Key Takeaways
• IATA warns EU aviation faces competitiveness crisis due to heavy regulations, rising costs, and slow reforms in 2025.
• EU’s SAF mandates require 2% sustainable fuel in 2025, rising to 70% by 2050, but production and costs remain problematic.
• ETS reforms limit free allowances by 2026, increasing airline costs and possibly expanding to all EU outbound flights by 2027.
Europe’s aviation sector is facing a serious competitiveness crisis, according to the International Air Transport Association (IATA). At the 81st IATA Annual General Meeting in June 2025, Willie Walsh, IATA’s Director General, warned that the European Union’s aviation industry is falling behind other regions. The main reasons, he said, are heavy regulations, rising costs, and slow progress on key reforms. This warning comes as airlines, travelers, and policymakers across Europe 🇪🇺 grapple with new climate rules, higher ticket prices, and growing worries about the future of EU aviation.
Why Is IATA Warning About a Competitiveness Crisis?
IATA, the global trade group for airlines, has sounded the alarm because Europe’s aviation sector is struggling to keep up with the rest of the world. Other regions are investing in their airports, air traffic systems, and airline industries to attract more flights and passengers. In contrast, Europe is dealing with:
- Strict new climate rules that increase costs for airlines
- Fragmented air traffic management that causes delays and inefficiency
- Rising airport and fuel charges
- Policy decisions that sometimes reduce airport capacity instead of expanding it
Willie Walsh summed up the situation by saying, “Europe faces a deepening aviation competitiveness crisis.” He criticized EU policymakers for not taking enough action to help the industry stay strong and competitive on the global stage.
The Role of Sustainable Aviation Fuel (SAF) Mandates
One of the biggest changes affecting EU aviation is the new requirement for airlines to use more sustainable aviation fuel (SAF). SAF is a cleaner alternative to regular jet fuel, made from sources like plants or waste materials. The EU’s ReFuelEU Aviation Initiative started in January 2025 and sets strict targets:
- 2% of jet fuel must be SAF in 2025
- 6% by 2030
- Up to 70% by 2050
While these targets are meant to help the EU reach its climate goals, IATA and many airlines say they are unrealistic. The main problems are:
- Not enough SAF is being produced to meet the targets
- SAF is much more expensive than regular jet fuel
- Fuel suppliers are charging high premiums, making it even harder for airlines to afford SAF
Walsh called the situation “the EU great green scam” and said it’s turning into a “billion-dollar windfall for fuel suppliers.” Airlines worry that these costs will force them to raise ticket prices, cut routes, or even move flights to airports outside the EU, hurting the region’s aviation industry.
EU Emissions Trading System (ETS) Reforms: More Costs for Airlines
Another major challenge is the reform of the EU Emissions Trading System (ETS). This system requires airlines to buy permits, called “allowances,” for the carbon dioxide (CO2) they emit. The rules are getting stricter:
- Free allowances are being reduced by 25% in 2024 and 50% in 2025
- From 2026, airlines must buy 100% of their allowances at auction
This means airlines will have to pay much more to operate flights within the EU. The EU has set aside 20 million ETS allowances (worth €1.6 billion) to help airlines cover the extra cost of SAF, but the support varies depending on the airport and type of fuel.
There is also talk of expanding the ETS to cover all flights leaving the EU by 2027. This could bring in up to €72 billion by 2030, but it would make it even more expensive for EU airlines to compete with non-EU carriers.
For more details on the EU’s climate policies and aviation rules, readers can visit the European Commission’s Directorate-General for Climate Action.
Infrastructure and Capacity: The Single European Sky Problem
Europe’s air traffic management system is still divided by national borders, which leads to delays, inefficiency, and higher costs. The Single European Sky (SES) project was supposed to fix this by creating a unified airspace, but progress has been slow. IATA says that “narrow national interests appease air traffic controllers at the expense of travelers,” and predicts another summer of delays.
Airport capacity is also a problem. For example, the Dutch government decided to shrink the number of flights allowed at Schiphol Airport for environmental reasons. IATA warns that this could set a trend, with other countries following suit and reducing airport capacity instead of expanding it. This would make it even harder for Europe to compete with major aviation hubs in other parts of the world.
Economic and Market Data: Recovery Still Lagging
The COVID-19 pandemic hit aviation hard, and Europe’s recovery has been slower than other regions. In 2023, flights at EU27+EFTA airports reached 8.35 million, still 10% below pre-pandemic levels. Low-cost airlines have bounced back faster than traditional “legacy” carriers, but overall growth forecasts have been cut back because of new regulations and global tensions.
Even though IATA expects airlines worldwide to make a profit of $36 billion in 2025, European carriers are not doing as well. They face higher costs from EU rules and a slower return to normal traffic levels.
Stakeholder Perspectives: Who Stands Where?
IATA and Airlines
IATA and most airlines are pushing back against the speed and structure of the EU’s green mandates. They want:
- More realistic SAF targets
- Greater flexibility in meeting climate goals
- Faster progress on infrastructure reforms
They warn that if things don’t change, airlines might move flights to non-EU airports, reducing choices for travelers and hurting jobs in Europe.
EU Policymakers
EU officials defend their climate policies, saying they are needed to reach the EU’s 2050 net-zero emissions target. They argue that measures like SAF mandates and ETS reforms will push the industry to become cleaner and more modern. However, after the 2024 EU elections, there is more focus on keeping the industry competitive and protecting jobs.
Fuel Suppliers
Fuel suppliers are under pressure to produce more SAF, but they are also making money from the high prices airlines must pay to meet the new rules. Airlines accuse them of charging too much, while suppliers say they need to cover the costs of building new SAF production facilities.
Environmental Groups
Environmental groups want even stricter rules, including measures to reduce the number of flights and cut emissions further. But after the 2024 elections, their influence has weakened as politicians shift their attention to economic growth and jobs.
How Do These Changes Affect Airlines, Travelers, and Others?
Airlines
- Rising costs from SAF mandates, ETS reforms, and airport charges
- Difficulty passing costs to travelers without losing business to non-EU airlines
- More paperwork to monitor and report emissions
- Uncertainty about future rules and support from EU funds
Travelers
- Higher ticket prices as airlines try to cover new costs
- Fewer route options if airlines cut flights or move them outside the EU
- More delays if air traffic management and airport capacity issues are not fixed
Fuel Suppliers
- Pressure to increase SAF production
- Benefit from current high prices
- Need to invest in new facilities to meet future demand
EU Policymakers
- Balancing climate goals with economic needs
- Facing pressure from airlines, travelers, and environmental groups
- Adjusting policies after the 2024 elections to focus more on jobs and competitiveness
What’s Next? Future Outlook and Pending Developments
Policy Reassessment
The new European Commission is under pressure to review SAF targets and the impact of current policies on competitiveness. Airlines and industry groups are lobbying for more flexible, market-based approaches and a stronger focus on fixing infrastructure problems.
Potential ETS Expansion
There are ongoing talks about expanding the ETS to cover all flights leaving the EU and including other types of emissions, not just CO2. This could make it even more expensive for EU airlines to operate, but it would also bring in more money for climate projects.
Clean Industrial Deal
After the 2024 elections, the EU is shifting some focus from the Green Deal (which was mainly about the environment) to a Clean Industrial Deal, which aims to support industry and jobs while still working toward climate goals. This could lead to changes in how aviation policies are set and funded.
Technological Innovation
Progress on new, cleaner aircraft—like those powered by hydrogen—has slowed down. Airbus, one of Europe’s biggest plane makers, has delayed its timeline for new technology. This makes it harder for airlines to meet climate targets without relying on expensive SAF.
Step-by-Step: How Policy Changes Affect Airlines
- SAF Mandate Compliance: Airlines must buy and use a growing share of SAF, with checks at EU airports to make sure they meet the targets.
- ETS Allowance Purchase: From 2026, airlines must buy all their emissions allowances at auction, increasing their costs.
- Reporting and Verification: Airlines must keep track of and report their CO2 emissions, and soon, other types of emissions too.
- Accessing Subsidies: Airlines can apply for help from the EU to cover some of the extra costs of SAF, but the amount depends on the airport and fuel type.
- Engagement in Policy Review: Airlines and their trade groups are actively talking to the European Commission and national governments to push for changes in the rules.
Real-World Scenarios: What Could Happen Next?
- If SAF production doesn’t increase: Airlines may not be able to meet the targets, risking fines or being forced to cut flights.
- If ticket prices rise too much: Travelers may choose non-EU airlines or avoid flying, hurting EU carriers’ profits.
- If infrastructure isn’t improved: Delays and congestion could get worse, making EU airports less attractive for travelers and airlines.
- If the EU changes its policies: There could be more flexibility for airlines, but also possible delays in reaching climate goals.
Analysis from VisaVerge.com
VisaVerge.com reports that the EU’s unique approach to collective action on SAF and emissions is both a strength and a weakness. On one hand, it shows leadership in fighting climate change. On the other, if the rules are too strict or costly, airlines and travelers may simply choose other regions, hurting the EU’s economy and global standing.
What Should Stakeholders Do Now?
Airlines
- Plan for higher costs and look for ways to operate more efficiently
- Engage with policymakers to push for more realistic targets and better infrastructure
- Explore partnerships with SAF producers to secure supply at better prices
Travelers
- Expect higher fares and possible changes in flight options
- Stay informed about new routes and airline choices
Policymakers
- Balance climate goals with competitiveness
- Listen to feedback from airlines, travelers, and industry experts
- Invest in infrastructure to reduce delays and improve efficiency
Fuel Suppliers
- Ramp up SAF production to meet growing demand
- Work with airlines to set fair prices and long-term supply agreements
Conclusion: The Road Ahead for EU Aviation
Europe’s aviation sector is at a crossroads. The push for cleaner, greener flying is important, but if the costs and rules become too much, the region risks losing its place as a global aviation leader. The coming months will be critical as airlines, policymakers, and other stakeholders debate the best way forward. Will the EU find a balance between climate action and competitiveness, or will it see more flights, jobs, and investment move elsewhere? The answer will shape the future of flying in Europe for years to come.
For official updates and detailed policy documents, readers can visit the European Commission’s Directorate-General for Climate Action. For industry perspectives and the latest news, IATA’s website at iata.org is a valuable resource.
By staying informed and engaged, everyone involved—from airlines to travelers—can help shape a future where EU aviation remains both competitive and sustainable.
Learn Today
IATA → International Air Transport Association representing global airline interests and industry standards.
Sustainable Aviation Fuel (SAF) → Cleaner jet fuel alternative made from renewable resources to reduce carbon emissions.
EU Emissions Trading System (ETS) → Cap-and-trade system requiring airlines to buy permits for their carbon emissions.
Single European Sky (SES) → EU initiative to unify air traffic control and improve efficiency across European airspace.
ReFuelEU Aviation Initiative → EU policy mandating increased use of sustainable aviation fuel starting in 2025.
This Article in a Nutshell
Europe’s aviation sector faces a crises due to costly climate rules, slow airspace reforms, and rising fuel prices, warns IATA. Strict SAF mandates and ETS reforms increase expenses, hurting airline competitiveness and possibly causing route cuts or flight moves outside the EU. Infrastructure remains fragmented, worsening delays.
— By VisaVerge.com
