Europe’s Top Airline To Introduce Surcharge To Cover Cost Of Clean Fuel

By Tsvetana Paraskova of OilPrice.com

The Lufthansa Group, the biggest airline group in Europe, is introducing a so-called Environmental Cost Surcharge of up to $77.20 (72 euros) per flight to cover part of the costs for using additional volumes of sustainable aviation fuel (SAF), the Germany-based airline said on Tuesday.

The surcharge of between $1.07 (1 euro) and $77.20 (72 euros) will apply to all tickets issued from June 26, 2024 with departure from January 1, 2025 from the 27 EU countries as well as the UK, Norway, and Switzerland.

“The surcharge is intended to cover part of the steadily rising additional costs due to regulatory environmental requirements,” Lufthansa said in a statement.

“These include the statutory blending quota of initially two percent for Sustainable Aviation Fuel for departures from European Union (EU) countries from January 1, 2025, adjustments to the EU Emissions Trading System as well as other regulatory environmental costs such as the Carbon Offsetting and Reduction Scheme for International Aviation.”

Despite investing a lot in new technology and fuels, Lufthansa “will not be able to bear the successively increasing additional costs resulting from regulatory requirements in the coming years on its own,” it said.

“Part of these expected costs for the year 2025 are now to be covered by the new Environmental Cost Surcharge.”

Back in 2022, another major Europe-based airline, Air France-KLM, added a sustainable fuel surcharge on its departures in Europe to help offset the rising costs of using more expensive SAF.  

Last year, Willie Walsh, Director General at the International Air Transport Association (IATA), said that the airline industry would be ready to embrace the fact that SAF would always be more expensive than oil-based jet fuel.

Despite numerous pledges from airlines and government support for SAF production, the alternative of the petroleum-based jet fuel faces challenges in supply, costs, and feedstock, analysts say.

According to the IATA, SAF has the potential to reduce CO2 emissions by up to 80%.