S&P Global Ratings analysts have once again highlighted the potential effects of regulatory limits on carbon emissions for European airlines. A recent assessment suggests that a London to Barcelona flight could rise by about 18 euros per passenger, while a Paris to Athens ticket might increase as much as 33 euros. Transatlantic journeys are not excluded, with a London to New York trip potentially costing up to 90 euros more under tighter emission rules.
The report notes that currently there is no cost-effective substitute for fossil fuels, and it underscores the high expense involved in funding low-emission or non-carbon energy sources. It also points out that S&P holds stakes in European airlines and warns that by 2026 they will lose free rights to pollute as the European Union advances its decarbonization roadmap, which targets a maximum 55% reduction in emissions by 2030.
At the same time, the analysis stresses that some European carriers labeled as “weaker” may struggle to curb emissions. The sector accounts for a relatively small share of global CO2 emissions, roughly 2.5%, and about 3.8% of European emissions. By comparison, the energy sector accounts for about 40% of global CO2 emissions and industry around 16%, indicating that aviation’s share is modest in the grand scheme.
Industry observers suggest this position may reflect a broader perception where airlines see themselves as privileged, a view reinforced by the fact that around 20% of the world’s population operates about 80% of the flights. Nevertheless, passenger traffic is expected to grow by about 3% annually through 2040, signaling continued pressure on emissions and regulation alike.
The report also notes uncertainty around carbon offset pricing, with shares of the carbon offset market potentially rising as regulatory pressure increases. Given the volatility of carbon prices, a hypothetical 50% rise could make a Barcelona trip about 27 euros more expensive, nearly half of the current increment under existing conditions.
Flying outside the European Economic Area
The assessment concludes that flights beyond the European Economic Area are unlikely to be heavily impacted in the same way, though advances in electric propulsion could play a role in reducing CO2 levels. More importantly, these technologies might help create more efficient networks, improve route planning, and enhance air traffic management. Despite this progress, it may still be feasible for operators to select destinations outside the European Economic Area, which includes Iceland, Liechtenstein, Norway, the United Kingdom, and Switzerland.
In the end, European airlines face widespread vulnerability to accelerated emission reductions. Some carriers, particularly those focused on short-haul routes within the European Economic Area, may be more exposed to regulatory pressure than others, though no specific airline names are singled out in the report. The overarching message is that emissions policies will shape cost structures, route choices, and competitive dynamics across Europe’s aviation sector in the years ahead, while regulators, market forces, and technological innovations will together determine how quickly and how firmly those effects take hold. [Source: S&P Global Ratings].