{"id":7361,"date":"2025-06-03T15:34:42","date_gmt":"2025-06-03T14:34:42","guid":{"rendered":"https:\/\/www.greenairnews.com\/?p=7361"},"modified":"2025-08-08T16:34:41","modified_gmt":"2025-08-08T15:34:41","slug":"iata-chief-hits-out-at-profiteering-fuel-suppliers-as-saf-production-expected-to-double-in-2025","status":"publish","type":"post","link":"https:\/\/www.greenairnews.com\/?p=7361","title":{"rendered":"IATA chief hits out at \u201cprofiteering\u201d fuel suppliers as SAF production expected to double in 2025"},"content":{"rendered":"\n

Sustainable aviation fuel production is expected to grow to two million tonnes in 2025, double that produced in 2024, but still just 0.7% of total airline fuel use, estimates IATA. Production will need an exponential expansion if the industry is to meet its commitment to net zero carbon emissions by 2050, it says. The airline body estimates the average cost of SAF in 2024 was 3.1 times that of conventional jet fuel, for a total additional cost of $1.6 billion, but the multiple will increase to 4.2 times in 2025. This, claims IATA, is largely the result of SAF compliance fees being levied by European fuel suppliers to hedge their potential costs as a result of the 2% blending mandates introduced by the EU and UK in January. IATA Director General Willie Walsh called the behaviour of fuel suppliers fulfilling the mandates \u201can outrage\u201d.<\/strong><\/p>\n\n\n\n

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\u201cThe cost of achieving net zero carbon emissions by 2050 is estimated to be an enormous $4.7 trillion,\u201d Walsh told delegates at this year\u2019s IATA AGM in New Delhi<\/a>. \u201cFuel suppliers must stop profiteering on the limited SAF supplies available and ramp up production to meet the legitimate needs of their customers.\u201d<\/p>\n\n\n\n

IATA says most SAF is now heading towards Europe to meet the mandates and the one million tonnes of SAF required, at a cost of $1.2 billion at current market prices. However, it estimates compliance fees will add a further $1.7 billion on top, making SAF five times more costly than conventional jet fuel. IATA says to comply with the 2% blend mandate and to account for potential future penalties, fuel suppliers are adding surcharges that are resulting in an average SAF cost of $3,505 per tonne, nearly double the market price of $1,846 per tonne.<\/p>\n\n\n\n

\u201cThis highlights the problem with the implementation of mandates before there are sufficient market conditions and before safeguards are in place against unreasonable market practices that raise the cost of decarbonisation,\u201d said Walsh. \u201cRaising the cost of the energy transition should not be the aim or the result of decarbonisation policies. Europe needs to realise that its approach is not working and find another way.\u201d<\/p>\n\n\n\n

IATA calls on governments<\/a> to eliminate the disadvantage faced by renewable energy producers compared with \u2018big oil\u2019 and \u201credirect a portion of the $1 trillion in subsidies that governments globally grant for fossil fuel.\u201d It also asks for a holistic approach to energy policy, with an increase in renewable energy production from which SAF is derived and policies to ensure SAF is allocated an appropriate portion of renewable energy production.<\/p>\n\n\n\n

IATA expects the airline industry to improve total net profits in 2025 to $36 billion, up from $32.4 billion earned in 2024, on revenues at a record high of $979 billion, just below a previous projection of $1 trillion. Profits will be boosted by a $25 billion lower fuel bill than in 2024, when fuel costs amounted to $261 billion. This is a result of an average price of a barrel jet fuel projected to fall from $99 in 2024 to an expected $86 in 2025. Jet fuel is anticipated to account for 25.8% of all operating costs in 2025.<\/p>\n\n\n\n

\u201cThe first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections,\u201d said Walsh. \u201cThe biggest positive driver is the price of jet fuel, which has fallen 13% compared with 2024 and 1% below previous estimates.\u201d<\/p>\n\n\n\n

IATA estimates jet fuel consumption<\/a> will rise from 99 billion gallons in 2024 to 103 billion gallons in 2025, so the sector will be emitting around 985 Mt of CO2 this year.<\/p>\n\n\n\n

The airline industry cost of complying with ICAO\u2019s international carbon offsetting scheme, CORSIA, is expected to reach $1 billion in 2025 and although the market demand for CORSIA eligible emissions units (EEUs) will grow, Guyana is still the only country to have issued certificates for the high-quality credits the scheme requires, points out IATA. \u201cWe urge governments to make EEUs available to airlines,\u201d it says.<\/p>\n\n\n\n

Another factor hindering industry\u2019s Net Zero ambitions is the backlog in deliveries of new, more fuel-efficient aircraft, now put at more than 17,000, sharply up from pre-pandemic levels of 10,000 to 11,000 aircraft, which is largely due to supply chain constraints and production limitations. The implied wait time is now estimated at 14 years and the current average fleet age has increased from 13 years in 2015 to 15. The fleet replacement rate has been cut to half the 5-6% of 2020 and fleet utilisation efficiency reduced.<\/p>\n\n\n\n

Delivery of 1,692 aircraft is expected in 2025, the highest level since 2018 but is 26% lower than year-ago, IATA estimates, with further downward revisions likely given ongoing supply chain issues.<\/p>\n\n\n\n

\u201cManufacturers continue to let their airline customers down,\u201d commented Walsh. \u201cEvery airline is frustrated that these problems have persisted so long. And indications that it could take until the end of the decade to fix are off-the-chart unacceptable.\u201d<\/p>\n\n\n\n

One outcome of the backlog and constraints on fleet expansion is that passenger load factors are expected to reach an all-time high in 2025, with a full-year average of 84.0%.<\/p>\n\n\n\n

Following double-digit annual growth in passengers since the pandemic, growth in 2025  \u2013 measured in RPKs \u2013 is expected to return to a more normalised 5.8%. Real average air fares in 2025 are expected to be 40% below 2014 levels and IATA\u2019s polling data suggests a further increase in passenger demand over the next 12 months.<\/p>\n\n\n\n

During the AGM in New Delhi, IATA announced it will be working with the Indian Sugar and Bio-Energy Manufacturers Association and Praj Industries to provide guidance on global best practices for lifecycle assessment of the use of feedstocks in the country. The third-largest oil user after the US and China, India has launched the Global Biofuels Alliance<\/a> to position the importance of biofuels to the country\u2019s energy transition and economic growth. This includes a 2% SAF blending target for international flights by 2028 with enabling policies such as guaranteed pricing, capital support for new projects, and technical standards.<\/p>\n\n\n\n

\u201cAs the third-largest global civil aviation market, India can strengthen its leadership in biofuels with the accelerated adoption of SAF through progressive policies,\u201d notes IATA.<\/p>\n\n\n\n

IATA\u2019s 82nd AGM will be held in Rio de Janeiro in June 2026, hosted by LATAM Airlines Group.<\/p>\n\n\n\n

\u201cBy the time we meet next year, we must be able to show more progress [on decarbonisation]. And by \u2018we\u2019, I mean all the aviation industry and governments who are joined in a common commitment to net zero by 2050,\u201d Walsh said in his state of the industry address.<\/p>\n\n\n\n

\u201cI have always been sceptical referring to governments and supply chain participants as partners. But if there is one area where we should share a partnership, it\u2019s sustainability. Airlines can\u2019t make SAF, build aircraft, promulgate government policy or fix air traffic management. Decarbonisation needs true and active partnership. Am I being cynical for wondering if other parts of the value chain are committed to net zero because they see it as an opportunity to generate additional profit?<\/p>\n\n\n\n

\u201cIf these comments cause alarm and trigger action, that is their intent. Good intentions will not get us to net zero. Action is what we need. Fortunately, it\u2019s not too late to pick up pace and re-align us on the path to success.\u201d<\/p>\n\n\n\n

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Photo: IATA’s Willie Walsh: \u201cFuel suppliers must stop profiteering on the limited SAF supplies available and ramp up production to meet the legitimate needs of their customers.\u201d<\/strong><\/p>\n\n\n\n

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