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  • Writer's pictureHeini Noronen-Juhola

Does the question of the sustainable aviation fuel belong to the passenger or the airline?

The currently used sustainable aviation fuels (SAF) are suitable for existing combustion engine technologies and they can be used in mixtures with the traditional aviation fuels. Therefore it has been interesting to read news from various oil companies how they have informed about new SAF purchase deals with airlines. However, depending on the airline, the SAF batch might end up to flights in many ways.

Basically it's the airline's decision what kind of a fuel they are using on a flight. They are not typically explaining to the passengers what kind of a fuel choice they have made for the flight the passengers are on. Since the sustainable aviation fuel is at least about 2-4 times more expensive than the fossile based aviation fuel, there is probably only a small amount (if any) SAF in the fuel mixture that is in use.

Some airlines have added a mandatory fee for SAF on top of the flight ticket and for that they have announced that they are using regularly SAF at their flights. For example KLM is using 0,5% SAF at all their flights that depart from Amsterdam and they are charging from about 1 to 12 euros extra from the passengers based on the flight distance.

Some airlines like Finnair are using a tiny amount of the ticket price for SAF purchases or they have offered the passengers an option to pay a voluntary fee on top of the flight ticket to support the usage of SAF. In these cases there's typically no system how SAF is used at flights. Probably there won't be additional SAF used at your flight especially. In these cases the airline often buys a batch of SAF when enough money has been collected. Then some selected flights use this batch of SAF.

We are in a transition phase regarding the usage of the sustainable aviation fuels. More and more airports globally are willing to give reductions in their landing charges to the flights that use SAF. More and more passengers are willing to pay something extra for the usage of SAF. So why is SAF still used so little?

If we think about the climate change and the CO2 reduction targets, the aviation industry is going towards the net zero goals by the year 2050. In this regard the industry sees that there is plenty of time to reach the goal also with some other actions like reductions or compensations. However, the industry is expected to be a growth industry and therefore all the actions are definitely needed.

If we think about the financial side, the current incentives from the airports or voluntary fees from the passengers aren't sufficient to cover the costs. The airport reductions don't cover even closely the extra costs for the airlines. Or not all the passengers are willing to pay extra money for the SAF usage especially if it doesn't affect their own flight directly. So unless we find extra ways to attract incentives or voluntary payments this will not solve the problem.

The end user in the aviation travel is the passenger. The end user is always the one that ends up paying for everything. So why have all these financing tools for SAF instead of just raising the prices for the end user? Challenging equation. In the economics the main goal of the business is to maximize the profits for the shareholders. In this context raising the ticket prices for SAF isn't desirable for the airline since it might reduce the demand for flying. On the other hand the voluntary fees aren't sufficient. So does this challenge belong to the airlines or the passengers?

The European Union is planning to launch a blending mandate in 2025. That is when at least in the Europen level the cost of SAF gets automatically into the ticket prices. And then we will see how it will affect the demand for flights and eventually the profitability of the airlines. But in that sense the usage of the sustainable aviation fuel belongs to both airlines and the passengers. It belongs to us all.

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