EU aviation carbon tax threat edges China into widening Airbus boycott

2012 03 20

CHINA's airlines have suspended purchases of 10 Airbus jets over a rift between Beijing and Brussels grows over the EU's aviation carbon emissions tax, Reuters reported.

Citing unidentified sources it was also reported Airbus confirmed China had blocked the purchase of 35 long-haul A330s and 10 Airbus A380 superjumbos worth US$12 billion.

Two sources familiar with the matter said China would delay 10 more A330 long-haul planes from the European aircraft maker, on top of the thirty-five A330s and ten A380 superjumbo jets blocked earlier last week.

In total, sales of 55 Airbus planes worth US$14 billion have now reportedly been put on hold - about 10 per cent of all Airbus planes ever delivered to China.

While Airbus did not say which airlines had delayed their purchases, insiders say it was Hong Kong Airlines, 46 per cent owned by the Hainan Group. China,the US and other countries, oppose the carbon tax based on CO2 emissions over whole flights rather than EU airspace alone, say the measure exceeds EU jurisdiction. But the European Commission says the tax is needed to fight climate change and the European court supports that view.

This comes as efforts are underway to find a solution to the dispute, which airlines say risks a trade war which would be injurious to all parties.

China has so far limited retaliation to wide-body jets capable of reaching Europe, not short-haul A320s assembled in China for domestic use.

While the A380 purchase is a done deal and a cancellation would involve the loss of a deposit, the threatened A330 deals await approval of the Chinese government.

Meanwhile, the US rival Boeing looks forward to mega sales for its 777 long-haul mini-jumbo, which has been selling well in China. "I think you're going to see both sales of narrow-bodies and wide-bodies [in China] continue to grow," said Boeing commercial chief James Albaugh.

"We sold thirty 777s over there last week and had a lot of discussions with other customers about more," Mr Albaugh said.

A Boeing spokesman said these included 10 jets already announced. Boeing is in "advanced discussions" for the other 20.

Source Shipping Gazette - Daily Shipping News

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