AER LINGUS may have to cut back on some routes if oil prices remain high, its chief executive warned yesterday.

Addressing the Oireachtas Joint Committee on Transport, Dermot Mannion said that, following the peak summer season, Aer Lingus would suspend services on its Dublin to Los Angeles route from November 2nd and would reduce long-haul capacity by 15 per cent for the winter season.

"However," he said, "I would emphasise that the situation is being kept under constant review and I cannot rule out further changes to the schedule as volatile conditions evolve. These actions are a direct consequence of the unprecedented increases in fuel costs, the weak US dollar and slowing economies."

Aer Lingus has hedged for 28 per cent of its 2008 fuel requirements, Mr Mannion said. But with fuel prices at current high levels, he said the implications for fuel costs in the full-year 2009, with minimal hedging opportunities, posed a serious challenge for the entire airline industry.

However, Mr Mannion said he did not accept that Aer Lingus would have to merge or be taken over by a larger player to survive the turmoil. "I do not accept that we can't be a strong, independent carrier," he said.

Mr Mannion strongly criticised the EU's planned emissions trading scheme. Denying that the airline industry was "crying wolf", he said the net cost of the scheme for Aer Lingus would be €39 million in 2012, and that this could jump to more than €205 million between 2013 and 2016.

"At a time of unprecedented oil prices and a very uncertain outlook for the aviation industry, it is incomprehensible that such costs could be imposed," he said.

The scheme would make it difficult for the airline to raise finance to purchase new aircraft as it would be penalised financially for expanding, Mr Mannion added.

Ireland's position as an island-based economy meant it was dependent on air transport links and no consideration had been given to the disproportionate effect of the scheme on passengers travelling to and from the country, he said.

"It is hugely discriminatory and I would call on Minister [for the Environment John] Gormley at the Council of Ministers to put a stop to this and get back to the drawing board," Mr Mannion said.

CityJet chief executive Geoffrey O'Byrne White said Ireland would suffer from the scheme. Unless there was a separate policy for islands, access to Ireland would become a major issue, he said.