British Airways owner IAG warns sustainable aviation fuel charges could ‘kill’ European aviation

Luis Gallego has warned that proposed green charges on airlines will push up fares for passengers

The chief executive of British Airways ‘ parent company has warned that proposed environmental levies on airlines could “kill” the European aviation industry while driving up ticket prices for passengers.

Luis Gallego, chief executive of International Airlines Group (IAG), has cautioned that the planned green charges – which place a heavier burden on UK carriers – would push fares higher and inflict serious damage on the aviation sector.

The proportion of sustainable aviation fuel (SAF) that airlines are required to use is set to increase next year under the proposed regulations.

At present, British airlines must ensure their fuel mix comprises 3.7 per cent SAF. Following next year’s rise, this figure is expected to climb steeply to 10 per cent by the end of the decade.

Gallego cautioned that oil companies producing SAF are failing to generate sufficient quantities for airlines to meet the mandated environmental targets, as reported by City AM.

Speaking to the Financial Times, Gallego said: “We have mandates for things that do not exist.

“All the European airlines will have a major cost disadvantage to global competitors and this is going to have consequences,” he added.

The IAG chief executive further argued that the aviation industry deserved “a level playing field, otherwise we’re going to kill European aviation, but we’re not going to save the planet.”

This comes after UK ministers conducted a consultation on the green fuel proposals, with one official stating that “a common sense approach” to aviation fuel would allow carriers to “keep costs down and make it cheaper for families to go on holiday.”

Within the consultation, ministers are weighing up regulations that would require UK airlines to purchase sustainable fuel produced from non-food waste or through electricity, referred to as second or third-generation SAF, which carries a higher price tag than conventional SAF.

IAG has suffered a blow to its profitability owing to spiralling fuel costs, which industry leaders have cautioned could result in some carriers going under next year.

The London-listed company, which also operates airlines Vueling and Aer Lingus alongside British Airways, recorded a 16 per cent drop in pre-tax profit to €3bn in the nine months to the end of September.

The group attributed this profit decline to the “significant increase in jet fuel prices from March onwards,” which stemmed from the closure of the Strait of Hormuz following the outbreak of conflict in the Middle East.