Roundtrip Airfares to Europe on the Rise

Roundtrip airfares to Europe inched up by about $6 early this year, a jump widely attributed to the European Union's Emissions Trading Scheme, which went into effect Jan. 1 for the airline industry.

The plan, already in place for other industries in the EU, requires airlines to buy permits for all carbon emissions that exceed allocated annual quotas. The rule applies to all flights that depart from or arrive at EU airports, regardless of which country the airline is based in, a significant point of contention for U.S.-based and other international carriers.  

The European Court of Justice upheld the validity of the scheme in a late-December 2011 decision, responding to a legal action that was filed by the trade group Airlines for America (formerly the Air Transport Association). In a statement, Airlines for America claims the scheme ignores "long-standing international provisions that have enabled governments around the world to work cooperatively to make flying safer and more secure, and to reduce aviation's environmental footprint."

The organization is reviewing additional legal options, but meanwhile, "members will comply under protest and will continue to operate safely and efficiently to Europe."  

Delta Air Lines was the first to add the $6 surcharge, which was matched quickly by Air Canada, Air France, Alitalia, American, British Airways, KLM, Lufthansa and United, according to FareCompare.

That hike is just a taste of things to come, noted a January report by market intelligence group OAG. The first of two possible scenarios, explained the report, is that EU fares will rise by about 3 percent per passenger. The second is that carriers will begin using stopover points outside the EU, such as Switzerland's Geneva, Zurich and Basel airports; Zagreb in Croatia, or Istanbul in Turkey. "They would then be able to either leverage partnerships to 'feed' passengers into Europe or tag on a shorter sector into the EU and pay significantly less," per the OAG report.

The EU likely will begin collecting the fees in January 2013. Meanwhile, 26 countries, including China, Russia and India, have opposed the scheme.