Air Travel To Get Expensive As Airlines Prepare To Pass $5T Decarbonization Expenses To Passengers: Report

The global airline industry has consistently cautioned passengers about the inevitable need to contribute to the $5 trillion expense of decarbonizing air travel. That time has now arrived.

What Happened: Airlines across the world are raising ticket prices to offset the expenses of decarbonizing air travel, reported Bloomberg on Thursday. The cost of sustainable aviation fuel, a primary tool for achieving the industry’s 2050 net-zero target, is more than double that of traditional jet kerosene. This has left airlines with little choice but to transfer the additional cost to passengers.

"We've entered a new era," said Rico Luman, a transport, logistics, and automotive economist at ING Groep NV in Amsterdam. "Flying will turn more expensive."

Several countries have introduced measures to fund the transition. Singapore is imposing a tax on airfares, while Malaysia has authorized carriers to levy a carbon fee. In Europe, airlines are losing a quarter of their free emissions allowance, leading to ticket prices rising.

Despite the variations in policies, the common objective is to clean up an industry that has relied on fossil fuels for a century. Airlines fear that failure to demonstrate a serious commitment to cutting emissions could result in fines, flying restrictions, or grounding.

"It pains me to suggest that travelers are going to have to pay more," Margy Osmond, chief executive officer of Tourism & Transport Forum Australia, said at a renewable aviation fuels conference in Canberra this week. "There's going to be an additional cost to aviation. That's all there is to it."

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Why It Matters: The aviation industry’s shift towards sustainability is not without its challenges. The industry has been grappling with the staggering cost of decarbonization, which is now being passed on to passengers. This is a significant development, considering the global push for sustainable practices and its impact on the aviation sector.

Earlier this month, Saudi Aramco CEO Amin Nasser cautioned against the current energy transition strategy, asserting that it is not yielding the expected results. This latest move by Singapore and Malaysia further underscores the complexities and costs associated with transitioning to sustainable aviation fuel.

Meanwhile, Barclays PLC BCS has halted direct financing of new oil and gas fields and restricted lending to energy companies expanding fossil fuel production. This is part of its Transition Finance Framework (TFF) and follows intense pressure from campaigners over its energy policy amid higher climate-damaging emissions from burning fossil fuels.

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Photo by Daniel Eledut on Unsplash

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Posted In: NewsGlobalEconomicsaviationcarbon taxdecarbonizingGreen TransitionKaustubh BagalkoteSingapore
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