The CEO of the International Airlines Group IAG, Luis Gallego, announced that the proposed regulations regarding green fuels could jeopardize Europe's aviation industry. These regulations are based on increasing the amount of sustainable aviation fuel (SAF) that airlines must use, with the aim of raising this fuel's share from the current 3.7% to 10% by the end of the decade.
Consequences of Increased Costs
Gallego pointed out the rising costs resulting from these regulations and stated that British airlines would face a cost disparity compared to their global competitors due to these impositions. He emphasized that this situation could lead to increased ticket prices for passengers and ultimately harm the aviation industry. According to him, "We have requirements for things that do not exist."
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Shortage of Sustainable Fuel
According to forecasts, there is not enough production of sustainable aviation fuel to meet new demands, which could lead to further problems for airlines. Gallego stated that "all European airlines will face a major cost disparity compared to their global competitors, and this situation will have consequences."
While British ministers are consulting on green fuel programs, one official said that "a sensible approach" to aviation fuel will help companies "keep costs down and make family travel cheaper." In this consultation, officials are considering regulations that would require British airlines to purchase sustainable fuel produced from non-food waste or through electricity, known as second or third-generation fuels, which are more expensive than standard fuels.
Impact of Fuel Costs on IAG's Profits
The IAG group has faced financial difficulties due to rising fuel costs, and reports suggest that this increase in costs may lead to the bankruptcy of some airlines next year. The company, which includes British Airways, Vueling, and Aer Lingus, reported a 16% decrease in its pre-tax profit for the nine months ending in September, down to 3 billion euros. This decline was due to "a significant increase in jet fuel prices since March," resulting from the closure of the Strait of Hormuz and the outbreak of war in the Middle East.
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