The Gulf airline said it would increase prices by $3 per passenger for flights into and out of Europe and 0.03 cents per kg for cargo shipments, to offset the costs of the EU's Emissions Trading Scheme ETS.L.

The scheme, introduced on January 1, charges for emissions from European and foreign airlines flying into and from EU airports. It has drawn protest from airlines around the world, with China banning its carriers from taking part.

The charges are calculated based on the additional cost for the carbon credits the airline will purchase in 2012 to comply with the EU ETS, the airline said in a statement.

Etihad said the surcharges would take effect from March 1.

Global planemarkers have joined the chorus of concerns that the scheme risks triggering a full-blown trade war.

Gulf carriers have also been vocal in their objections to the scheme. Dubai's Emirates said last year that the scheme may cost it as much as $1 billion over 10 years.

"We have invested many millions of dollars to ensure we operate a young and highly efficient fleet but are still being penalised," chief executive James Hogan said.

Etihad has been expanding aggressively and acquired 30 percent of Germany's Air Berlin (AB1.DE) late last year. .

(Reporting by Praveen Menon; Editing by Helen Massy-Beresford)

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