Lufthansa to pass EU ETS costs on to passengers

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Lufthansa has made it clear that it will pass on the cost of its compulsory inclusion the European Union's Emissions Trading System (ETS) to its customers through higher ticket prices.

Aviation's inclusion in ETS took effect on 1 January 2012.

The German carrier expects the scheme to generate additional expenses of approximately €130 million ($169 million) in 2012.

These costs will be included in the existing fuel surcharge, the company said.

Lufthansa increased its fuel surcharge last month, two weeks before ETS came into force. The airline added it has "no immediate plans" to raise the fuel surcharge again, but did not rule out a later increase.

"European operators are now facing additional costs which will make flying within and via Europe more expensive for passengers," said group board member Carsten Spohr.

The EU will provide 85% of the required carbon dioxide certificates free of charge in 2012, while 15% will have to be purchased by the airlines. In the 2013-20 period, airlines will receive 82% of their allowances for free, with 3% being reserved by the EU for new entrants and fast-growing airlines.

Lufthansa calculated that it will need to buy "at least 35% of the certificates it needs", due to the group's growth in recent years.

The carbon credit allocations are based on average emissions between 2004 and 2006.