European aviation has recovered from Covid with a positive prognosis. But now it is facing serious new challenges – and some old ones as well
If it were human, there’s an excellent chance European aviation would wind up in therapy.
It is often berated and rarely praised, even though more than 2.5 billion passenger journeys are expected across the skies of greater Europe this year, which is over 25% of the global total.
Having finally regained its confidence after a pandemic pounding, and clawing back to comparatively good health, the sector has had good reason of late for real optimism.
But it is entering new and intensifying turbulence on competitive, regulatory, infrastructural and geopolitical fronts, each an unwelcome reminder that no matter how much progress it makes, Europe’s air transport industry is still very vulnerable, and never far from its next big challenge.
Still, the resurgence has been comprehensive, and good news deserves to be celebrated.
Encouraging updates
“Europe’s air traffic has recovered and skies are busy again. The region’s aviation market has finally returned to pre-pandemic levels,” says Augusto Viansson Ponte, director of the newly opened London office of the global Alton Aviation Consultancy.
Recovery, while uneven, has generally been robust for most airlines and airports in the 27 member nations of the EU, and in surrounding, non-aligned Euro-states, albeit with exceptions such as Icelandic budget carrier PLAY and Air Belgium, both of which have ceased flying.
“Leisure travel has largely led the comeback,” says Ponte. “Low-cost carriers remain Europe’s growth engine. People are still eager to travel despite higher inflation and modest regional economic growth, and pent-up demand has continued to push leisure and VFR [visiting friends and relatives] traffic above 2019 levels.
“Business travel is a somewhat different story. It has returned to around 80-85% of pre-pandemic levels. But a rise in ‘blended’ trips, combining business and leisure, has softened the impact.”
“Prospects are good,” adds Neil Garwood, CEO of UK-based Airport Coordination Limited, a global manager of airport slots. “Europe is a huge market on a steady growth trajectory, passenger numbers and flights are now exceeding pre-pandemic levels, and there’s a 2-3% annual growth projection and continued expansion of low-cost carriers providing broad access to aviation.”
And it’s not just post-Brexit Europe to which he refers. “The UK remains a vital part of European aviation, with an open market and strong sustaining passenger flows, especially transatlantic despite the politics. There are ongoing investments in infrastructure and finally some impetus behind London airport capacity.”
Growth has been particularly strong on international routes, says Marcel Langeslag, European aviation lead for global consultancy Turner and Townsend, with 2.5 billion passengers passing through Europe’s airports in 2024, 1.8% more than in 2019. Infrastructure has expanded in response and anticipation.
“Many airports have upgraded facilities, improving the passenger experience and boosting connectivity. And despite the challenges, collaboration between industry players – airports, airlines, regulators – is improving in some areas, which is encouraging,” says Langeslag.
The key words here are “in some areas” for change is also uneven, he continues, with disparate and increasing variables often impeding Europe’s aviation revival and hoped-for prosperity.
“Disjointed policies across countries, unclear sustainability rules, high costs, staffing shortages, and ageing infrastructure – it’s hard to move fast when everyone’s pulling in slightly different directions. Airspace reform and better cross-border coordination are going to be key if Europe wants to stay ahead.”
High competition
Commercially, European aviation is also changing rapidly, in line with consumer preferences since the pandemic, challenging not just legacy airlines but also the extended aviation ecosystem including airports and service providers.
Long-established big-name airlines are increasingly being sandwiched between surging low-cost carriers, more competitive intra-Europe rail services, and expanding foreign competitors, driving increased airline consolidation, particularly among what were once state-owned EU national carriers.
As well, airlines are facing significant new costs as the EU ramps up sustainability regulations, including mandated and escalating use of expensive blended sustainable aviation fuel, and even more expensive penalties for non-compliance.
Lufthansa Group, Europe’s largest airline company, provides a textbook example of an enterprise constantly evolving to keep up with the changes encircling it.
Because it owns the former national airlines of Germany, Switzerland, Austria, Belgium, and Italy – along with low-cost siblings – it’s easy to assume that this aviation giant, a key member of the Star Alliance, is generating huge profits from its extensive European operations.
Yet, at the company’s recent Capital Markets Day, held in Munich, Group CEO Carsten Spohr highlighted Europe as its worst-performing region, due to aviation taxes, continued staff shortages in ground operations and air traffic control, and ever more stringent regulations on aircraft emissions.
To help fight off low-cost competitors, Lufthansa Group is ramping up its own, as are other legacy giants across the industry.
In addition, Spohr and one of his major competitors, Air France-KLM Group (AF-KL) CEO Benjamin Smith, have come together in a rare display of collaboration to warn of a threat to European carriers from expansive full-service competitors based in the Arabian Gulf and Turkey, reigniting a fierce fight that raged a decade ago against Emirates, Etihad and Qatar Airways, but now adding the bigger and closer Turkish Airlines.
“Think about this,” said Smith in a recent social media post. “In just two decades, Gulf and Bosphorus carriers have achieved extraordinary growth, fuelled by regulatory advantages, fiscal support, and privileged market access.
“While Qatar Airways has expanded by 1005%, and Turkish Airlines by 756%, Air France and Lufthansa have grown by just 14% and 16%, respectively. The result: fewer nonstop flights from Europe, fewer jobs for EU citizens, reduced sovereignty and higher-emission flights.”
Among the solutions Spohr and Smith propose is a rethink of the EU’s aviation climate policies, which carry significantly greater obligations and costs for the region’s carriers than they do for foreign players.
They also want more and easier consolidation in the European airline sector. While Lufthansa has recently completed the acquisition of Italy’s ITA Airways, Air France–KLM – which already owns 19.9% of Scandinavia’s SAS – plans to increase its stake to 60.5% by midnext year. Meanwhile, the Portuguese government is looking for buyers for its 44.9% share in the national carrier, TAP Air Portugal.
Sustainability challenges
The concerns of Lufthansa and Air France-KLM are mirrored by A4E (Airlines for Europe), a lobbyist representing 17 airline groups which carry an estimated 80% of European air travellers. In 2024, that totalled 771 million passenger journeys.
Recently, the CEOs of A4E carriers collectively warned of imminent threats to Europe’s air connectivity from EU actions on decarbonisation and inactions on critical structural reform such as the long-promised and long-delayed Single European Sky programme to coordinate management of Europe’s airways.
“More than a year into the new EU term,” complains A4E, “airlines have seen little action to reinforce competitiveness, support aviation’s transition to net zero, and keep European airspace resilient.
“The challenges ahead are immense, and our competitors are not subject to the same rules or costs. The EU and national governments must sober up to today’s geopolitical reality and its implications for the resilience of European aviation. We can no longer continue with inertia about the airline sector and a fragmented market, coupled with the stranglehold of inhibiting regulations.”
The European Regions Airline Association (ERAA), which represents airlines serving smaller European markets, additionally argues that EU policies to decarbonise air transport unfairly penalise operations to smaller communities which rely more than most on aviation.
“A one-size-fits-all approach to sustainability comes at a heavy price, paid by regional carriers and the people who rely on them,” it says.
“Regional airline leaders are already feeling the impact. Invoices landing on their desks include unexplained ‘SAF mandate fees’, causing monthly bills to rise sharply with no clarity on the extra charges. Unlike larger carriers, regional airlines can’t absorb these charges without putting vital connections at risk,” the ERAA adds.
Disruption
But universally more frustrating than confusing new decarbonisation charges is the lack of collaboration between EU nations on management of airspace, which routinely disrupts flight flows through European skies and creates huge cumulative delays and costs across the sector, further complicated by neighbouring airspace closures.
The problem is worsened by technical failures, shortages of air traffic controllers or industrial action in specific markets – particularly France, which accounts for the bulk of ATC strikes, impacting flights to and over its territory.
A4E publishes weekly data on industry flight delays, due largely to airspace congestion, while Ryanair, Europe’s biggest single airline, has posted on its website the email addresses of all EU transport ministers, and encouraged disrupted travellers to complain to them directly.
It’s not just airlines that are angry.
“The problem is getting worse, costing billions to the continent’s economies,” says Warwick Brady, CEO of Swissport, the world’s largest single provider of aviation services, which handles some four million flights per year.
“Our saturated skies mean even short delays multiply quickly in magnitude and cost. We saw ATC-related flight delays in Europe jump from 11.6% in the first half of this year to 18.9% in July. This is seven times higher on average versus the US, Swissport’s second-biggest market,” he continues.
“The Single European Sky (SES) initiative, first proposed in 1999, would unify fragmented national air traffic management systems and pool their resources under one coordinated body.
“The European Parliament says SES could triple airspace capacity and halve delays. IATA [the International Air Transport Association] estimates it could cut emissions by 10% overnight, reducing aviation’s annual carbon footprint by 18 million tonnes.
“But over 25 years later, it has still not been implemented. Demand for European airspace, meanwhile, continues to grow, with Eurocontrol expecting flight numbers to increase by 2% a year,” Brady says.
In its most recent report, Eurocontrol’s Performance Review Commission warns that European airspace chaos is “a cause for concern and likely to get worse unless structural issues are addressed”.
The report also warns that without coordination and investment by EU member states, “European ATM will be unable to accommodate the projected 50% increase in flights by 2050, while also improving cost and operational efficiency.”
But it’s not enough just to consolidate the administration of EU skies, observes Garwood. “Airspace management lacks necessary resilience as global weather patterns change, and asset bases tighten. We need to implement a Single European Sky with purpose, and policy cohesion to further harmonise regulations and embed digitisation efficiencies.”
Standardisation also needs to apply to airport access rules, he says, highlighting that more than 20 slot coordination companies currently manage airline arrivals and departures across EU gateways with 20 interpretations of the best way to do so.
Growth and expansion
While ways to reduce air traffic congestion and harmonise sustainability policies remain up in the air, there is, nonetheless, significant progress on the ground, says Langerslag, with resurgence of air traffic driving investment in airports.
“Europe doesn’t have many greenfield opportunities, so most growth will come from upgrading existing airports. That means squeezing more out of current space while modernising facilities. Most major infrastructure programmes include both upgrading existing assets and expansions,” he continues.
“Making better use of data and the power of machine learning solutions holds great potential to enhance capacity and experience, without the need for additional space.
“It’s a mixed picture,” says Langerslag. “Western and Southern Europe are putting serious money into expanding airport capacity – think big programmes in France, the Netherlands, Spain and Italy – and Poland’s new mega-hub is a standout in the East.”
His own company is also working with Dublin Airport as it progresses a €3 billion (US$3.4 billion) Capital Investment Programme to transition to a global hub with increased capacity and sustainable infrastructure.
“Europe’s aviation sector has done well to recover,” says Ponte, “but it still trails North America and the Middle East in profitability and efficiency.
“The EU needs to take a stronger lead, treating aviation as a strategic growth driver, not just a climate challenge to tax.
“A unified framework that promotes sustainability, tourism and overall connectivity would give Europe a clearer global voice. Simplifying and aligning regulations across member states would cut unnecessary costs and boost competitiveness.”
A4E emphasises urgency. “The clock is ticking, and time is running out. Without urgent EU action and reform this year, Europe’s competitive edge will erode, leaving passengers paying the price.”
And that’s a stress that European aviation just doesn’t need.
