EU Aviation Strategy
Recommendations for competitiveness, technological leadership, climate protection and sovereignty
May 21, 2026
Summary
The aviation industry and the air transport sector ensure the mobility of passengers and goods, safeguard both civil and military technological leadership, and thereby substantially contribute to climate protection, security, and the strategic sovereignty of the European Union. As a key strategic industry, aviation drives cross-sector innovation, creates high-quality jobs, and generates sustainable value. It is a central pillar of Europe’s resilience and, through the close interaction between civil and military applications, significantly contributes to overall defence readiness.
At the same time, the aviation sector is facing significant challenges. High operating costs in Europe, combined with an increasingly complex and asymmetrical regulatory framework, place a disproportionate burden on both the air transport sector and the aviation industry. This weakens their international competitiveness and leads to a decline in connectivity, which represents a critical location factor for Europe’s export-oriented economy. In addition, the transition to climate neutrality requires substantial investment from airlines, airports, aircraft and engine manufacturers, as well as their upstream supply chains. Simultaneously, capabilities in military aviation need to be strengthened.
To ensure that European aviation remains globally competitive, meets growing mobility demands, and contributes to Europe’s security, a strong EU commitment to both civil and military aviation and a more competitive regulatory environment are essential. Most importantly:
▪ a competitive-neutral regulatory framework for climate protection in air transport,
▪ effective research and technology funding in civil and military aviation,
▪ framework conditions that support the ramp-up of sustainable aviation fuels and
▪ an efficient aviation security regime and air traffic management that reconciles noise protection with economic interests in accordance with international standards.
To sustainably strengthen the competitive position of European aviation and enhance Europe’s resilience, the EU aviation strategy should be accompanied by a roadmap of targeted measures. These should provide immediate relief for the sector, ensure that climate policies are competition-neutral, and foster innovation and investment across the entire value chain. The roadmap should also include targeted investments in the technologies for the development of next-generation climate-friendly aircraft and the next-generation airborne weapon system. There should be an equal focus on both the air transport sector and the aviation industry - otherwise the EU risks losing its status as a leading global aviation region. The following objectives and measures should therefore be incorporated into the EU aviation strategy.
Enable climate protection in a competition-neutral manner
With its ‘Fit for 55’ package, the EU provides impetus for investments in carbon-neutral aviation but has failed to design a competitive-neutral regulatory framework. As a result, EU climate legislation unilaterally increases the cost of European flight connections via European hubs, creating incentives to shift traffic and emissions to non-EU countries (carbon leakage). A competitiveness check and necessary improvements must be performed swiftly to establish a level international playing field and enable the EU to meet its quota commitments for sustainable aviation fuels. The European Commission should, in consultation with the aviation industry, swiftly develop a strategy for a competition-neutral climate protection framework in aviation and implement measures to establish a level playing field at the latest as part of the upcoming reviews of the EU ETS and the ReFuelEU Aviation. The following instruments should be considered in this process:
▪ Enable competitively neutral compliance with EU quota obligations for sustainable aviation fuels: The current design of ReFuelEU Aviation and its quota obligations for sustainable aviation fuels (SAF) unilaterally increases the cost of flights via European hubs, thereby creating incentives to circumvent costly European climate protection instruments. On long-haul routes, EU airlines must bear the additional costs of SAF for the entire journey, whereas for airlines with hubs outside the EU these costs arise only on part of the route. The result is a distortion of competition at the detriment of European airlines and airports, as well as Europe’s connectivity. The EU must urgently introduce instruments to correct these distortions of competition, at the latest by using the review process laid down in the regulation. The introduction of a European, destination- and passenger-based earmarked SAF levy represents one way of offsetting distortions of competition at the expense of European airlines, reducing carbon leakage and ensuring the ramp-up of sustainable aviation fuels. Alternative instruments for establishing fair international competitive conditions, such as a SAF rebalancing charge, should also be examined. This charge would be applied to non-EU airlines for flight segments not subject to the SAF quota on routes via non-European hubs. The functionality and practicality of the instruments must be ensured.
▪ Expand efforts to establish a global level playing field: The Commitment to internationally harmonised and effective climate protection measures at the level of the International Civil Aviation Organisation (ICAO) must be expanded. The EU should, in particular, advocate for strengthening the ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). As an existing, global system, CORSIA has the potential to contribute to a level playing field beyond Europe.
▪ Rule out an expansion of the ETS and the introduction of a kerosene tax: The intraEuropean scope of the EU ETS Aviation must be maintained to avoid further competitive disadvantages and retaliatory measures by non-EU countries. Extending the EU ETS to flights to third countries would also jeopardise the continued existence and success of CORSIA. National and European kerosene taxes must be ruled out, as these would inherently disadvantage European carriers in international competition.
▪ Conduct open-ended research on non-CO₂ effects and prevent them through effective mitigation strategies: The EU should ensure that non-CO₂ effects in aviation are researched with an open outcome, independently of the ETS, and that the quality of prediction models is examined more closely. Measures should only be proposed once there is sufficient scientific evidence, which is not currently available, to avoid adverse effects caused by unsuitable measures. Effective mitigation strategies and a sound decision-making framework can only be developed on this basis. This approach should be complemented by effective incentives to reduce non-CO₂ effects. The 100-flight trial by the DLR and German airlines, as well as the aviation industry’s research and demonstration projects, provide a suitable basis. The further development and promotion of the Single European Sky should also be pursued, as this can create options for flight route and non-CO2 optimisation. A flat-rate pricing scheme within the ETS would be counterproductive and would create further one-sided cost burdens for European airlines without providing effective incentives to mitigate non-CO2 impacts.
▪ Make more SAF allowances available: The allowances currently allocated under the ETS to offset the additional costs of using sustainable aviation fuels (SAF allowances or FEETS) will not come close to covering these additional costs and are expected to be exhausted by 2028 at the latest. The EU should therefore aim to implement the extension of the programme already provided for in the EU ETS Directive, as well as remove the quantitative cap and the time limit on SAF allowances. Currently, the allocation rules favour some airlines more than others.
Secure technological leadership in civil and military aviation
The European aviation industry is the global market leader in the growing international market for civil aviation. To secure European technological leadership, industrial value creation and strategic sovereignty in both civil and military aviation, the EU must set a course that promotes innovation and supports the sector across the entire value chain. Therefore, the aim of the EU aviation strategy should be to ensure that the development, industrialisation, and a significant proportion of the value creation of future aviation systems remain in Europe permanently. This requires measures to strengthen core industrial competencies, continued support for research and development, and framework conditions that enable the market launch of innovative aircraft, such as ultra-efficient, SAF-based, electric and hybrid-electric and hydrogen-based aircraft. The EU aviation strategy should therefore include the following measures:
▪ Ensure continued support for research and development: The next step in the evolution towards climate-neutral aviation requires a joint effort by industry and legislators. The EU should support the leading position of the European aviation industry and the achievement of technological maturity for the technologies, components and systems required for the next generation of climate-friendly aircraft by 2030 by increasing funding for aviation in the European Framework Programmes for Research and Innovation and by maintaining successful
instruments and partnerships (currently, in particular, Horizon Europe and its successor programme FP10 with its instruments Clean Aviation, SESAR and Collaborative Research). The new European Competitiveness Fund should also support the development and market rampup of aviation technologies. The following technology priorities should be set: sustainable and more efficient propulsion systems and aircraft architectures, critical and sustainable materials, lightweight construction, AI-based automation, robotics and connectivity functions, air traffic management, effective mitigation strategies for non-CO2 effects, and cybersecurity technologies. A key prerequisite for the successful transition of new technologies into industrial application is the targeted strengthening of European capabilities through funding programmes for industrial demonstrators. The EU should therefore establish and fund a European ecosystem for testing and demonstrating the potential of carbon-neutral aviation. Funding programmes should be designed to capitalise on dual-use potential, in order to systematically exploit synergies between civil aviation and defence applications and to strengthen the technological sovereignty of Europe. In doing so, it must be ensured that funding measures in the civil and military sectors operate independently of one another financially and do not undermine each other. Cooperation with partner states must remain possible. Funding and participation rules should therefore consider the existing industrial innovation and value creation structures of the European aviation sector, including close cooperation with partner states and globally integrated supply chains.
▪ Promote spill-over effects between civilian and military applications: Spill-over effects from defence technologies to the civilian sector, and vice versa from civilian technologies to defence, must be strengthened. This requires a framework for military procurement and cooperation with industry that facilitates common standards, faster procedures and the use of civilian technologies. This will enable synergies between civil and military applications to be better exploited. At the same time, procurement and funding should be structured in such a way that industrial capacities can be utilised flexibly and rapidly expanded where necessary.
▪ Build a hydrogen ecosystem for aviation: The next generation of low-emission, hydrogenpowered aircraft will play a central role in decarbonising the sector. A prerequisite for the development and deployment of hydrogen-powered aircraft is the integration of aviation into the European hydrogen ecosystem. Planning and implementation of integration into the crosssectoral ecosystem must begin today as part of a holistic strategy. The development of hydrogen refuelling infrastructure at airports and transport infrastructure must receive state support, as must the production of green hydrogen at competitive prices. The connection of airports to the core hydrogen network and financial support for the aviation industry in establishing a hydrogen ecosystem must be ensured.
▪ Create optimal conditions for innovation and ease the burden on the supply industry: The market launch of innovative aircraft (SAF-based, electric, hybrid-electric, hydrogen-based) and technologies requires policy decisions that promote innovation and support the industry across the entire value chain. In addition to promoting research and development and establishing the necessary infrastructure, it is essential to strengthen the foundations of the industrial backbone of Europe. A sustainable, resilient and affordable supply of energy and raw materials, the removal of bureaucratic hurdles and the reduction of reporting obligations at national and European level, as well as competitive location costs, are indispensable for the success of the aviation industry. This is particularly important for SMEs in the supply chain, as they are especially affected by transformation costs, regulatory complexity, financing gaps and rising location costs. Securing their competitiveness and value creation in Europe is essential for
stabilising the supply chain. Therefore, the EU aviation strategy should provide targeted measures to stabilise, transform and scale up the industrial backbone of the aviation industry.
▪ Strengthen industrial scalability and supply chain resilience: The ability to rapidly expand production capacity for aviation-related technologies must be strengthened. This includes establishing resilient supply chains, promoting modular and decentralised production structures, and improving the framework conditions for investment in industrial manufacturing capacity in Europe. Resilient and diversified supply chains are a key prerequisite for industrial performance and the ability to act in the interests of security policy in the event of a crisis or defence situation. Strategic dependencies on critical intermediate products and raw materials such as special alloys, titanium and composites, key components such as microelectronics and semiconductors, and key digital technologies must therefore be specifically reduced, and European value-added structures strengthened. They require adapted framework conditions that facilitate investment in resilient structures, take appropriate account of the additional costs associated with diversification, and ensure a competitive level playing field.
▪ Strengthen maintenance, repair and overhaul capabilities: Maintenance, repair and overhaul (MRO) capabilities are an essential component of industrial sovereignty, resilience and security of supply. The European aviation strategy should therefore also address the strengthening of European MRO capabilities, the digitalisation of maintenance processes and the promotion of data-driven and predictive maintenance technologies.
▪ Harmonise and accelerate certification and approval procedures: Speed and regulatory predictability are crucial factors in succeeding in the international competition for technological leadership in the future technologies of aviation. In addition to reducing bureaucratic burdens, significantly faster, digitised and more harmonised certification and approval procedures at European level are urgently needed. The EU should therefore strengthen the EASA and the relevant national authorities in terms of both staffing and structure to enable innovation-friendly procedures, regulatory testing grounds and accelerated approval processes.
▪ Enable the introduction of autonomous military air systems: The development and deployment of sovereign, interconnected air combat systems, as well as modular command and communications architectures, should be actively pursued. Interconnected cooperation between manned and unmanned platforms creates the operational basis for scalable, highly automated capabilities, whilst open, interoperable command architectures enable the rapid integration of new technologies – particularly in the fields of AI, sensor technology and data fusion. The targeted development of European capabilities secures Europe’s access to key technologies, reduces strategic dependencies and sustainably strengthens Europe’s military capacities and technological sovereignty. Furthermore, Europe should systematically build up and secure capabilities in autonomous and unmanned aviation systems, AI-based assistance and mission systems, resilient data and communication architectures, and cyber-resilient aviation systems. These technologies are relevant to both civil and military applications.
Support the roll-out of sustainable aviation fuels
Sustainable aviation fuels are currently the only option available for the widespread decarbonisation of aviation. However, the availability of SAF, particularly regarding renewable fuels of non-biological origin (RFNBO), is currently limited, and the costs are significantly higher than those of conventional
kerosene. To increase the availability of SAF and reduce costs, existing production pathways must be scaled up, the production of electricity-based fuels must be industrialised, and the high potential of advanced biofuels derived from innovative processing methods and previously untapped biomass resources must be harnessed. However, the European legal framework has so far failed to provide sufficient impetus for investment in the ramp-up of RFNBO and advanced biofuels derived from innovative processing methods and untapped biomass potential. Similarly, the measures announced in the Sustainable Transport Investment Plan (STIP) are insufficient to achieve a rapid and cost-effective rampup of SAF. The EU must therefore develop a strategy for the cross-sectoral roll-out of renewable fuels. In doing so, greater attention must be paid to raw material potential and production facilities outside the EU which are detrimental to meet the quota targets at competitive prices. The following measures can contribute to a successful and more cost-effective roll-out of SAF and should be considered in the EU aviation strategy:
• Implement a more pragmatic regulatory approach: The EU quota obligations for bio-based SAF and PtL under the ReFuelEU Aviation enhance investment and planning certainty for producers but will not ensure a comprehensive and cost-effective ramp-up on their own. In addition to long-term investment security and the removal of investment barriers, a more pragmatic regulatory approach that allows the use of all permissible feedstock potentials and production processes is urgently needed. This also applies to the specific definition of permissible feedstocks for biofuels, which is currently being developed by the European Commission in guidance on Annex XI of RED III in consultation with the Member States. To develop an international market for RFNBO, trade barriers must be removed, including through more practical definitions for low-carbon and renewable hydrogen, as well as CO2 sources for RFNBO. The review of the criteria scheduled for 2028 should therefore be brought forward. This will also benefit producers within the EU.
• Create an international SAF market: International sustainability and quality criteria, an international certificate trading system (book and claim), and international guidelines for crediting sustainable fuels in the carbon footprints of users and their customers must be established and enforced in order to develop an international market for SAF. The flexibility mechanism established in ReFuelEU Aviation should therefore be further developed into an EU-wide book and claim system for all SAF users.
• Ensure investment security for early adopters through grandfathering provisions: Regular monitoring and the fine-tuning of regulations by national and European policymakers are key priorities for the business community. At the same time, short-term changes to the regulatory and political framework pose a high risk of malinvestment in projects with typical investment horizons of 15–20 years. In a still-developing market for hydrogen technologies and carbon-neutral fuels, investors in pilot plants should be granted grandfathering guarantees covering the required operational period of 15–20 years.
• Secure funding for the first industrial-scale production facilities: PtX dual auctions, modelled on the H2Global approach, must be implemented, expanded, secured with long-term funding and designed in a more pragmatic manner to provide incentives for the construction of the first production facilities. To this end, revenue from aviation and maritime transport within the European Emissions Trading Scheme (EU ETS 1) should be utilised
• Ensure the long-term, consistent and harmonised continuation of RED III: The targets of RED III currently apply until 2030. New facilities for the production of carbon-neutral fuels
require a robust regulatory framework that extends well beyond 2030. The review of RED III in 2027 should therefore be used to ensure its long-term, consistent and harmonised continuation. In doing so, consistency must be ensured with the European Union Emissions Trading System (EU ETS) as well as the ReFuelEU Aviation and FuelEU Maritime regulations, which already define a pathway for carbon-neutral fuels in aviation and maritime transport by 2050.
The current geopolitical situation highlights the importance of refineries for Europe’s security of supply. Refineries are a central component of industrial value chains, ensuring Europe’s supply –which will be decarbonised in the future – of fuels and petrochemical products for industrial use. In doing so, they make an indispensable contribution to the mobility and supply of the population, the economy and the armed forces, as well as to the functioning of critical infrastructure. Securing domestic energy and fuel production is therefore not only a matter of industrial policy, but also a security imperative. A successful transition of refinery sites towards climate neutrality is only possible under fair international competitive conditions.
Design the aviation security and air traffic management regimes more efficiently and reconcile noise protection with economic interests
High-performing aviation hubs are crucial to Europe’s competitiveness and sovereignty. Any cuts to airport operations should therefore only be made following a comprehensive assessment of the social, economic and environmental impacts of all available measures to address noise and environmental protection issues. The European security architecture for air traffic and the secure supply chain must be designed to be effective and practical, and implemented in a harmonised manner across Europe and internationally, to achieve cross-border security gains and safeguard the industry’s competitiveness. The EU and its Member States are also called upon to finally realise the opportunities for increasing the overall efficiency of the Air Traffic Management (ATM) system. The following measures should therefore be considered in the EU aviation strategy:
▪ Implement the Single European Sky: The full implementation of the Single European Sky (SES) is urgently needed to meet Europe’s growing mobility needs and to enable more efficient flight routes, thereby reducing kerosene consumption and improving punctuality. A European airspace management is also a prerequisite for the efficient mitigation of non-CO2 effects through optimised flight routes.
▪ Strengthen the Balanced Approach: The International Civil Aviation Organisation (ICAO) has established the Balanced Approach as a global framework for the management of aircraft noise at airports, which the EU implements through Regulation (EU) 598/2014. The Balanced Approach lays the foundation for a uniform and evidence-based management of aircraft noise at international and European level. In practice, however, an imbalance to the detriment of economic interests can be observed. From the BDI’s perspective, there is no need to amend the substantive content of the Regulation. The Balanced Approach is appropriate and balanced. The EU should focus on a consistent and strictly sequential application of all four pillars across Europe, forward-looking land-use planning that takes greater account of the operational requirements of air traffic, and consistent monitoring of compliance with the requirements by the European Commission in the interests of the single market and the safeguarding of European connectivity. In doing so, the EU should ensure that all operating restrictions introduced under the Balanced Approach are subject to continuous monitoring and regular review.
▪ Make aviation security regimes more efficient and harmonise them internationally: The aviation security regime must be made more resource-efficient, with a focus on genuine security risks in air transport and the secure supply chain and harmonised at European and international level to safeguard European competitiveness in passenger and freight transport. The aim must be to maintain high security standards whilst reducing complexity and burdens. Particular potential exists in the areas of cybersecurity and aviation security training.
Recognise the importance of air transport for tourism and trade fairs
A competitive aviation hub is not only a key prerequisite for integrating European industry into industrial value chains, but also a crucial factor for tourism, culture and the trade fair industry. These sectors make a vital contribution to prosperity and employment in Europe. The EU aviation strategy should therefore also take tourism into account and, by implementing the measures outlined for flights to and from Europe, contribute to the continent’s international connectivity and value creation.
Imprint
Federation of German Industries / Bundesverband der Deutschen Industrie e.V. (BDI)
Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
German Lobbyregister Number: R000534
EU Transparency Register: 1771817758-48
Editorial Marco Kutscher
Expert Energy, Transport and Environment
T: +49 30 2028-1751 m.kutscher@bdi.eu
Kerstin Petretto
Senior Expert Innovation, Security and Technology
T: +49 30 2028-1710 k.petretto@bdi.eu
Olivier Hummel
Senior Representative Energy, Transport and Environment
T: +49 30 2028-1011 o.hummel@bdi.eu
BDI Document number: D 2304