A new analysis from IBA examines what would happen if the EU ETS were expanded to cover all flights departing the European Economic Area, not just intra-EEA routes. Currently, short-haul low-cost carriers like Ryanair and Vueling face the highest ETS exposure because their emissions are almost entirely within Europe. An expansion would shift much of the cost burden to long-haul full-service airlines and cargo operators such as Air France, KLM, Lufthansa Cargo, and Iberia, whose emissions are mostly international. The analysis shows that expanding ETS coverage would increase aviation emissions under the scheme by 109%. Airlines like Ryanair have publicly supported expansion as a matter of competitive fairness, arguing that long-haul carriers currently pay less for their carbon. Full-service groups like Air France-KLM and IAG have instead pushed for strengthening CORSIA, the ICAO offsetting scheme, which would affect them differently. The outcome of this policy debate will shape airline cost structures and carbon market demand for years to come.
