British Airways fears the European Union’s emissions trading scheme (ETS) could collapse under the weight of “serious retaliation” from foreign airlines and governments.
BA head of environment Jonathon Counsell told an aviation law conference in London: “There is strong anti-ETS feeling. There could be a serious retaliatory response. “We are worried about the risk. There is a danger the scheme could collapse.”
Airlines are due to join the European ETS in January amid competing claims about the cost and the impact on fares. Airline Association IATA has warned the scheme could cost carriers $1.2 billion (£760 million) in the first year. But the EU insists the impact “should be below €2 (£1.75) each way” on long-haul fares.
Counsell said uncertainty about whether the scheme would go ahead prevented BA from pricing the impact into fares for next year.
The Air Transport Association of America (ATA) has challenged the scheme in the European Court of Justice, arguing it violates international law. The Court is due to rule shortly, although the advocate general of the court has ruled the scheme does not breach international law.
The US House of Representatives this week passed a bill that would impose huge fines on US carriers that comply with emissions trading. The Republican-backed bill still has to go before the Senate.
Counsell said: “This has gone beyond a legal issue and become a political issue. There is talk it will affect route rights.”
He said: “It is an administrative nightmare. We need to recover the costs [of emissions trading]. We sell about 30 million tickets a year and have already sold about one-fifth of those for next year. But if we recover the costs now, we would be obliged to refund passengers [in the event there was a delay].”
Charles Lewis of the UK Department of Energy and Climate Change (DECC) said the government expects the ECJ to rule on the ATA case by the end of this year or early next. Lewis said: “There is a risk the ECJ may not adopt the same approach as the advocate general.”
The pair were speaking at the Butterworths Aviation Law and Policy Conference in London.