Trade war looms over EU's airline tax

A trade war is looming over the European Union's move to impose charges on airlines based on the greenhouse gases emitted during a flight into and out of European airports.

Beyond a certain level of free allowances, the airlines have to buy emission permits depending on the emissions produced by their flights. As the free allowances will be reduced in future years, the charge to be paid will rise, thus increasingly raising the price of passenger tickets and the cost of transporting goods, and affecting the profitability and viability of airlines.

The China Air Transport Association has estimated that Chinese airlines will have to pay 800 million yuan ($127 million) for 2012, the first year of the EU scheme, and that this will treble by 2020.