Etihad Airways has said it will increase the fuel surcharge on its European flights to offset the costs being imposed on the airline by the European Union (EU) Emissions Trading Scheme (ETS).

The increase of US$3 per passenger for flights into and out of Europe and US$0.03 cents/kg for cargo shipments will take effect for travel from 01March12.

The EU ETS imposes a limit on carbon dioxide emissions for flights operating to and from EU airports, effective from 01Jan12. Its aim is to mitigate the impact of climate change on aviation. Each airline is allowed to emit some carbon dioxide for free each year, but they will have to buy "carbon credits" from other airlines or industries if they exceed their allowance.

The charges are calculated based on the additional cost to Etihad for the carbon credits the airline will be required to purchase for 2012 in order to comply with the EU ETS. As carbon prices fluctuate, this cost may need to be adjusted from time to time.

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