Clear message: An Eva Air Cargo Boeing 747-400F freighter airplane approaches to land at Changi. With the new sustainable fuel targets and levy, Singapore is trying to send a signal to fuel producers to scale up the supply of green fuel. — Reuters
SINGAPORE: Plans to charge a levy on passengers departing Singapore so airlines here use greener jet fuel will not put the republic’s status as a global aviation hub at risk, says International Air Transport Association (IATA) chief Willie Walsh.
That is because all major air hubs and airlines around the world are pursuing a similar agenda, and passengers will ultimately bear the cost of the aviation industry’s transition to net-zero emissions by 2050, he told a press conference on Monday.
Rounding up the second Changi Aviation Summit, which brought together more than 400 senior government officials and industry leaders, Walsh said the only credible option available for aviation to decarbonise by 2050 is to pursue the widespread use of sustainable fuels.
Yet, such fuels are three to five times more expensive than conventional fuel, and this will be reflected in airfares, whether through a levy or airlines raising ticket prices.
“The cost of travel will increase. It just cannot be avoided,” said Walsh, who heads the industry body representing 320 airlines, adding that carriers will pass on the extra costs incurred given the thin margins.
Singapore’s new green jet fuel levy will be imposed on travellers from 2026, as flights departing the city-state will have to use sustainable aviation fuel from that year.
The national target is for sustainable fuel to form 1% of all jet fuel used at Changi and Seletar airports in 2026. The eventual goal is to reach 3% to 5% by 2030.
The money collected from the levy will go towards the bulk purchase of greener jet fuel that airlines need to meet these aims.
Walsh, who is IATA’s director-general, called Singapore’s levy “unique”.
While the former British Airways chief is not in favour of levies and taxes, he said Singapore’s measures are designed to generate an “environmental improvement”.
“The manner in which it has been introduced, appears sensible at this stage,” he said.
“We have always argued that if there are to be taxes or levies on the industry for environmental reasons, the money from those initiatives should be set aside and ringfenced, and used solely for improving environmental performance,” he added.
Walsh warned, though, that increases in airfares will dampen the industry’s growth.
He said governments can play a role by providing support to significantly increase green fuel production.
“What we want to see is more facilities and greater volumes being produced, which should have a significant effect on the price that we’re seeing today.”
Industry players and experts largely welcomed Singapore’s move to lower aviation emissions, but some said the nation’s targets are conservative.
Japan, for instance, is looking to mandate at least 10% sustainable fuel by 2030.
“Why can Japan and other countries have higher sustainable aviation fuel targets than Singapore for 2030? I think that’s a valid question,” said independent aviation analyst Brendan Sobie of Sobie Aviation.
He added that the new levy, combined with an existing government levy to fund the development of Terminal 5, could have an impact on Changi Airport’s growth.
“I was already saying Singapore needs to consider reducing its airport charges. Now I think it’s even more important to reduce them,” he said.
Passengers on flights originating from Changi Airport now pay S$62.20 in airport charges, comprising a S$43.40 passenger service and security fee collected by Changi Airport Group, an S$8 aviation levy collected by the Civil Aviation Authority of Singapore and a S$10.80 airport development levy introduced in 2018.
From April 1, the passenger service and security fee will climb by S$3, taking the total to S$65.40. Departing transit passengers will continue to pay a S$6 passenger service and security fee and a S$3 airport development levy.
With the new sustainable fuel targets and levy, National University of Singapore environmental economist Alberto Salvo said Singapore is trying to send a signal to fuel producers to scale up the supply of green fuel, which amounts to 0.1% of overall jet fuel volume at the moment. — The Straits Times/ANN
