‘Great green scam' to cost passengers £2bn a year, warns airline chief

Telegraph

4 days ago

Airline passengers will foot costs of almost $3bn (£2.2bn) a year as the EU and UK impose net zero targets, an industry chief has warned.
Willie Walsh, the chief executive of the International Air Transport Association (IATA), said the soaring cost of sustainable aviation fuel (SAF), as well as poor demand, meant passengers faced even higher ticket prices.
Describing the net zero rules behind the additional costs as 'the EU's great green scam', Mr Walsh, who was previously chief executive of British Airways, said Brussels had been 'unrelenting in its proposals' to ramp up measures that have been wholly ineffective.
Purchases of SAF will cost an extra $1.2bn in 2025 compared with traditional jet fuel, according to the IATA.
On top of that, producers such as Shell and Total are set to charge airlines $1.7bn as they pass on fines, or 'compliance fees', for failing to supply carriers with at least 2pc SAF. This is the amount required by both Britain and Brussels following the introduction of a mandate this year.
Speaking at an industry event in New Delhi, Mr Walsh said: 'The EU mandate has done nothing to stimulate additional production and a lot to enable fuel suppliers to increase their charges and therefore increase costs to airlines.
'The SAF has not been available but the fuel suppliers don't care. They will be subject to fines but they are just passing on the cost to the airlines.
'It is an outrage that suppliers are charging airlines compliance fees that value SAF at double its market premium over conventional jet fuel. That's a $1bn-plus windfall.
'People will say these mandates are positive because they stimulate production. We don't see any evidence of that. Consumers at the end of the day are paying more.'
Mr Walsh stopped short of saying that a goal of reaching net zero emissions by 2050 is unachievable. However, he warned that without a huge increase in SAF production, the squeeze on airlines would worsen as the UK and EU require ever-increasing quantities to be used.
The IATA estimates that sustainable fuel will need to deliver two thirds of the carbon reduction needed to reach the mid-century net zero goal. While SAF production is forecast to double to 2m tonnes this year, it said that would represent just 0.7pc of airline fuel needs.
Mr Walsh said the situation is being exacerbated by the possible removal of US tax credits for SAF, a production crisis at Boeing and Airbus that has hurt deliveries of more efficient planes, and the recent abandonment of hydrogen plane projects.
He added: 'And companies we need to be major SAF producers such as BP and Shell have cut back or delayed investment plans.
'This is not where we should be in 2025. We have a quarter of a century to get to net zero with a $4.7 trillion price tag staring us in the face. There is no time to delay and no tolerance for government green-washing.'
Hemant Mistry, the IATA's head of sustainability, said the fines passed on by fuel suppliers would increase the cost of SAF from 1.7 times the cost of kerosene to more than four times. That compares with about three times as much last year.
Mr Mistry added that there is 'zero transparency' regarding the compliance fees and what they include and that oil producers appear to be 'kitchen-sinking all sorts of other stuff'.
He said the level of fees being levied by airport fuel suppliers in the UK was even higher than in the EU. Mr Mistry added that the IATA had complained to the Department for Transport about the practice.
The IATA downgraded its financial outlook for the year, predicting that the industry will make a collective $36bn in profits, $600m lower than estimated in December.
It said expectations have been 'dented by trade tensions and falls in consumer confidence'.