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Russia and China mulling retaliatory measures against EU carriers.

Europe’s controversial Emissions Trading Scheme for aviation has been criticized by Chinese airlines while Lufthansa has repeated its call for a 12-month delay because “too many problems remain unresolved” regarding implementation of airlines’ inclusion in the ETS.

Last month the China Air Transport Assn., representing China’s largest airlines, sent a formal notice to the EU expressing strong opposition to inclusion of nonmember carriers. CATA said in its statement that inclusion of airlines from developing countries is illegal and violates the “common but differentiated responsibility” principle. It called for a global solution to dealing with air transport-related carbon dioxide emissions. “But if the EU insists on imposing its ETS on our carriers, we would urge the Chinese government to take corresponding measures to protect Chinese airlines’ interest in the global air transport industry,” the group warned.

The EU noted that it would maintain communication with Chinese airlines on the issue. Russia also is reported to be mulling retaliatory measures against EU carriers.

Lufthansa in its April Policy Brief contended that “all of the scheduled deadlines [in the ETS process] have so far been missed and numerous legal and technical questions remain unanswered—just as 2012 tickets are beginning to go on sale and only eight months before the official kickoff. The aviation industry therefore still has no way of knowing what the major economic parameters will be.”

While the EU directive mandating airlines’ inclusion in the ETS was supposed to be enacted into law by each of the body’s member nations by February 2010, most governments have failed to do so “owing to the complexity of including the international transport sector in emissions trading,” LH highlighted. “It certainly cannot be said that the directive is being implemented in a uniform manner which preserves competition.”

At least year’s IATA AGM in Berlin, LH Group CEO Wolfgang Mayrhuber called for postponement of the EU ETS because of the market distortions caused by the grounding of aircraft due to the volcanic ash cloud. He pointed out that the main impact was felt in northern Europe and Scandinavia and thus airlines in those regions would be affected adversely in the allocation of free emissions permits, as 2010 is the benchmarking year for the calculation. In its April Policy Brief, LH again raised the issue.

LH’s concerns come as Standard & Poor’s warned that Europe risks being sidestepped in global traffic flows. In its latest study on the issue, S&P claimed that transit passengers outside Europe will in the future avoid EU hubs because of the additional costs arising in the wake of the ETS.

Air Transport World, 15 April 2011