Airfares to increase as passengers pay for airlines’ adoption of sustainable aviation fuel

Airlines are being forced to reduce their carbon emissions by using sustainable aviation fuel, which is in short supply and twice as expensive as kerosene fuel

Much of the US$5 trillion cost will be borne by passengers, who have already been paying more to fly post-pandemic. A Singapore tax is a sign of things to come

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Airlines are being forced to reduce their carbon emissions using expensive sustainable fuel, and passengers, already spending more on flights since the pandemic, will be footing a good part of the bill. Singapore has introduced a tax on air fares to help pay for sustainable aviation fuel. Photo: EPA-EFE

Published: 11:15am, 22 Mar 2024Updated: 5:07pm, 27 Mar 2024

The global airline industry has long warned passengers they’ll eventually have to pay some of the US$5 trillion cost of decarbonising air travel. And the moment has come.

Singapore’s government has announced a tax on air fares to fund purchases of pricey sustainable aviation fuel (SAF), while neighbouring Malaysia has authorised carriers to charge a carbon levy from next month.

In Europe, airlines this year lose one quarter of their free emissions allowance, the first in a series of reductions that’s already estimated to be adding to ticket prices.

“We’ve entered a new era,” said Rico Luman, a transport, logistics and automotive economist at ING Groep in Amsterdam. “Flying will turn more expensive.”

Sustainable air fuel can cut emissions by as much as 80 per cent, but is in short supply and twice as expensive as normal jet fuel. Photo: Shutterstock

While the policies differ from country to country, the common goal is to clean up an aviation industry that for a century has relied on fossil fuels to function. Airline chiefs fret that unless they show they’re serious about cutting emissions right now, they’ll face fines, flying limits or be grounded completely.