The International Air Transport Association (IATA) is calling for the review of the European Union's Emissions Trading System (EU ETS) to enhance European air connectivity and economic resilience by improving the competitiveness of Europe's air transport industry.
The global trade association for the world's airlines is calling for the review to ensure full implementation of CORSIA for all international flights, including flights within the European Economic Area (EEA) routes. IATA said to prevent market fragmentations, the EU should avoid regional derogations, additional eligibility hurdles, and overlapping measures that conflict with this global framework.
The review will also enable a Sustainable Aviation Fuel (SAF) book-and-claim system for the claiming of environmental attributes under the EU ETS. Allowing purchase-based SAF claiming will enhance investment certainty and affordability which are needed to maintain a level playing field for all operators.
IATA is urging a review of the EU ETS to ensure a greater share of aviation contributions is directed back into the industry's transition — with priority given to scaling SAF production and supporting the development of emerging zero-emission technologies.
The association is also calling for "balanced climate policy for resilience," pursuing ambitious targets while protecting the sector's global competitiveness. All measures, it noted, must be "science-based and aligned with international standards to avoid unnecessary burdens and costs."
IATA's call follows growing skepticism among EU leaders regarding the effectiveness of the EU ETS and its negative impact on European competitiveness.
This position aligns with the Draghi Report, which identifies high costs, regulatory complexity, and underinvestment as critical barriers to the bloc's economic resilience. In an era of geopolitical volatility and supply chain disruptions, robust air connectivity remains a vital asset for Europe’s global standing.
"European aviation policy must bolster competitiveness as it advances decarbonization," said Willie Walsh, IATA's Director General. "Reviewing the EU ETS offers a critical opportunity to refocus efforts on cost-effective emission reductions."
Walsh added that the priority must be the full implementation of CORSIA, the reinvestment of EU ETS revenues into SAF and other credible decarbonization solutions, and the elimination of overlapping measures that add cost and complexity without environmental gain.
"By doing so, we will protect European air connectivity — a vital strategic asset foundational to EU integration, trade, and commerce. Amid global economic strain and geopolitical volatility, the EU ETS review must deliver a harmonized climate policy framework that balances the sector’s competitiveness with its climate ambitions," the IATA chief said.
Call for full implementation of CORSIA
IATA pointed out that aviation is a global industry operating within an increasingly volatile geopolitical landscape. To manage emissions effectively, governments, including EU Member States, committed to a single, global market-based measure through the International Civil Aviation Organization (ICAO): the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
To uphold these international commitments and prevent damaging regulatory fragmentation, IATA said the EU must implement CORSIA in its entirety for all international flights, including intra-EEA routes.
"Layering regional measures over a global framework creates redundant costs and administrative complexity without delivering additional environmental gain," Walsh said. "Furthermore, by failing to fully implement CORSIA, the EU risks undermining the scheme’s global decarbonization potential and weakening the multilaterally agreed rules that govern international compliance."
IATA added that a full, harmonized implementation that is free from unique EU-specific eligibility criteria for Eligible Emissions Units (EEUs) is essential.
"This approach will provide a predictable, stable framework for all airlines operating in Europe while ensuring that environmental benefits remain verifiable and globally consistent."
Enable a SAF book-and-claim system
To accelerate the transition to sustainable aviation, IATA said the EU must also introduce purchase-based claiming for (SAF under the EU ETS. A robust "book-and-claim" mechanism is an essential infrastructure for a liquid, transparent, and well-governed SAF market within the European Union.
Book‑and‑claim allows airlines to purchase SAF environmental attributes separately from the physical fuel, enabling them to claim SAF use based on purchase records even when they cannot uplift the fuel locally—an important flexibility for EU ETS compliance, voluntary uptake, and accurate reporting. To support this, the EU must amend SAF‑claiming rules in the ETS Directive and extend the Union Database to track both physical SAF and its environmental attributes, preventing double‑counting and improving transparency. IATA said this approach promotes regional cohesion by ensuring a level playing field for all European stakeholders, regardless of their distance from major fuel hubs.
Reinvest revenue into decarbonization
IATA noted that as the aviation sector's financial burden under the EU ETS intensifies following the 2024 phase-out of free allowances, it is critical that these revenues are channeled back into the industry's transition.
"Current incentives remain disproportionately small compared to the sector's total contribution," the airline organization said, adding that the SAF Allowance scheme, for example —designed to bridge the SAF price premium—covers only a fraction of the demand, estimated to meet just 4-5% of the industry's total allowance needs between 2026 and 2030.
The Sustainable Transport Investment Plan (STIP) estimates investment requirements between €57 and €67 billion to meet SAF requirements in the EU by 2035, and between €268 and €376 billion to meet the requirements by 2050.
IATA said a considerable amount of these can be met through rechanneling the aviation sector's contribution to EU ETS.
"The aviation sector is expected to surrender nearly 330 million allowances between 2026 and 2030, generating billions of revenues to Member States. To date, reinvestment through the EU’s Innovation Fund has been limited," it said.
Future funding should focus on emerging SAF technologies, helping airlines bridge high early‑stage costs, and strengthening industrial resilience—including restoring free allowances to protect competitiveness and keep capital flowing into green investments.
IATA said the EU should reinstate free ETS allowances for aviation, as rising compliance costs—especially in a fragile geopolitical and economic climate—risk weakening connectivity, limiting consumer choice, and diverting resources away from decarbonization.
"A sudden spike in compliance costs, coupled with global geopolitical instability, threatens to weaken European connectivity and limit consumer choice," IATA said, while noting that aviation plays a critical role in the EU's economy, and the EU ETS can play an important role in aviation's decarbonization.
"To ensure both, EU aviation policy must align with global frameworks, support investment in measurable emissions reductions, and avoid unnecessary duplication and disproportionate costs for all airlines operating in the EU and for their passengers," it said.