The European Union on Friday said it would stick to a plan to include airlines in its overall strategy to cut carbon dioxide emissions. The plan would require airlines using European airspace to trade carbon permits, forcing them to buy more if they want to add more flights.

EU Environment Commissioner Stavros Dimas said that in the fight against climate change "all sectors must contribute in a fair way, including aviation, whose emissions are increasing very rapidly."

EU officials criticized the International Civil Aviation Organization (ICAO) for not enacting stricter carbon dioxide emissions standards for international air traffic.

"We strongly believe it would be best if the international community could reach an effective mechanism on tackling aviation emissions," said Luis Fonseca de Almeida, head of Portugal's civil aviation authority. Portugal currently holds the EU's rotating presidency.

After an ICAO meeting in Montreal ended without a promise to aim for cutting aviation emissions, Fonseca de Almeida said the organization had "abdicated the leadership role given to in the Kyoto" Protocol.

US, airline industry opposed to plan

The plan however faces stiff opposition from the United States which believes the EU has no right to force airlines using European airspace to participate in the bloc's emissions caps program. Washington says it prefers a voluntary agreement among nations.

The dispute may turn into an global trade fight as the United States said the EU had no legal authority to include foreign airlines in its environment plans, C. Boyden Gray, US ambassador to the EU told reporters on Tuesday.

The plan also has the airline industry up in arms.

Giovanni Bisigani, director general and CEO of the Geneva-based International Air Transport Association or IATA, which represents 250 airlines around the world, said the EU's approach was "disappointing and irresponsible."

"Europe's unilateral approach to emissions trading confuses taking leadership into taking cash," Bisigani said in a statement. "Regional schemes will have, at best, limited impact on the environment."

Munich, Frankfurt to have emission-linked fees

Meanwhile, Germany's two main airports said this week that airlines will be rewarded for flying lower emission planes into Munich and Frankfurt airports beginning in 2008.

"Flying will become cleaner and easier on the environment," German Transportation Minister Wolfgang Tiefensee said in Berlin, adding that the project will give airlines "incentives to use modern and environmentally friendlier airplanes."

The minister and airport authorities said they hoped other German airports would voluntary decide to join in applying the new rules, which will initially be put in place for three years. Munich and Frankfurt airports are responsible for about half of German air traffic.

Airports in Switzerland, Sweden and Great Britain currently have similar fee structures that take emissions into account.

Fees not a revenue device

The new rules will means that 32 percent of landing and take-off fees will be climate related, according to Wilhelm Bender, chief executive of Fraport, which runs Frankfurt International Airport.

The fees are not intended to raise the airport operators' bottom-line, as revenue losses from airlines emitting the fewest emissions would be balanced by planes emitting more environmentally damaging Nitrogen oxides.

The effect on ticket prices will depend on the airline, officials in Berlin said. Companies operating older fleets may pass the higher fees on to customers while, ideally, the lower fees paid by airlines with more modern plane could lead to a drop in prices.