‘Thing of the past’: why cheap flights face price hikes over fuel changes

Airline tickets will increase substantially in the near future as Europe prepares to legislate necessary rules to replace polluting, fossil jet fuel with SAF – sustainable aviation fuel.

Earlier this week, MEPs adopted a position on the draft EU rules, that will force EU airports to have flights uplifting a minimum share of SAF, starting from just 2% in 2025, right up to 85% by 2050.

The proposed rules aren’t final yet. To become law, they have to be agreed by negotiators from the European Parliament and EU member states during so-called trialogue talks due to start in September.

But experts believe SAF will cost Air Malta six times as much as jet fuel, according to previous statements by Air Malta officials to a Chamber of Commerce debate.

A study by Amsterdam Economics and the Royal Netherlands Aerospace Centre predicts EU islands, like Malta, could be outliers that will suffer up to €60 and €70 ticket price increases. Spain, an example of a country deemed ‘peripheral’ due to the larger amount of kilometres flown within the European economic area, could see price increases of over €65 in 2030 and then over €114 in 2035.

In an online debate on the Fit For 55 targets organised by the Chamber of Commerce in 2021, an Air Malta official, Nadia Giordimaina, had remarked that SAF costs were five times that of Jet A1 fuel. “And this might mean that the ticket prices we got used to are a thing of the past unless there is the necessary support,” she told the panel.

Flying has certainly become awfully cheaper in the last 25 years, opening hundreds of under-served European cities to a wider market of travellers seeking weekend trips and longer stays. Malta’s tourism authority subsidises landing fees for low-cost giants like Ryanair and Easyjet to bring more tourists.

But SAF is now seen as the key to balance out the environmental cost of tourism, where the decarbonisation of aviation will be a necessary process over the next decade, and where price increases will finance investment in technologies that reduce reliance on fossil energy.

The proposed EU regulation suggests that airports with 2 million or less annual passengers should not be covered by SAF obligations, a threshold that Malta’s sole airport does not fall under.

EU airports situated in the Union’s “outermost region”, such as the Azores or Canary islands, will not be subject to the SAF rules, given their distances from the EU mainland.

Failure to obtain exemptions

The Nationalist Party spokesperson Peter Agius, a candidate for the European Parliament, is a regular critic of government failures to prevent Brussels regulations from affecting Maltese industry disproportionately.

“It’s another case in which the government failed to adapt proposed legislation to cater to our specific situation of insularity and dependence on air transport,” Agius said.

“98% of incoming tourists to Malta reach it by air. Our economy depends almost exclusively on air transport and we don’t have the same rail and road networks as Germany or Poland. We do not have the same access to rail and road networks as Germany or Poland.”

Agius said the government had prevented another case of Brussels ‘one-size-fits-all’ rules which, in this case, also included specific provisions for island territories. “It failed to make Malta’s case for policies that cater to our specific situation.”

The impact of SAF on European airlines will only be analysed in five years’ time, another niggling matter for Agius. “It will be too late to avert impact by that time. We need safeguards for the Maltese economy before we adopt EU rules, not after.”

Government tells MEPs to vote against

While the Maltese government was unable to either convince European transport ministers, or obtain exemptions on sustainable aviation fuel for airlines landing at Malta International Airport, within the European Council, earlier this week it advised Maltese MEPs to vote against the Fit For 55 legislative position.

All Labour MEPs voted against SAF, while Nationalist MEP David Casa supported the EPP line and voted in favour of SAF despite submissions from the Maltese government that it would raise Air Malta costs and pricing.

The government told MEPs that while the original Commission proposal from Brussels was to introduce a “gradual blending obligation” on SAF, the European Parliament’s proposals was to increase this share significantly.

“This substantial increase might prove challenging for member states, such as Malta, which do not produce fuel and thus, rely heavily on imports,” permanent representative Marlene Bonnici told MEPs.

While Malta supported the Commission proposal, it said MEPs should oppose the increased targets proposed by the European Parliament’s rapporteur, because this would raise prices for aviation. “Due to the increase in price of flight tickets, citizens will not be able to travel via flight to their intended destination as the cost of air transport starts to become prohibitive. This is obviously all the more relevant for a member state which depends so heavily on the aviation sector for connectivity, tourism and economic development.”

Malta appears to have been successful in pushing for an exemption from routes of less than 1,200km when departing from an EU airport. Crucially, it allows airlines to exempt themselves from having to use SAF if a member state authority has not replied to an exemption request within three months. But the EP position has not provided for such a system.

Government position

Yet while the Permanent Representation of Malta called on MEPs to vote against the EP’s negotiating position on SAF, transport minister Aaron Farrugia yesterday told MaltaToday it was “positive to see the European Parliament also moving in this direction... futher work on this dossier will be carried out throughout which Malta will continue to push forward its interests, in order to for an agreement to be reached between the co-legislators.”

Farrugia said Malta is a strong supporter of this Fit For 55 proposal. “Shifting to smart and safe low- and zero-emission aviation requires a radical change throughout the whole aviation industry and its supply chain. It is true that SAF is currently more costly than traditional fossil jet fuel. However, as the technology matures it will become more efficient and less costly for the industry and its customers.”

Farrugia said passengers of airlines that use SAF will value the emission-reduction benefits, and that phasing out fossil fuels will save Malta from further costs borne through the Emissions Trading System (ETS) and other fuel taxes.

To bridge the price gap between conventional fuel and SAF, Malta is hoping to claim ETS allowances when SAF is used on flights which serve peripheral, insular and island regions.

In forthcoming negotiations between Council and MEPs, Malta will adamantly push the line for an EU-wide SAF blending mandate only, to ensure a level playing field and sufficient access to SAF so as to bring costs down. Farrugia says the Council’s agreement has the necessary safeguards for Malta’s issues of peripherality, with its limited connectivity options. Whether it can drive home its position in the forthcoming negotiations with the European Parliament is another matter.

Sustainable aviation fuel

Renewable electricity and green hydrogen were given the green light from MEPs for inclusion in the SAF mix, with requirements for airports to facilitate recharging and refuelling.

The European Parliament voted to expand a list of feedstocks to include recycled carbon fuels produced from waste processing gas and biofuels derived from so-called category three animal fats up until 2034.

But the Parliament voted to exclude palm oil by-products and food crops, including palm fatty acid distillates (PFAD), intermediate crops, and palm or soy-derived distillates – feedstocks which MEPs had approved in committee.

MEPs exclude biofuels

In their vote on SAF, MEPs barred the use of controversial biofuel feedstocks from Europe’s aviation green fuel mandate (ReFuelEU).

MEPs effectively doubled down on using synthetic fuels for aviation, rather than harmful biofuels made from palm oil by-products and crops.

This means that sustainable aviation fuels cannot be linked to the production of food that is derived from deforestation or loss of biodiversity, or which otherwise leads to increasing food prices.

MEPs in fact opposed extending the definition of sustainable fuels to include palm oil by-products  PFADs and intermediate crops.

Animal fats, the by-products of the animal slaughter process, will however be included for SAF. Palm oil is very often the chosen substitute for animal fats, and this leads to negative impacts on global land use change and emissions.

MEPs showed preference for synthetic fuels over biofuels, but the main synthetic fuel available now is e-kerosene, which is generated by combining green hydrogen (H2) and carbon dioxide (CO2).

Synthetic aviation fuels could also be created using renewable electricity and green hydrogen.