By Thomas Reynaert, IATA Senior Vice President, External Affairs
Europe’s prosperity depends on its connectivity, both within its borders and to the world, and aviation makes that possible. At IATA’s Wings of Change Europe this week there was broad agreement on the strategic importance of the sector. The challenge is to move from recognition to policies, across varied government departments, that nurture and strengthen air connectivity.
New analysis from Oxford Economics, commissioned by IATA and the Air Transport Action Group, shows what is at stake for Europe in socioeconomic terms. In 2025, air transport supported 18 million jobs across Europe and generated €1.36 trillion in economic activity, or 4.9% of European GDP. Aviation’s direct contribution alone reached €306 billion, approaching the size of Czechia’s economy.
Its impact extends far beyond airlines and airports. Every person directly employed in Europe’s aviation sector supports another five jobs elsewhere in Europe. For every euro of value created directly by the sector, a further €3.40 is generated across the wider European economy. It is therefore vital for all branches of government, whether they are interested in promoting growth, collecting tax, or creating a sustainable economy, that they understand the catalytic importance of air transport.
In my conversations with airline executives, I hear a consistent concern: the cost and complexity of operating in Europe is increasing fast, and in the exact opposite direction the Draghi report tried to point Europe towards. Airlines operate on low margins, with European airlines expected to record 3.1% net profit margin in 2026. Europe cannot assume that routes, aircraft, and investment will grow—or even remain—regardless of the conditions it creates. Indeed, of the 554 city-pairs within the EU that were serviced by regional aircraft in 2016, 28% are no longer served by any airline. When a route becomes unviable, a region loses direct access to visitors, investment, and export markets.
Taxation illustrates the problem. Across Europe, aviation is too often viewed as a convenient source of revenue rather than a strategic enabler of economic competitiveness. Yet policymakers are increasingly recognizing the cost of that approach. Sweden and Germany have both moved to reduce or remove aviation taxes after concluding that stronger connectivity is essential for attracting investment, supporting tourism, and sustaining economic growth. That shows that taxing connectivity ultimately undermines the competitiveness that Europe is trying to strengthen.
Climate policy presents an even more consequential test. We have just celebrated a decade since countries agreed to establish CORSIA as the only global market-based measure for aviation. From next year, CORSIA is expected to cover around 85% of international aviation emissions and could mobilize more than €100 billion in climate finance over its lifetime.
With CORSIA in place, why is the European Union considering extending its Emissions Trading System (ETS) 5,000km outside its borders on flights already in the CORSIA scheme? Between 2027 and 2040 that would be a €280 billion hit on European competitiveness. We know that will hurt businesses, and there has been no study produced to show how it will improve sustainability performance.
The question is not whether aviation should pay for its emissions—it already does, and those costs will rise. But does Europe’s ETS proposal support Sustainable Aviation Fuel (SAF) production, reduce the cost gap with conventional jet fuel, and improve energy security? The answer is no. It will just increase costs and undermine CORSIA. In other words, it would be a terrible mistake for Europe and for the world.
That is because CORSIA provides something no regional system can match: a common framework for a global industry while preserving a level playing field. The presence of the President of the ICAO Council at Wings of Change Europe in Brussels underlined the importance of international cooperation instead of regional, fragmented solutions.
Lastly, Europe must confront its capacity constraints. Fragmented airspace and outdated infrastructure create delays, unnecessary fuel burn, and emissions. The solutions are well known. Completing the Single European Sky and modernizing air traffic management would improve resilience, efficiency, and passenger experience. Airports face hurdles to build new runways and terminals. But there are significant opportunities for airports to create capacity through optimizing the infrastructure they already have. Best practices should be urgently followed. And declaring and delivering greater capacity to generate more airport slots would create opportunities for air transport to support Europe’s competitiveness with the infrastructure that exists today.
Similarly, digital processes offer huge potential for increasing terminal throughput while improving the travel experience. But for that to happen, regulations must enable the use of biometric options for those passengers that wish to use them.
By 2045, aviation’s impact could grow even stronger—to 23 million European jobs and €2.1 trillion in economic activity. Achieving that potential requires policymakers to act now. That’s not just those in transport, but across all functions of government. And, importantly, it needs to be with a common vision of sustainable growth that supports competitiveness. Together, all levels and disciplines share a common task to create the conditions for aviation to compete, decarbonize, and continue connecting Europe. Those are the Wings of Change that will enable air transport to carry Europe to a more prosperous future.
