June 9, 2008 / 5:48 PM / 10 years ago

Inclusion of jets in CO2 scheme unfair, says Air France

PARIS (Reuters) - Air France-KLM on Monday voiced concerns over the proposed inclusion of airlines in the European Union’s Emissions Trading Scheme (ETS) at a time of soaring oil prices.

The French-Dutch airline said the terms of the system were “discriminatory” and threatened the financial balance of companies already worried about their profitability.

High fuel prices and a dip in traffic in the United States and Europe have bankrupted 24 carriers since the start of the year, the International Air Transport Association says.

Under proposals being drawn up in Brussels to fight climate change, all airlines using airports in the 27-nation EU would be included in the ETS from 2012, with a cap on their emissions of greenhouse gases.

A European Parliament panel voted to include aviation from 2011, one year earlier than envisioned by EU ministers.

The panel also voted to make the sector pay for 25 percent of its permits to produce carbon dioxide in the first year, rather than the 10 percent suggested by ministers.

The plan would give a competitive edge to companies which have a hub outside Europe and “should be applied equally to all airline companies”, said Pierre-Henri Gourgeon, Air France-KLM’s deputy chief executive, at a news briefing.

Air France-KLM, the world’s biggest airline by revenue, warned last month that soaring fuel prices would slash operating profits this year, knocking its shares to two-month lows on despite a rise in 2007 operating profit.

Oil spiked to a record $139 a barrel on Friday.

The airline industry is struggling to cope with oil prices that have surged 170 percent since the start of 2007 and economic uncertainty in the United States and elsewhere which threatens growth.

Writing by Muriel Boselli; Editing by William Hardy

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