analysis
According to the will of the EU, airlines should increasingly use sustainable fuels in the future in order to reduce emissions. What does this mean for ticket prices?
At the start of this year’s holiday season, airlines are expecting a boom in the travel sector. In order to improve the environmental balance of air travel, aviation companies are focusing not only on more economical engines and aircraft with electric or hydrogen engines, but above all on switching to sustainable fuels. Synthetic and biofuels are set to replace fossil kerosene in the coming years. But these are more expensive to produce, which should also affect ticket prices.
Many factors in ticket prices
The alternative fuel Sustainable Aviation Fuel (SAF) is made from various renewable sources, including algae and plant residues. If SAF’s surcharge were passed on in full to the passengers, the ticket price for a typical long-haul flight – for example from Frankfurt to Singapore or from Munich to New York – would increase by around 36 euros in 2035. This is shown by a study by PwC Germany and Strategy&.
“More sustainable flying will entail high costs in the future – but this is just one of many factors that influence ticket prices for consumers,” explains Dirk Niemeier, Director at Strategy& tagesschau.de. Prices also depend heavily on supply and demand. The utilization of the flights and the competition on certain routes play a decisive role here. According to current analyses, the influence of SAF on the costs of the airlines remains moderate.
If additional costs for emission allowances and energy taxes are taken into account, the institutes “Royal Netherlands Aerospace Center” and “SEO Amsterdam Economics” predict that the price for an economy ticket for a round-trip flight from Hamburg to Bangkok via the Frankfurt hub could rise from 815 to 914 euros by 2035.
Are European airlines disadvantaged?
Representatives of the European Parliament and the EU states have agreed that from 2025 sustainable fuels must be added to aviation fuel. Initially, the rate should be two percent and gradually increased over the next few years. By the year 2050, 70 percent of the fuel used in aviation should be sustainable.
Some European airlines, including Lufthansa and Condor, fear that competitors from non-EU countries could offer long-haul flights at lower prices as a result. Because airlines such as Emirates or Qatar Airways as well as Turkish Airlines can transfer passengers from the EU at their hubs in Istanbul or Dubai; you only have to fill up expensive SAF for the feeder flight from the EU. Qatar Airways announced in March that it would add 10 percent SAF by 2030.
Production must be ramped up
Currently, SAF accounts for less than 1 percent of all jet fuel used. “In order to supply the entire aviation industry with sustainable fuels, production must be ramped up on a large scale,” says Strategy&’s Niemeier. That takes time.
According to Christian Küchen, CEO of en2x, a lobby group for the mineral oil industry, simply setting quotas for the addition of renewable aviation fuel is not enough. “As a manufacturer, we need clear conditions on how to meet the quotas in detail. That’s not the case yet,” he said at a conference in Berlin earlier this month.
What is the total cost
In a second study commissioned by the aviation industry, the two Dutch institutes calculates that it will cost around 820 billion euros by 2050 to fly climate-neutrally in Europe. To achieve this, all emissions caused by air travel must be reduced to zero or offset.
The study shows that the largest costs will be 441 billion euros for SAF. Overall, the researchers estimate that the aviation industry will spend €1.9 trillion between 2018 and 2050, including investments in new aircraft, infrastructure, alternative jet fuels and measures to reduce CO2 emissions.