British Airways may soon offer cheaper, more eco-friendly flights than competitor airlines thanks to its early investment in sustainable aviation fuel (SAF).
Under parent company IAG, the airline has committed $3.5 billion (£2.6bn) in SAF investments to meet sustainability targets and lower operational costs.
SAF refers to aviation fuels that are synthetic, biofuels or recycled carbon, some produced from used cooking oil, tyres and forestry waste.
Unlike conventional fuels, the carbon dioxide generated by SAF is already part of the carbon cycle, reducing carbon emissions by up to 80 per cent over the fuel lifecycle compared to traditional jet fuel.
Jonathon Counsell, IAG sustainability head, said at a summit last week that investing in sustainable fuel early would give the group a “competitive advantage” over other airlines, reported The Times.
According to the outlet, executives from the airline conglomerate said it is currently paying less than 60 per cent of the market rate for SAF after locking in long-term contracts with suppliers early and at favourable rates.
IAG spent €7.6 billion on fuel in total in the last financial year, making it the group’s largest single expense.
According to British Airways, SAF accounts for 2.7 per cent of its total fuel use today.
The airline was the first in the world to use SAF produced on a commercial scale in the UK after signing a multi-year agreement with Phillips 66.
The SAF Mandate says 2 per cent of total UK jet fuel demand should be SAF in 2025, increasing to 10 per cent in 2030 and then to 22 per cent by 2040.
However, SAF is between two and seven times more expensive to produce than traditional jet fuel.
The mandate is set to drive up flight fares as airlines face environmental surcharges and spend more on SAF over the coming years.
British Airways has so far opted to pay the initial costs of SAF itself. Seat prices to fly BA from the UK, Switzerland, and Norway could become more competitive if savings from discounted SAF contracts are passed on to passenger pricing.
Airlines that delay securing SAF are likely to face higher procurement costs that could hike costs for customers.
Lufthansa and Virgin Atlantic have already added a SAF supplement to tickets to fund their sustainable fuel expenses – up to €72 (£61) per ticket and up to £24 per ticket, respectively.
The IAG group plans to reach net zero carbon emissions by 2050.
The Independent has contacted British Airways for comment.
In September, British Airways became the largest carbon removal purchaser in the UK after agreeing to a more than £9 million partnership with UK-based company CUR8.
The airline said that roughly one-third of its emissions reductions will come from carbon removals – the process of removing carbon dioxide from the atmosphere and storing it – by 2050.
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