Contrary to what airlines claim, extending the European Union’s Emissions Trading System (ETS) to long-haul flights leaving the European Economic Area (EEA) would have only a minor impact on ticket prices and demand, an upcoming study finds.

Extending the EU Emissions Trading System (ETS) to all flights departing the European Economic Area (EEA) would have a very small impact on ticket prices and passenger demand, according to a new study commissioned by Carbon Market Watch and carried out by independent research consultancy CE Delft.

This is partly because airlines would absorb up to 85% of the additional ETS costs and because the carbon price is only a small component in the overall ticket price, with the rising price and supply volatility of fossil fuels having a far greater impact on prices, which only serves to generate windfall profits for fossil fuel companies.

Extending carbon pricing to all flights departing from the EEA would raise an extra €9 billion annually by 2030, according to another study CMW released last year. Additionally, if coverage is extended to arriving flights, revenues could double, reaching up to €19 billion per year.

“For years, airlines have argued that carbon pricing on long-haul flights would make these flights significantly more expensive. This study shows those claims do not hold up,” said Jenny Helle, aviation policy expert at Carbon Market Watch and author of the accompanying policy briefing. “Extending the ETS to all flights leaving the EEA would cost passengers very little while generating billions of euros annually to support Europe’s energy transition.”

The one percent

The study finds that ETS costs would have a negligible effect on ticket prices and demand compared to existing price volatility in aviation markets. For example, the price of an economy class return flight from Frankfurt to Singapore would increase by just 0.9%, with an estimated demand reduction of only around 0.95%. The geopolitical premium on fossil fuel prices embedded in the ticket is 5.6 times higher than ETS costs would be.

The study also finds that the wealthiest passengers with the largest climate footprint are the least likely to change their behaviour in response to price fluctuations, even though they are mostly exempt from the ETS. Long-haul flights are fully exempt, while 67% of private jet flights escaped carbon pricing altogether.

According to the study, long-haul commercial passengers are about 41% less affected by prices than short-haul passengers. Private jet passengers are roughly nine times less price sensitive than commercial long-haul passengers and about 15 times less sensitive than short-haul passengers.

This makes private jet flights the perfect candidates for higher carbon pricing with a price multiplier of four (x4), which could raise around €800 million annually by 2030, or €1.2 billion if arriving private jet flights are also covered, according to the study we released last year. This multiplier is based on private jets’ higher fuel consumption per hour and per seat.

Unfair exemptions

Today, a large share of emissions from non-European airlines remains outside the ETS, as all flights to and from the EEA are fully exempt. In 2024 alone, the EU missed out on over €360 million in potential revenue from just two of the biggest US airlines: United Airlines and Delta Air Lines. This undermines the ‘polluter pays’ principle and results in the EU missing out on billions of euros annually in proceeds that could go to the green transition.

While airlines warn about the impact of carbon pricing, the sector continues to benefit from significant tax exemptions. Aviation is estimated to avoid around €21.3 billion in annual taxation through exemptions on kerosene and no VAT. The case for ETS expansion is further strengthened by the fact that the ETS currently covers only around 15% of aviation’s total climate impact, while huge portions of ETS revenues are spent on supporting the sector.

“We call EU policymakers to extend the ETS to all departing flights and include all private jets by lowering ETS thresholds,” said Jenny Helle, aviation policy expert at Carbon Market Watch and author of the accompanying policy briefing. “Additionally, we call for a price multiplier of at least four to private jets to reflect their disproportionate climate damage.”

Read the full study here.

Read our policy brief here.