Article: Passengers will pay for carbon, airlines warn

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From the Melbourne Age click here!

Passengers will pay for carbon, airlines warn

Passengers will pay for carbon, airlines warn
ANDREW HEASLEY
December 26, 2009

DOMESTIC air travellers face higher fares to cover the cost of airlines' greenhouse gas emissions - estimated at $100 million or more - if the Federal Government's emissions trading scheme is passed by Parliament next year, leading airlines warn.

And that, they claim, could hurt the Australian tourism industry, which employs about 500,000 people.

Domestic air travel in Australia has more than trebled over the past 20 years, with people making over 50 million trips in 2008-09.

Qantas and its low-cost sibling Jetstar say by 2012 they could be looking at an extra $50 million to $60 million in emissions costs to comply with the Rudd Government's scheme, as well as new emissions schemes in New Zealand and Europe.

Qantas' head of corporate relations, David Epstein, said there were only two ways to deal with the cost burden: ''Either the ticket prices go up or the margins go down, reducing the viability of the routes.''

He said that ''whichever way the impact falls, it imposes pressures on the Australian domestic aviation and tourism sectors which are not faced by its immediate competitors in the region''.

The Government's proposed emissions scheme would cost Virgin Blue $50 million to $70 million, said the airline's chief executive, Brett Godfrey.

He said those estimates were based on a cost of carbon dioxide of about $40 a tonne.

However, a carbon price of $40 a tonne is not expected to be reached in Australia for a number of years, with the price capped at $10 a tonne for the first year of the proposed emissions trading scheme.

''It means an additional cost burden, there's no doubt about that,'' Mr Godfrey said.

The proposed emissions trading scheme, which comes before Parliament for the third time in February, would put Australian tourism at a competitive disadvantage to near overseas destinations, Mr Epstein warned, as international airlines flying over Australia won't have to pay for their emissions over Australian skies. The Rudd scheme applies only to domestic carriers.

The industry says the scheme could also make overseas travel cheaper than staying at local holiday spots.

''Basically, you can fly to a resort in Bali and not incur the [emissions] cost and that resort will be competing against any number of Australian tourist destinations where you will have the levy and you won't have any offsetting credit,'' Mr Epstein said.

Unlike electricity generators, the aviation industry has not been able to convince the Government that it should receive compensation.

''The scheme assumes that there is a level playing field in prospect. Copenhagen demonstrates that we are a long way away from an international level playing field,'' Mr Epstein said.

Aviation accounts for about 2 per cent of greenhouse emissions.