Delta Becomes First U.S. Airline to Add EU Emissions Fee
Delta Airlines — the country's second-largest carrier — has instituted a $3 surcharge to tickets purchased on flights going to or from Europe. The new fee may seem tiny, but it's the opening salvo in what could end up being a significant hike in European ticket prices due to a controversial European Union global warming plan.
A Delta Airlines Boeing 767. Credit: flickr/jbself20.
The fee is aimed at helping the airline comply with an emissions trading rule that went into effect on Sunday. Under the rule, airlines are charged for the carbon emissions from their European flights. According to Reuters, Atlanta-based Delta is the first U.S. airline to institute such a fee, and it's unclear if other major carriers will follow suit:
"When airlines raise prices they're testing two things: the appetite of their competition and the appetite of consumers," said Rick Seaney, chief executive of Farecompare.com, which tracks air fares. "If either one of these two balk, they typically have to roll back those increases."
"Airline experts have said U.S. carriers must add the cost to ticket prices or risk eroding their margins on trans-Atlantic flights."
As I wrote on December 21, the U.S., China and other countries are opposed to having their airlines subjected to Europe's Emissions Trading System, which allows companies that emit carbon dioxide, a gas that contributes to global warming, to buy and sell a limited amount of permits. The Reuters story notes that some aviation industry analysts expect airfares between the U.S. and Europe to rise by up to $90 as a result of the emissions fees. Airlines for America, an industry group fighting the EU law, has said it could cost the U.S. airline industry $3.1 billion by 2020.
The EU's highest court recently upheld the carbon fee plan, but the airlines may challenge it in other venues, including the World Trade Organization.