Under new EU law, all airlines flying into or out of Europe must either cut greenhouse gas emissions or pay heavy fees and fines. But U.S-based airlines, which have only recently seen profits return this year after imposing new fees of their own on passengers, are fighting the law, saying that the EU has no right to impose such a law on non-European companies.
United Continental Holdings (NYSE:UAL), AMR Corp. (NYSE:AMR), and the Air Transport Association argued against the imposition of the law last week in the European Court of Justice. Chinese airlines have also contested the application of the new law. A decision should be reached later this year or early next.
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The European Commission first started their cap-and-trad emission plan in 2005, targeting utilities (NYSE:XLU) and manufacturers, and in 2012, will begin capping greenhouse gas emissions from airlines at 97% of their average 2004-2006 levels, and will lower the cap to 95% of those levels in 2013. Any airline keeping their emissions below those levels will be able to sell their excess allowances to other carriers. For every ton of greenhouse gases an airline emits over the cap, they will be fined 100 euros.