As aviation advances towards more sustainable and efficient transport solutions, the emergence of next-generation aircraft stands out as a transformative force for short-haul aviation. These technologies have the potential to unlock between 20 and 25 billion US dollars in value globally, representing nearly 35 percent of the current short-haul market. By reducing operating costs and enabling new route opportunities, next-generation aircraft could reshape regional mobility, strengthen connectivity, and support broader climate and economic objectives.
A new era of connectivity: How aviation innovation can unlock regional value
Innovation in transport has always played a key role in connecting people and supporting economic development. From ancient road systems to modern low-cost airlines, each advancement has made travel more accessible and efficient. Today, aviation is an essential part of global mobility, supporting jobs, trade, and tourism. According to IATA, the sector sustains around 87 million jobs and contributes nearly EUR 3.8 trillion to the global economy.
At the same time, the sector is facing increasing scrutiny over its environmental impact. In Europe, some governments are turning to regulatory measures to reduce emissions from short-distance flights. France has already implemented a ban on short-haul flights where a rail alternative exists with a travel time of less than 2.5 hours—roughly equivalent to 600 km by high-speed train. According to Euronews, this policy is part of the country’s broader strategy to meet long-term climate goals. Other governments, including Spain, are also considering similar restrictions as they seek to align national transport policies with 2050 climate targets.
However, the introduction of cleaner technologies in aviation could offer a different path. Rather than replacing air travel with other modes, next-generation aircraft powered by electric, hybrid-electric, and hydrogen propulsion systems may enable short-haul routes to continue operating with a much lower environmental footprint. This shift would allow for both climate goals and regional connectivity to be maintained.
EUROCONTROL’s 2050 outlook highlights the role of these new aircraft, which are expected to enter the market from 2035 onwards. Their use is projected to focus initially on routes under 1,000 km—precisely the segment most affected by current regulatory pressure. These developments could support a reconfiguration of regional air networks in Europe, making more routes economically and environmentally sustainable, especially in areas where rail or road options are limited.
Rethinking Europe’s short-haul market: underserved routes, but necessary
The European aviation network is among the most extensive and interconnected in the world. In 2019, more than 14,000 commercial routes operated across the continent, according to OAG Flight Analyzer. However, this dynamic landscape was significantly disrupted by the COVID-19 pandemic, which led to a steep decline in air connectivity. The number of routes dropped sharply, reaching a low point in 2021.
Before the pandemic, European route growth averaged a CAGR of 5.8%. COVID-19 caused an 9.5% drop, but by early 2024, activity had recovered to around 14,000 routes. However, growth has slowed, with a current CAGR of 3.4%, reflecting structural shifts in the sector.
Several factors now constrain further expansion:
- Sustainability targets, such as the European Green Deal’s goal to cut emissions by 55% by 2030;
- Alternative transport options, including extensive high-speed rail and highway networks;
- Rising operational costs, particularly fuel, which pressure airlines with already tight margins.
At the same time, the distribution of traffic highlights a notable pattern. Routes between 300 and 800km account for approximately 85% of total passengers and 80% of all routes, showing a relatively balanced and consistent presence across the network. This indicates that within this range, air travel maintains broad coverage and steady demand.
However, the similar proportion of passengers and routes also suggests that distance alone does not directly determine traffic volume or route density—implying that other factors, such as connectivity needs, geographic constraints, and availability of alternatives, play a more decisive role in shaping short-haul air travel.
The promise of new-generation aircraft: cleaner, cheaper, closer
New propulsion technologies are opening opportunities for a more sustainable and cost-effective short-haul aviation market. Several aircraft manufacturers and startups are developing electric and hydrogen-powered models aimed at reducing fuel consumption and maintenance—two of the main cost drivers in regional operations.
Electric and hybrid-electric aircraft
Electric and hybrid-electric aircraft are projected to lower operating costs by 30–50% per seat-kilometre on specific routes, largely due to simplified propulsion systems and lower fuel use.
- Fully electric aircraft, such as Eviation’s Alice and Heart Aerospace’s ES-30, are targeting ranges of 200–400 km, with future versions expected to exceed 500 km as battery technology advances.
- Retrofitted aircraft, like those from Dovetail Aviation, offer a faster path to deployment by converting existing regional models, with expected ranges of up to 400 km.
- Hybrid-electric models, including Ampaire’s Eco Caravan and Wright Electric’s concepts, could reach 800–1,000 km, combining batteries with thermal propulsion to extend range and operational flexibility
Hydrogen-powered aircraft
- Hydrogen propulsion, while still in early stages, offers potential for longer regional and short-medium-haul routes. Key players such as Airbus (ZEROe) and ZeroAvia are leading development.
- Early hydrogen aircraft are expected to achieve ranges between 1,000 and 2,000 km, with some future designs projected to exceed 2,500 km.
The rollout of these technologies will be gradual. Electric aircraft for short routes and smaller capacities (up to 19 seats) could enter commercial service by 2030. Hybrid-electric models are expected between 2035 and 2040, while larger hydrogen-powered aircraft could begin operations in the latter half of the 2030s, with broader adoption expected into the 2040s.
Comparing modal preferences for short-distance travel
Despite aviation advantages for long distances, cars remain the preferred choice for short distances. Driving is typically quicker door-to-door, avoiding airport delays like security checks and boarding. Cars also offer flexibility, comfort, and cost-efficiency, particularly when traveling with multiple passengers, as they take travellers directly to their destination without transfers.
For longer distances, flying becomes more advantageous. Aircraft reduce travel time and provide a more comfortable experience. For medium distances, the choice between car, plane, and other transport depends on factors such as timing, route conditions, and passenger preferences.
In regions with poor infrastructure, such as islands or mountainous areas, aircraft are essential for reliable and efficient travel.
A study on the Environmental Impact of Long-Distance Travel by the Technical University of Denmark (DTU) found that demand shifts from car to air travel around the 400 km mark. Beyond this distance, the convenience of flying starts to outweigh the benefits of driving, influencing travel patterns for short-haul routes.
After analysing ticket prices on over 2,300 direct routes across Europe, it becomes clear that air travel can be a competitive and cost-effective alternative to driving—not just due to speed, but particularly when geography or limited infrastructure restrict ground transport options.
Figure 6 illustrates the relationship between distance and unit cost in air travel, revealing a noticeable inflection point around the 300 km range. On shorter routes, unit costs are higher, but they decrease over longer distances as fixed operational costs are distributed over more kilometres and cruise segments represent a larger share of the flight.
The introduction of new-generation aircraft, however, has the potential to alter this cost dynamic substantially. With projected reductions of up to 90% in fuel consumption and 50% in maintenance expenses, overall operating costs could decrease by around 30%. These savings are particularly pronounced on short-haul routes, where the impact of cost reductions is more immediate. As a result, the cost-efficiency transition point could shift to approximately 200 km, significantly enhancing the competitiveness of air travel on shorter distances.
Building on the shifting cost-efficiency threshold, the competitive dynamics of short-haul transport may experience a notable transformation. As illustrated in Figure 7, air travel generally becomes more economical than car travel beyond a distance of approximately 225 kilometres. However, with the anticipated 30 percent reduction in operating costs associated with next-generation aircraft, this threshold could shift significantly, making air travel cost-competitive from distances as short as 150 kilometres. Such a shift carries important implications for the transport sector. It not only enhances the viability of air travel over shorter distances, thereby reducing the comparative advantage traditionally held by car travel, but also contributes to a broader redefinition of regional connectivity and mobility economics.
Below this threshold, car travel remains more advantageous in terms of both cost and total journey time, primarily due to the absence of airport-related processes such as security screening and boarding, as well as the relatively higher per-kilometre cost of short-haul flights. However, as travel distances increase, the efficiency of air transport becomes more pronounced, reaffirming its position as the preferred option for medium- to long-distance regional journeys.
This shift in the cost paradigm has the potential to generate substantial value across the aviation sector. Under existing short-haul operations, the estimated savings in operating costs could reach approximately 5 billion US dollars within the European market and up to 20 billion globally. In addition to these direct efficiencies, a rebalancing of supply and demand in response to the lower operating costs could stimulate an estimated 10 percent increase in passenger demand, as air travel becomes more competitive with other modes of transport. When combined, these effects could generate between 20 and 25 billion US dollars in global economic value. It is important to note that these figures do not consider the additional benefits that could arise from the opening of new viable routes or the stimulation of further demand, both of which may further amplify the impact of next-generation aircraft on the future of short-haul aviation.
Conclusion and what-if: Unlocking the value of next-generation aircraft
Next-generation aircraft have the potential to reshape the short-haul aviation market by significantly improving cost-efficiency and expanding the competitive range of air travel. With operating cost reductions, current short-haul routes could see substantial economic gains. This enhanced cost structure may also support a shift in passenger behaviour, increasing demand and narrowing the gap with other modes of transport. Taken together, these developments could unlock between 20 and 25 billion US dollars in global value. Furthermore, this figure does not account for the added benefits of newly viable routes or the broader stimulation of demand, which suggest the full impact could be even greater.
However, the successful integration of next-generation aircraft into the short-haul network will depend on meeting several key enabling conditions:
- Infrastructure development: Airports will require significant investment in systems to support electric charging, hydrogen refuelling, and other emerging technologies.
- Regulatory evolution: Aviation frameworks must be updated to incorporate new propulsion methods, safety requirements, and certification processes.
- Technological progress: Continued advancements in battery density, hydrogen storage solutions, and aircraft design will be critical for commercial adoption.
- Environmental alignment: The technologies must contribute effectively to emission reduction targets and support broader sustainability goals.
- Market readiness: Policymakers, regulators, and industry leaders must work collaboratively to establish funding mechanisms, operational models, and entry-into-service strategies.
The introduction of next-generation aircraft offers more than a technological advancement. It presents a strategic opportunity to reshape the regional aviation landscape in line with long-term climate and mobility ambitions. Although the path forward will require close coordination across the aviation ecosystem, the potential benefits are substantial: a more sustainable, efficient, and accessible short-haul market.
About the authors
Mario Cano
BSc in Aeronautical Engineering, MSc in Astronautics and Space Engineering, and MSc in Aerospace Engineering. Executive MBA from IESE. Senior Engagement Manager at ALG specializing in ATM and Space.
David Sabirón
MSc in Autonomous Vehicle Dynamics and Control and MSc in Aeronautical Engineering, specialized in the ATM sector. Senior Consultant at ALG.
Álvaro Fernández
BSc in Aeronautical Engineering, MSc in Air Traffic Operations Management from ENAC, Toulouse. Consultant at ALG specializing in ATM.
