Sustainable Aviation Fuel Expected to Increase Airfare Costs
Travellers may face increased airfare costs due to the adoption of sustainable aviation fuel (SAF) as governments globally push for reduced emissions in the aviation sector.
Research Findings on Cost Impact
A University of Sydney study found that using SAF could add between $68 and “hundreds of dollars” to the cost of a long-haul flight ticket. In contrast, the average traveller is willing to contribute only $2.60 extra towards sustainable fuel for such flights. Rico Merkert, a professor of transportation at the University of Sydney, highlighted that Australian and New Zealand travellers support sustainability but are not willing to bear the associated costs. He warned that air travel will likely become more expensive without collaboration between government and industry.
Government Mandates and Fuel Scarcity
Despite consumer reluctance, European governments are implementing decarbonisation mandates that will compel airlines to adopt sustainable fuels. SAF, which is derived from sources like used cooking oil and green waste, is crucial for decarbonising air travel. However, it is currently three to six times more expensive than conventional jet fuel due to scarcity.
Regulatory Timelines
The European Union mandates a blend of sustainable fuel with traditional fuel, starting at 2% in 2025, rising to 6% in 2030, 34% in 2040, and 70% by 2050. The United Kingdom requires a 2% blend in 2025 and 10% by 2030. Australia currently has no binding SAF blend mandate or large-scale production facilities, though it is considering incentives to stimulate the industry.
Industry Concerns on Affordability
Stephen Beckett, chief executive of Airlines for Australia and New Zealand (A4ANZ), stated that the aviation sector aims to reduce its environmental impact but is aware of the potential financial burden on consumers. He emphasized the need for policy architecture that aligns demand and supply-side strategies to ensure aviation remains affordable. The industry estimates that electric or hydrogen-powered aircraft will not significantly contribute to emission reductions before 2050, underscoring the importance of SAF despite its cost.
Global SAF Consumption and Costs
In 2025, SAF accounted for an estimated 0.6% of total global jet fuel consumption, projected to increase to 0.8% in 2026. This translated to an additional US$3.6 billion ($5.4 billion) in global fuel costs for airlines last year. Willie Walsh, Director General of the International Air Transportation Association (IATA), suggested that current sustainable fuel mandates have primarily increased prices rather than production, advocating for incentives designed in collaboration with the airline industry to boost SAF production.