Like dominos: Airlines globally raise fares after EU Emissions Trading Scheme starts

For all the verbal storms airlines raised in the lead up to the controversial 01-Jan-2012 inclusion of aviation in the European Union's Emissions Trading Scheme (EU ETS), most airlines are now responding by increasing or planning to increase ticket prices to reflect the price of carbon credits they will have to pay (see survey below). While airlines were quick to talk up sums in the tens if not hundreds of millions of dollars, the impact per ticket is so far quite low. Like with fuel surcharges, airlines are implementing flat fees rather than taking the laborious path to get a closer estimate, which may not vary much.

Surcharges could go up as carriers receive fewer free carbon credits, but the market price of carbon could counter-balance that increase or send it rocketing. What will not be seen for some time is the extent of the correlation between a drop in demand and incremental ticket price increases. The correlation may never be discernible in some markets, such as where airlines are shrinking into profitability.