International air fares are expected to rise over the next 15 years as the cost of sustainable fuel leads to a spike in ticket prices, the International Air Transport Association (IATA) has warned. The transport group said global airlines more than doubled their forecast for industry profits by 2023, but warned delays in aircraft deliveries to cope with rising demand could slow any post-pandemic recovery.
Willie Walsh, the association’s director general, said at IATA’s annual summit which brings 300 airlines from around the world: “The pandemic years are behind us and the borders are open as normal.”
Mr Walsh said: “We are going to need more and more SAF, and that means more and more cost.”
SAF (Sustainable Aviation Fuel) is a liquid fuel with zero or low CO2 emissions obtained from renewables such as sustainable vegetable oils, animal fats, biomass, waste or even CO2 removed from the atmosphere.
Many countries have announced minimum requirements for the use of SAF in response to criticism from environmental advocates.
He added: “Unless there is some offsetting reduction in other costs, and I don’t see that, then people should expect an increase in average prices as we move forward.
“It will mean higher fares, because sustainable aviation fuel is more expensive than traditional jet paraffin.
“And as we transition to net zero, it will cost some money.
“And whichever way you look at it, consumers will ultimately pay for this.”
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IATA chief economist Marie Owens Thomsen also warned passengers should prepare for some of the cost of the industry’s sustainable transition to be offset by airfares, especially if governments do not help develop and fund sustainable aviation fuel.
She said: “These costs will rise until sustainable aviation fuel becomes commercially viable, which will not happen until it is produced at scale.
“When we get to that lucky moment, I’m tempted to say that around 2040, we can start to think that costs will come back down.”
A World Travel and Tourism Council (WTTC) report released in April noted that the sector is approaching its 2019 global GDP contribution levels when travel was at its peak, projecting a 95 percent recovery compared to 2019 by the end of the current year.
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