Airlines Introduce Green Fees to Cover Sustainable Aviation Fuel Costs
In the past, airlines would often impose “fuel surcharges” whenever jet fuel prices spiked, a practice that persisted even when oil prices dropped. However, this term fell out of favor over a decade ago when U.S. regulators demanded transparency in how these fees were calculated. Now, in 2024, a new type of surcharge is emerging: “green fares” or fees tied to the use of Sustainable Aviation Fuel (SAF), an eco-friendlier alternative made from renewable sources like cooking oil. These fees are gaining traction, especially in Europe, as airlines face increasing pressure to reduce their carbon footprints.
Airlines like Virgin Atlantic have recently introduced green fees to cover the high costs associated with SAF, which is estimated to be three times more expensive than traditional kerosene-based jet fuel. Virgin Atlantic plans to gradually implement these charges over the next 18 months, with the goal of having them in place systemwide by 2030. The airline’s CEO, Shai Weiss, has indicated that prices will need to rise to account for the increased costs of using SAF. While the exact amount of the surcharge has not been confirmed, media reports suggest it could reach as high as 40 British pounds (approximately $52) per ticket.
This shift comes as part of a broader industry effort to decarbonize air travel. The International Air Transport Association (IATA) has set an ambitious target for the global airline industry to achieve zero-carbon emissions by 2050. Major airlines are committed to this goal, but most have so far avoided directly charging customers for green initiatives. However, this is starting to change, particularly in Europe, where government mandates are pushing airlines to adopt more sustainable practices.
For instance, Lufthansa Group has introduced optional “green fares,” which allow passengers to pay extra for flights powered by SAF. While more than a million passengers have already opted for these fares, they still account for only 3% of the group’s total bookings. Lufthansa is also preparing to implement mandatory SAF-related fees on flights within Europe starting January 1, 2025, with surcharges potentially reaching up to 72 euros ($80) per ticket.
Other European airlines, such as Air France, have already begun imposing SAF-related fees. Air France’s “SAF contribution” starts at 4 euros for economy class flights departing from France. Scandinavian airline SAS has also introduced “bio” fares, allowing consumers to purchase SAF for their flights, mainly applicable to domestic and European routes.
The push for SAF adoption is driven by increasingly stringent government regulations. For example, the British government requires that by 2030, 10% of all jet fuel used on flights departing the country must be SAF. This aggressive timeline contrasts with the more gradual approach taken by organizations like IATA.
In the U.S., the adoption of green air fares is still uncertain, partly due to the ongoing political landscape. Airlines in the U.S. are more inclined to seek federal subsidies for cleaner fuels rather than imposing additional fees on passengers. The outcome of upcoming elections could influence the direction of these initiatives.
As airlines navigate these new challenges, they must also contend with “green fatigue” among consumers. Studies have shown a growing backlash against corporate sustainability programs, particularly when they involve added costs for customers. This has led to the emergence of a new phenomenon known as “greenhushing,” where companies downplay their sustainability efforts to avoid alienating consumers.
Whether green air fares will become the norm in the U.S. remains to be seen, but in Europe, the move toward more sustainable aviation practices is already well underway, with airlines and governments alike pushing for a greener future in air travel.