Indonesia is pushing its domestic airlines to stop purchasing European Airbus planes in retaliation for curbs imposed by the EU on palm biodiesel usage.
The country’s trade minister Enggartiasto Lukita was also asking airline companies, including Indonesian Lion Air, to consider switching their outstanding aircraft to Boeing, a US-based aerospace company, Bloomberg wrote on 22 August.
The threat was made in the fallout of the EU placing stricter limits earlier this year on the use of palm oil in biodiesel due to deforestation concerns.
The EU published its recast of its Renewable Energy Directive (RED II) in December, and plans to start phasing out first generation biofuels from this year until 2030. A delegated act published on 21 May to supplement RED II classifies palm oil from large plantations as a high indirect land use change (ILUC)-risk feedstock that should be capped at its 2019 level of consumption.
The delegated act has drawn fire from Malaysia and Indonesia, the world’s two largest palm oil producers.
Bloomberg said Indonesia had also threatened to slap import tariffs on EU dairy products in response to the EU moves.
The escalation of the trade feud could complicate Lion’s desire to switch to Airbus following a Boeing 737 crash last year operated by the airline, which killed all 189 people passengers and crew.
Lion had placed an order for eight Airbus A330neo planes worth US$2.4bn last year, adding to a 2013 order for 234 planes worth US$24bn, Bloomberg wrote.
“We are exploring all options,” Lukita said, adding that he had spoken with Lion’s co-founder, Rusdi Kirana, who said the airline would follow whatever the government decided.