its carbon footprint, and some speculate the new EU ETS rule could accelerate that slow-moving effort.

The governments of India, Australia, Russia, Korea and South Africa also publicly oppose the new law. Stay tuned for more lawsuits, fare hikes and surcharges lobbied in the coming months as various governments and airlines pressure the EU to drop or modify the rule.

Airplane image via Shutterstock.