Addressing supply shortfall fundamental to SAF success

Sustainability was the theme of the Association of Asia Pacific Airlines (AAPA) 67th Assembly of Presidents held in Singapore in early November. Its 14 member airlines agreed an ambitious target for the use of sustainable aviation fuel (SAF). Not everyone is convinced it is achievable, but it shows, despite pandemic recovery challenges, that carriers are striving to reach their goal of net zero emissions by 2050. Associate editor and chief correspondent, Tom Ballantyne, reports from Singapore.

December 1st 2023

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If there was one surprise at the Association of Asia Pacific Airlines Assembly of Presidents in November, undoubtedly it was the agreement of the association’s 14 member carriers to target use of 5% sustainable aviation fuel (SAF) by 2030 - just six years away. Read More »

Considering supply of SAF globally is less than 1% of airline fuel requirements worldwide, it is a tall order, particularly since SAF production in Asia is lagging behind other regions in the world.

It is, said AAPA director general, Subhas Menon, a collective “aspirational target” with some airlines using a higher mix of sustainable jet fuel than others. Hong Kong’s Cathay Pacific has set its own target for SAF of 10% of its fuel consumption by 2030. Japan aims to have airlines replace 10% of the fuel they use at Japanese airports with eco-friendly alternatives by 2030.

Singapore Airlines (SIA), the host airline of this year’s Assembly of Presidents, is more cautious. CEO Goh Choon Phong told delegates a 20-month trial involving SIA and its budget arm, Scoot, showed Singapore is operationally ready to switch to SAF but to meet the percentage of (SAF) to which the association has committed, supply must be there. “We would like to see how supply can be encouraged, but we are not making any decision on how we are going to facilitate that. I think it’s premature,” he said.

Menon said the AAPA is setting the 5% target to “wake the oil majors from their slumber… they are telling us if they do not have an indication of demand, (they) can’t start producing sustainable aviation fuel. So we are putting it out there.” He added the AAPA has not had direct contact with the oil majors, but it intended to do so.

Aspirational as it may be, there are serious doubts about the 5% target being reachable. Endau Analytics founder, Shukor Yusof, told Orient Aviation “there’s not a snowball’s chance in Hades these airlines can come anywhere near that”.

 There were three main reasons for this, he said. “One, the time frame is too short and there is no incentive (in terms of cost savings, for example) in achieving it other than to brag about it. Two, the issue of SAF (and sustainability) is limited mainly to practitioners, that is the airlines, with passengers - at least those in Asia - uninterested and unwilling to participate. Three, more people have become disillusioned with climate change. Many will concede they know it is happening but don’t think governments are doing enough. Our problem is there’s only one David Attenborough – and he is too old - and one Greta Thunberg - and she is too young and inexperienced.”

Menon takes a different approach. Sustainability is critical to the success of international air transport, he said. Already, the temperature increase in 2023 is close to the red flags raised by the Inter-Governmental Panel on Climate Change, he pointed out.

‘A harmonized global framework that enables the cost-effective supply of SAF is crucial for aviation to attain its net zero emissions goal by 2050. By highlighting their collective ambition on SAF usage, AAPA airlines are indicating the level of SAF demand as an impetus for governments to consider the necessary support initiatives for SAF supply, and for fuel producers to plan SAF production capacity, to meet the needs of the industry. At the same time, a globally agreed accounting framework for airlines to account for their emission reductions, based on a chain of custody approach, should be in place. This will ensure that the relevant carbon abatement credits are properly attributed in the SAF supply chain from feedstock to production and use’

Subhas Menon AAPA director general

“Until adequate supplies of SAF are available, ICAO’s (International Civil Aviation Organization) Corsia scheme is a necessary measure for airlines to mitigate their CO₂ emissions.” he said. “Regulations must be harmonized globally to make the world sustainable.

“Legislation that incentivizes SAF demand and supply, within borders, misses the critical point. If SAF is only available halfway on a return journey, airlines cannot be sustainable. It’s like building a bridge to somewhere only to stop when you are halfway there.”

Singapore’s acting transport minister Chee Hong Tat, when addressing the Assembly, said the use of SAF will lead to higher costs for airlines and passengers. He called on the industry and the Asia-Pacific to instead support new paths to production of greener jet fuel.

Chee said Singapore cannot single handedly pursue environmental sustainability within the aviation sector without considering the significant cost impact this will have on the industry.

“It is untenable for airlines to continue as usual without looking for greener ways of operating,” he added, outlining the trade-offs the Singapore government is weighing before it announces a strategy on increasing the use of eco-friendly jet fuels.

The strategy could include making greener fuels, which cost three to five times the price of regular jet fuel, mandatory for flights departing Singapore. Other options being considered are providing incentives for using greener fuel or a combination of mandates and incentives, he said.

International Air Transport Association (IATA) deputy director general, Conrad Clifford, said “the region will need to move rapidly towards the use of SAF because it will play the largest role in reaching our goal of net-zero CO₂ by 2050”. “IATA has been actively providing support to airlines in the region to help them ready for the transition to SAF,” he said.

“But ramping up SAF use goes far beyond the efforts of airlines alone. It requires close cooperation among different industry sectors, from agencies overseeing energy production and transition, fuel producers and suppliers, to the airlines.”

Most importantly, Clifford said, governments in the region must take the lead by introducing policies to ensure sufficient SAF supply and enable the uptake by airlines. “Many countries are just starting to consider SAF production and adoption, so government support - for example in the form of incentives - will be crucial to reduce risk and accelerate the energy transition at this early stage,” he said.

“Governments should set up comprehensive consultation processes that involve all stakeholders to discuss how the industry can transition to SAF. And a transition from consultation to action, in the form of a task force or working group, for example, will be vital.”

AAPA’s Menon said airlines are calling on governments, fuel producers, airports and other industry organizations to come together globally, to accelerate the transition to renewable energy and fuel the industry’s journey towards carbon neutrality.

As they continue to tussle with environmental challenges, airline chiefs said they still face headwinds from rising fuel prices and high inflation. Air travel in the region recovered to 69% of 2019 levels for the year to September 30 trailing all other regions and impacted mainly by China’s slow reopening of its border post-pandemic.

“Industry recovery has been slowed by inflation, the tight job market, supply chain constraints and fuel prices, which are still higher than in 2019,” said Menon. “Non-oil costs are escalating in areas like ground handling and taxation, squeezing profit margins for airlines,” he said, emphasizing supply chain issues continue to impact deliveries of new aircraft and spare parts for maintenance.

The industry is banking on Chinese travellers returning in full force to kick start a fresh wave of growth, which Menon predicts will happen in the first half of 2024. China was the largest air travel market pre-Covid-19, accounting for a fifth of international travel within the Asia-Pacific and 6% globally. At press time, the numbers were 10% and 2%, respectively.

Mainland recovery mainly has been focused on domestic travel. Also, the slow lifting of restrictions on group tours to popular overseas destinations has limited international travel.

Nevertheless, Menon remains optimistic about the industry’s prospects, saying air travel is now truly open. “Most economies have reached or exceeded pre-pandemic levels of connectivity. Domestic air travel has surpassed 2019 levels. International air travel will reach 2019 levels by year-end,” he told delegates.

“As the region’s borders reopened after the rest of the world, Asia Pacific air travel recovery at 69%, trails other regions. Still growth is dramatic. Asia-Pacific passenger traffic increased 171% over the same nine months in 2022 but capacity growth was a slower 130%.”

The Assembly of Presidents also passed a resolution on aviation safety, pledging to work with ICAO and relevant national regulators to actively generate initiatives in the Asia-Pacific to enhance safety culture in various areas, especially in regions with inherent terrain, visibility and situational weather challenges. They include training, education, reporting and investigation, knowledge-sharing programs and the deployment of advanced technologies.

A third resolution was passed at the Assembly calling on governments to avoid imposing unilateral measures on airlines that have disproportionate impacts on operations, affect overall connectivity and schedule reliability.

“Governments need to consider the overall economic effects of introducing regulations that will increase the operational and cost burden on airlines, particularly in circumstances beyond the control of airlines. Overly strict enforcement of passenger and slot-related regulations during and in the immediate aftermath of periods of mass disruption to transportation systems may not serve the best interests of the travelling public if they are not practical, cost-effective, efficient, and sustainable,” the resolution said.