Travellers might need to brace for soaring airfare costs as airlines attempt to cut their emissions simultaneously while the demand for travel increases.
This follows the federal government’s updated safeguard mechanism—which came into effect in July—that has set limits on the greenhouse gases from Australian companies to reduce emissions to 43 percent below 2005 levels by 2030 and net zero by 2050.
But airline bosses have said this change will come at a price.
Virgin Australia’s Chief of Corporate Affairs, Christian Bennett, said sustainable aviation fuel was the answer for dramatically cutting emissions.
Lack of Seats Curbing Demand
The comments come as the head of Sydney Airport warns a lack of seats is restraining domestic flight options rather than a lack of demand.Sydney Aiport has said the lack of seats is due to the airlines “hoarding” take-off and landing slots.
Chief Executive Geoff Culbert said domestic passenger numbers had remained stagnant over the past 15 months. However, he noted that international traffic was seeing growth.
This is the first time since COVID-19 travel restrictions eased that the recovery in international traffic had overtaken the domestic travel recovery at the country’s busiest airport as of July.
Mr. Culbert accused major airlines of effectively stockpiling spaces at the airport, which other providers could utilise to boost their capacity and diminish costs.
“We continue to see evidence of unused slots going to waste, with a persistent mismatch between slots held by domestic airlines and the schedule that is flown,” he said.
Mr. Culbert said a surge of passengers from China, Korea, and India had been encouraging, but lagging markets like the U.S. and New Zealand and domestic travel offset it.
“The (domestic) lag is being driven by a lack of seat capacity rather than a lack of demand,” he said.
But Mr. Bennett said Virgin Australia was “fully aligned with the safeguard mechanism’s goals” despite its potential to add to the price of airfares.
“There is no escaping the challenge of sustainable aviation fuel,” he said during a parliamentary hearing on Monday.
“The technology is not the problem—actually making sustainable aviation fuel is not the problem.”
“Economics is the problem,” he said.
The airline must reduce emissions by 4.9 percent to align with pollution limits.
Mr. Bennett said sustainable jet fuel was the “slingshot” to net zero because it produced 80 percent less pollution than conventional options.
But environmentally friendly fuel is two to five times more costly than commercial jet fuel as it is not produced in Australia, with Mr. Bennet explaining that Virgin’s single largest expense and a quarter of its operating costs is fuel.
The raw material used to produce sustainable fuel has increasingly been shipped to the U.S. and Singapore. But he noted that domestic fuel production from Australian feedstocks could pull down prices and emissions at the same time.
Sustainable Aviation Report
And more than 600,000 flights between Sydney and Melbourne could be powered by fuel made from agricultural waste in 2025, a Sustainable Aviation Fuel Roadmap report found.But the Australian industry and governments must make changes to support sustainable aviation fuel.
With more significant investments, aviation emissions could be significantly cut as a biofuel could also power 90 percent of all domestic flights by 2050.
CSIRO senior manager and report author Max Temminghoff said Australia was uniquely placed to meet the growing demand for sustainable aviation fuel (SAF) because of its strong agricultural industry.
Aviation biofuel can be created using waste from farming, such as sugarcane, sawmill residue, sorghum, used cooking oil, canola and cottonseed.
“Australia had enough feedstock that, if refined locally, could create 60 percent of jet fuel needed for domestic flights in 2025 and 90 percent of the fuel needed in 2050,” Mr. Temminghoff said.
He said the road map estimates Australia is “currently sitting on enough resources to produce almost five billion litres of SAF by 2025.”
“That’s enough fuel to power 640,000 Melbourne to Sydney return flights on a Boeing 737,” he said.
The report also found that a biofuel industry could generate jobs and export opportunities in Australia, though it also cautioned that the industry would need more investment and research to reach its potential.
Worldwide, the aviation industry has pledged to achieve net-zero emissions by 2050.
Qantas has committed to using 10 percent biofuel to cut carbon emissions by 25 percent in 2030, and Virgin Australia recently tested a flight using a 30 percent sustainable fuel blend.
