The aviation industry is already under pressure from rising jet fuel prices, tightening emissions rules, and growing expectations to decarbonize. But a less obvious cost driver is now emerging on the radar—one that doesn’t come from the refinery or the runway, but from Europe’s carbon border rules.

As the EU’s Carbon Border Adjustment Mechanism (CBAM) moves into its full implementation phase, airlines may begin to feel indirect cost inflation—not from jet fuel itself, but from the materials and infrastructure that keep their fleets in the air.

What Is CBAM?

CBAM stands for Carbon Border Adjustment Mechanism and is the EU’s regulatory tool designed to prevent “carbon leakage,” the shifting of emissions-intensive production to regions with relaxed environmental rules. For example, aluminum producers in the EU have been subject to a carbon price since 2005 when the EU Emissions Trading System (EU ETS) was created. Carbon leakage would result if an aluminum producer were to leave the EU and set up its operations in a country without carbon pricing mechanisms.

Under CBAM, importers of certain high-carbon goods will be required to pay a levy based on the embedded CO₂ emissions in those goods, aligning their cost base with the carbon price of the EU ETS, which is expected to climb in the coming years.

Initially, CBAM covers a small but strategic group of products: iron, steel, aluminum, cement, fertilizers, electricity, and hydrogen. These sectors were chosen for their high emissions intensity and critical role in industrial value chains. Starting in 2026, importers in the EU will be required to purchase CBAM certificates to account for the embedded carbon emissions in these products. This is designed to level the playing field for EU producers subject to ETS, while encouraging cleaner industrial practices globally, as less carbon-intensive products will face lower CBAM costs.

For most aviation stakeholders, CBAM might seem irrelevant at first glance. Jet fuel itself is not part of the CBAM product list, although the scope of the CBAM is expected to expand to include chemicals and petroleum products by 2030. But a closer look at how airlines operate and what they depend on reveals that CBAM’s influence is likely to trickle into aviation economics through another door: the cost of inputs and infrastructure.

Why Should Airlines Care?

Modern aircraft are made primarily from aluminum and steel alloys, both of which are covered under CBAM. Many of these materials are imported from outside the EU—including from Asia, Russia, and North America—and will soon be subject to carbon pricing at the border. Consequently, aircraft manufacturers operating within the EU may find themselves paying higher costs for raw materials. These costs won’t stay isolated at the factory level, they’ll likely be passed through the supply chain, raising the price tags for aircraft procurement, replacement parts, and maintenance services.

Beyond aircraft themselves, airport infrastructure is another major consumer of CBAM-covered materials. Steel is used in jet bridges, fuel delivery systems, and terminal expansion projects. Aluminum appears in service vehicles, cargo containers, and aircraft fueling equipment. Airlines may not purchase these materials directly, but they will certainly pay for them as part of the total cost of using and maintaining modern aviation infrastructure.

Even Maintenance, Repair and Overhaul (MRO) operations, which already face labor and logistics pressures, may see an uptick in materials pricing due to CBAM—adding yet another layer of inflation to operational budgets.

Aircraft manufacturers, maintenance providers, and infrastructure developers will likely pass on cost increases caused by CBAM to downstream users.

Compounding the Pressure on Jet Fuel Economics

The CBAM-driven increase in infrastructure and capital costs comes at a time when airlines are already juggling numerous other cost pressures. The EU ETS has covered aviation since 2012 and was limited to flights operating solely within the European Economic Area in 2016, meaning aviation operators are already paying for EU carbon allowances (EUAs). At the same time, airlines are under pressure to scale up their use of sustainable aviation fuel (SAF)—a cleaner but significantly more expensive alternative to conventional jet fuel.

Jet fuel itself remains a highly volatile commodity, impacted by shifts in global trade, regional refining dynamics, freight disruptions, and geopolitical instability. Europe’s pivot away from Russian diesel and jet supplies, coupled with a growing reliance on long-haul imports from the Middle East and Asia, has already introduced greater variability in price and availability.

CBAM’s Reach Goes Further Than Expected

Airlines are being squeezed on all sides: from regulatory compliance and sustainability mandates to volatile spot prices and infrastructure cost inflation. CBAM adds another layer to this pressure. While it may not target jet fuel directly, its ripple effects are already working their way into the aviation ecosystem. For airlines and fuel buyers, the path forward includes understanding both the visible and hidden drivers of cost, from the tarmac to the factory floor.

Staying ahead of these shifts means staying informed. Start a free trial of the OPIS Europe Jet, Diesel & Gasoil Report and gain the insights needed to navigate a more complex cost landscape.