Ryanair has urged the European Commission to abandon its "eco-looney" Emissions Trading Scheme (ETS), under which airlines are fined for exceeding carbon emission limits.
The unpopular scheme has faced strong opposition since it was established at the start of the year, with many airlines around the world refusing to sign up.
In an attempt to head off the threat of a global aviation trade war, non-EU airlines have been made exempt from ETS, but those flying within the EU must still take part.
Stephen McNamara, a Ryanair spokesman, said: "We do not believe that European aviation should be included in the ETS scheme since it accounts for less than two per cent of the EU's CO2 emissions.
"This continuation of this eco-looney tax will damage traffic, tourism, European competitiveness and jobs at a time when no other economic block is including aviation in their ETS schemes."
The International Air Transport Association has previously estimated that ETS could cost airlines around the world £1 billion – although that figure will fall sharply if non-EU airlines remain exempt.
The extra cost is already being passed on to consumers. Ryanair, for example, currently charges all passengers an "ETS levy" of 50p (76c) per return flight. The airline carries around 80 million passengers each year, meaning it will collect around £20 million (AUD $30.4 million) from the fee in 2012.
Its first annual ETS bill will be payable in April 2013, although Mr McNamara said how much that bill will be, and how it will be collected by the EU, remains "a mystery".
The cost of flying long-haul from Britain has already soared in recent years, following sharp increases to Air Passenger Duty (APD), which – when introduced in 1994 – was billed as an environmental tax.
Since 2007, APD on long-haul flights has increased from £20 ($30AUD) to £92 ($140AUD) per person in economy class, and it is to rise again in April. Calls for APD to be reduced, to offset the introduction of ETS, have so far been ignored.
The Telegraph, London