The European Union’s Emissions Trading Scheme (EU ETS) will lead to a distortion of competition, higher ticket prices for Dutch consumers and be financially damaging to Amsterdam Schiphol Airport (AMS) and KLM, a senior politician has warned.

The Netherlands’ Secretary of Infrastructure & Environment Joop Atsma told parliament’s House of Representatives in a letter that EU ETS would cost KLM €30 million ($39 million) annually and could result in a loss of 150,000 passengers (0.6% of total passengers carried in 2011) if the airline passes on those costs to customers. In turn, this could lead to a revenue reduction of €3.6 million for AMS and the possible loss of 200 jobs.

The warning falls in line with concerns of many European carriers about the impact of EU ETS (ATW Daily News, Feb. 9).

Atsma’s conclusions are based on a report by the Netherlands Institute for Transport Policy Analysis – the Kennisinstituut voor Mobiliteitsbeleid (KiM) – on the effects of the new carbon tax on the environment and on the Dutch avation industry. KiM is an independent institute within the Dutch Ministry of Infrastructure & Environment.

The passenger loss for KLM could double to 300,000 annually if the price of carbon permits or EU allowances doubles to €20 per tonne and the airline passes on EU ETS costs to passengers, according to the KiM report.

Other EU network carriers will also see a decline in passengers, mainly in their highly price-sensitive transfer traffic, the report states. Conversely, airlines and hub airports located outside the boundaries of the EU will benefit from the EU ETS. The report estimates that Emirates could see a 0.7% to 2.7% increase in passenger numbers per year, SWISS could benefit by 0.5%-1.9% and Turkish Airlines 0.1%-0.6%. This equates to 220,000, 190,000 and 65,000 additional passengers respectively.

“The negative effects of the EU ETS on the international competitiveness of Dutch aviation industry will be even worse if third countries implement retaliatory measures,” Atsma said in the letter, noting that this “calls for a global solution. The Netherlands will thus actively promote a positive outcome of the negotiations within ICAO.”