In a post-pandemic context with flaring geopolitical tensions, growing regulatory challenges, as well as intensified efforts to deliver on aviation’s Fly Net Zero 2050 commitment, we interviewed Mathias Jakobi, who oversees Central Europe (Austria, Germany, Lichtenstein, Luxembourg, and Switzerland), and serves all our member airlines* in these markets to share firsthand insights on the short and medium-term prospects for the cluster.
Location cost for airlines have increased dramatically, particularly in Austria and Germany. In Vienna, for example, the increase between 2019 and 2024 nearly reached 80%! The German aviation tax rose 25% in May 2024 and January 1, 2025, aviation security fees increased up to 50%. The excessively high fees represent the main reason why air traffic recovery massively lags other European countries. This development is extremely worrying. Connectivity is essential for economic growth. According to earlier research conducted by IATA and Oxford Economics among EU countries, a 10% increase in the level of connectivity, relative to the GDP size, can increase long-run GDP by 1.1%.
In 2013, Germany ranked first among all European countries in terms of air connectivity – that is, passenger capacity weighted by the economic importance of all served destinations. Since then, both the United Kingdom and Spain have overtaken Germany.
Austria has also slipped in recent years. In 2014 it was ranked 27th, compared to 33rd in 2024.
Switzerland – comparable in size to Austria – ranked 22nd in 2014 and 2024.
It is important to stop and reverse these negative trends. The importance of air transport for societies and economies is vital. In Germany, around 400,000 people work directly in the aviation sector, 50,000 in Austria, 66,000 in Switzerland, and 8,5000 in Luxembourg. These are impressive figures! Air transport connects the world, building important bridges to other countries and cultures. It is also critical for trade, as the rapid transport of important production goods is an indispensable location factor.
Since 1st January 2025 there has been a blending mandate of 2% SAF in Europe. The positive message is that the airlines will fulfill this mandate, despite the challenges of SAF inaccessibility in many airports, and high prices.
Germany has always showed a penchant for eSAF. A few months back, the world’s largest Power to Liquid (PtL) plant from Ineratec opened in Frankfurt. While this is promising, its yearly kerosene production does not suffice to operate a single flight from Frankfurt to Palma de Mallorca. Regarding eSAF, availability is scarce. Regulators must not ignore this fact. In Germany, a law in place requires a PtL sub-quota from January 1, 2026. Absurdly, airlines are thus legally obliged to buy a product which practically does not exist. A few weeks ago, the Federal Ministry of the Environment informed the aviation industry that the law would not be enforced – far too late.
Switzerland is also quite active in non-fossil SAF R&D – Metafuels/Evos and Synhelion, just to name two promising projects. The country has introduced the same SAF mandates as in the European Union, effective 1st January 2026.
The Austrian fuel producer OMV produces biogenic SAF in Vienna, and are currently building a large plant in Romania, where 250,000 tons of fuel will be produced annually from 2028, the delocalization being mainly cost-driven, with overall costs in Central Europe too high.
Despite excellent research and pioneering projects, industrial scale production will not see daylight in Central Europe. A “Book and Claim” of “SAF Accounting” system would facilitate SAF purchase anywhere worldwide for our airlines. It should be politically supported and quickly introduced.
Germany and Austria have new governments in place since spring, both of which have a much better understanding of air transport and its benefits. However, half of parliament members are new, requiring us to expose and explain this value. IATA is known for fact-based discussions and industry expertise, offering extensive data and economic reports for leading politicians and key stakeholders. This includes policy recommendations developed for Germany and Austria, where our Association plays an active role as member of the governmental SAF working groups in support of the sustainable transition.
The location cost increase is extremely harmful, lowering airline competitiveness. Comparing 2024 with 2019 (pre-pandemic), domestic flight connections have plummeted an astonishing 50%. Outside major hubs such as Frankfurt and Munich, the situation is even more dire, reaching declines of up to 75%! Many airlines are withdrawing their aircraft from Germany to operate from more economically favorable locations instead. This is detrimental to connectivity and mobility in the country and is already leading to job losses. Aviation bears a very high tax burden that other transport modes do not have. In 2024 alone, the aviation tax amounted to more than €2 billion Euro.
Aviation needs fewer, not more, government-induced burdens to avoid further widening the gap with the competition. Specifically, this means:
*Austrian, Cargolux, Chair Airlines, Condor, Discover Airlines, Edelweiss Air, European Air Transport, Eurowings, German Airways, Hahnair, Lufthansa, Lufthansa Cargo, Lufthansa CityLine, Luxair, SWISS, TUIfly.
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