No more cheap flights is the new reality for air travel

Tuesday, April 18, 2023

According to a travel search engine, summer flights between the UK and the continent are currently one-third more expensive than last year.

But two new reports make it clear that this isn’t just temporary turbulence.

It’s the new reality for flying as airlines face a huge decarbonisation challenge and tightening climate-compliance laws.

The first headwind stems from two big changes in the European Union’s Emissions Trading System (EU ETS).

Airlines must have enough emissions allowances to cover every metric ton of carbon dioxide released into the atmosphere on flights starting and ending in the European Economic Area, the UK and Switzerland.

Right now, they get about half of those allowances for free. But that deal comes to an end in 2026, as the share of allowances they have to pay for starts to rise from 2024.

That is effectively going to double their carbon costs over just three years.

The unit price of carbon emissions has also soared recently, topping €100 ($111) for the first time in late February, and it doesn’t seem to be on its way back down.

A report by a European transport analyst at Bernstein, puts the resulting cost from these changes for European airlines at about €5 billion in 2027.

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