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India asks its airlines not to submit carbon tax data to EU

India asks its airlines not to submit carbon tax data to EU

New Delhi: The Indian government has asked the country’s airlines to refrain from submitting carbon emissions data to the European Union (EU) for a new tax that will become applicable from 1 January for flights to Europe, hardening its stand further against the imposition of the levy.

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Under the planned Emission Trading Scheme (ETS), airlines using EU airspace will have to pay a fee for carbon emissions that exceed a set limit. They will also need to pay for the part of the journey covered by non-EU airspace.

India has led the opposition to the move with support from more than two dozen countries including the US and China.

“I am directed to say that the ministry has decided that there is no need for Indian carriers to submit any data to European Union under EU-ETS," the civil aviation ministry said in a letter to all the domestic airlines that fly on international routes on 25 November. The letter was reviewed by Mint.

“Any correspondence received at your end (airlines) from the EU in this regard may be forwarded to this ministry, for taking necessary action," the letter added.

The data is critical for working out how much an airline needs to pay.

The EU-ETS will follow an annual cycle: operators will be required to monitor yearly emissions, from 1 January to 31 December, on a per-flight basis, said Isaac Valero-Ladron, EU spokesperson for climate action commissioner Connie Hedegaard.

This data must then be aggregated in an annual emissions report and verified by an independent accredited verifier. By 31 March of the following year, the verified report must be submitted to a competent authority.

The EU maintains it’s not a tax. “Yes, the inclusion of aviation in the EU emissions trading scheme is on track. Our law will be implemented on 1 January 2012, as planned and announced," Valero-Ladron said.

Air India is likely to pay about 200 crore if such a tax is allowed under ETS, while Jet Airways, which has a European hub in Brussels for its flights to North America, expects about 100 crore in annual outgo, according to two respective senior airline officials, who declined to be identified.

John Slosar, chief executive officer (CEO) of Hong Kong’s Cathay Pacific Airways Ltd, expects a Hong Kong ticket to Europe to cost HK$50 more as a result of the ETS in the first year alone.

Indian carriers are yet to start charging passengers for the ETS.

It remains unclear what could be the result of India not allowing its airlines to submit data to EU.

India’s next step will be in consultation with other countries including the US, said a civil aviation ministry official who declined to be named.

“Whatever happens will happen in a coordinated manner," he said.

An analyst said these are difficult times for many airlines and 2012 could be tougher, given the economic woes of the West.

“The last thing that airlines need is another operating tax," said Steve Forte, a former CEO of Jet Airways. “A united front among non-EU countries would certainly help in changing the mind of the EU and placing the subject of reducing aviations emissions where it belongs: Icao (International Civil Aviation Organization)."

Forte added that he does not see a trade war looming.

“Worst comes to worst, the US will impose a similar tax on all EU carriers operating to and from the US, and the EU carriers will scream bloody murder until an amicable solution can be found."

Reuters contributed to this story.