Airlines Are Adding New “Green Fares” to Flights. Here’s What That Means for Ticket Prices

30.08.2024 - 23:21 / afar.com / Gary Leff

There was a time in the not so distant past when airlines would slap on “fuel surcharges” any time the price of jet fuel spiked. What was worse, those unpopular levies often lingered even after the cost of oil dropped. The term fell out of favor a little more than 10 years ago after U.S. regulators said that carriers had to explain how they arrived at the specific fee for fuel surcharges, or any other fee that wasn’t directly imposed by the government. Most airlines simply chose to drop the label.

Fast forward to 2024: Airline “green fares” or fees that are tied to use of sustainable aviation fuel (SAF), a more environmentally friendly jet fuel made from cooking oil, are catching on, at least across the pond. That’s in part due to moves by some nations to require carriers to lower their carbon footprint. And while this time, such fees might appeal to some fliers concerned about air travel’s contribution to climate change, in the end it’s the same result: We’re being asked to pay more to cover the cost of powering our flights.

“Airlines see government mandates, international pressure, and in some cases their own lobbying to forestall regulation, as leading to requirements for non–fossil fuel energy,” said travel expert Gary Leff, who pens the View from the Wing blog. But prices are set by supply and demand, he said, “So labeling part of the price as a ‘green fee’ is largely a marketing ploy.”

The latest levy comes from Virgin Atlantic, which recently outlined plans to charge passengers a green fee on certain flights to cover the expense of transitioning to SAF. The airline says it will phase in the charges over the next 18 months and expects to have it in place systemwide by 2030.

“Prices will have to go up to account for the fact that flying with SAF in greater and greater volumes is materially more expensive,” Shai Weiss, Virgin CEO, explained to the media regarding the airline’s move. It’s estimated that the cost of SAF is triple the amount that airlines pay for kerosene, the form of jet fuel most carriers currently use. This past fall, Virgin brought attention to the issue when it operated the first-ever commercial transatlantic fully SAF-fueled flight. Virgin didn’t say how much fliers would pay for the new green surcharge, but media reports have suggested that it could be as high as 40 British pounds a ticket, or around US$52 based on current conversion rates.

And the pressure to decarbonize air travel is ramping up. The International Air Transport Association (IATA) has set a goal of reaching zero-carbon emissions by 2050. Most major international airlines say they are committed to reaching that goal, but thus far they’ve avoided having to directly charge their customers for any related green