This paper presents estimates of environmental costs in a set of 36 European airline markets. Cost are calculated for noise, air pollution and accident risk using data on aircraft emissions, exposure-response parameters and economic valuation of environmental goods. The 'medium value' cost estimate is 0.0201ECU per passenger-km. This result suggests that environmental costs represent only a small fraction (2.5%) of the internal cost of aviation as measured by the average ticket price. Noise costs are the dominant environmental cost at some 75% of the cost total. The medium estimates are sensitive to changes in the various assumptions in the pathways: a low and high estimate are three times lower and five times higher, respectively, than the medium estimate. The study further suggests that there are environmental economies of scale in air transport and that Chapter 2 aircraft are about a factor four more environmentally costly than Chapter 3 aircraft. © 2003 Elsevier Ltd. All rights reserved.