Net(-work) Impact of Non-CO2 Pricing in EU ETS: Demand and Ticket Price Dynamics in Air Transport Across Geographical Scopes

This study examines the airline network effects of possible non-CO 2 climate effect pricing mechanisms under the European Union Emissions Trading System (EU ETS) on air transport demand and ticket pricing. It is focusing on three regulatory scopes: full coverage of all flights including those in and out of the EEA (European Economic Area), a reduced scope limited to intra-European routes and a departure-allocation scope covering outbound flights only. Ticket price adjustments are analyzed using pre-calculated trajectory optimizations that account for varying weather conditions, particularly regarding the formation of contrails. Contrail-induced cloudiness significantly enhances non-CO 2 climate effects increasing costs to different extents depending on the geographical scope of the regulation. Based on these cost increases, demand changes are assessed through passenger preference models that incorporate intra-market dynamics, capturing the competitive and behavioral responses of passengers across different market segments. This analysis provides valuable insights into the interplay between environmental policy and market behavior. It particularly includes mitigation strategies for non-CO 2 impacts, airline pricing strategies, and passenger behavior, offering guidance for the design of effective and equitable climate mitigation measures in aviation by quantifying the demand and network effect of these measures.