The International Air Transport Association (Iata) has urged the European Union to review its Emissions Trading System (EU ETS) to protect the competitiveness of Europe’s air transport industry.
Iata said on Thursday that the review was essential to strengthen European air connectivity and economic resilience amid rising compliance costs and geopolitical volatility.
The association wants the EU to ensure full implementation of the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) for all international flights, including intra-European Economic Area routes.
This would prevent market fragmentation, avoid regional derogations and overlapping measures and uphold the global framework agreed through the International Civil Aviation Organization.
It also wants the EU ETS to introduce a purchase-based “book-and-claim” system for Sustainable Aviation Fuel (SAF). The mechanism would allow airlines to claim environmental attributes based on purchase records, independent of physical uplift location.
Iata said this would deliver investment certainty, affordability and a level playing field for all operators. Amendments to the EU ETS directive and full extension of the Union Database are required to track both physical supply and environmental attributes and prevent double-counting.
The association has also called for a greater share of aviation’s EU ETS revenues to be reinvested directly into the sector’s transition. With free allowances phasing out from 2024, airlines are expected to surrender nearly 330 million allowances between 2026 and 2030.
Current incentives, such as the SAF Allowance scheme, cover only 4-5% of needs. Iata recommends increasing both the volume and duration of support, prioritising less mature SAF pathways, cost-parity measures and reinstatement of free allowances to protect competitiveness.
Iata noted growing EU-level scepticism about the ETS’s effectiveness and its drag on competitiveness, a concern echoed in the Draghi Report. The association warned that sudden cost spikes risked weakening connectivity, reducing consumer choice and diverting capital from green investments.
Iata director general, Willie Walsh, said European aviation policy must bolster competitiveness as it advanced decarbonisation
“Reviewing the EU ETS offers a critical opportunity to refocus efforts on cost-effective emission reductions. The priority must be the full implementation of Corsia, the reinvestment of EU ETS revenues into SAF and other credible decarbonisation solutions, and the elimination of overlapping measures that add cost and complexity without environmental gain,” Walsh said.
“By doing so, we will protect European air connectivity – a vital strategic asset foundational to EU integration, trade and commerce. Amid global economic strain and geopolitical volatility, the EU ETS review must deliver a harmonised climate policy framework that balances the sector’s competitiveness with its climate ambitions,” he said.
The Sustainable Transport Investment Plan estimates EUR 57–67 billion is required for SAF by 2035 and EUR 268–376 billion by 2050. Rechannelling EU ETS revenues, alongside limited Innovation Fund support to date, would accelerate a competitive SAF market, according to the association.
