Proactive Investors - Air travellers have been warned that fares will have to rise to enable airlines to meet the cost of cutting emissions.
Luis Gallego, the boss of British Airways owner International Consolidated Airlines Group (LON:ICAG), introducing "more expensive, sustainable fuel (SAF)" would “have a big impact” on the industry.
“Flying is going to be more expensive. That is an issue, we are trying to improve efficiency to mitigate that, but it will have an impact on demand,” he said in an interview with the FT.
Decarbonisation has to be brought in globally in a consistent way, said Gallego, and not in a way that threatens European aviation.
Current EU targets stipulate that by 2030 6% of jet fuel has to come from sustainable sources.
IAG is already one of the largest users of SAF across its fleet, but Gallego said production remains a problem.
“The reality is we do not have [enough] SAF, and the SAF we have is very expensive,” Gallego said.
A reduction in carbon allowances allocated to airlines will also push up costs, said the IAG boss.
Lufthansa has already introduced a surcharge on tickets to fund cleaner fuels and decarbonisation.
Gallego also welcomed the conditional clearance for Lufthansa’s acquisition of a 41% stake in Italian carrier ITA on Wednesday as a sign that consolidation among the industry would be allowed.
“I see that this is positive news, because it means that the European Commission sees the value of consolidation, to have a stronger airline industry in Europe,” he said.
Currently, IAG is seeking regulatory approval to acquire Air Europa in Spain, but Gallego said it had other options including a South American carrier or Portugal airline TAP.