European Airlines Plan Ticket Price Hikes Amid Emissions Pressure

European airlines, including British Airways, are preparing to increase ticket prices in response to mounting pressure to reduce greenhouse gas emissions. 

Luis Gallego, CEO, International Airlines Group (IAG), which owns British Airways, emphasized that the shift to cleaner, sustainable aviation fuel (SAF) will significantly impact costs and demand. "Flying will become more expensive," Gallego told the Financial Times. "This is a concern; we are striving to enhance efficiency to mitigate it, but there will be an impact on demand."

Starting next year, European airports are mandated to use at least 2% SAF, a requirement set to increase to 6% by 2030, 20% by 2035, and 70% by 2050. Despite recent price drops prompting Shell to halt biofuels plant construction, SAF remains considerably pricier than traditional jet fuel. The aviation sector, a major emitter of carbon, faces EU regulations aimed at reducing its environmental footprint.

"We agree with decarbonization,but I think we need to do it in a consistent way worldwide so as not to jeopardize European aviation. The reality is that we do not have enough SAF, and what we do is very expensive," Gallego added. 

The challenge is exacerbated by limited SAF production, which accounted for less than 1% of total aviation fuel consumption last year. IAG itself utilized 12% of the world's SAF across its five airlines, including British Airways, Iberia, and Aer Lingus. 

Gallego expressed cautious optimism regarding recent regulatory approvals, such as Lufthansa’s acquisition of a 41% stake in ITA, the successor to Alitalia. He hoped this indicated potential approval for IAG's proposed takeover of Spanish carrier Air Europa. "I see this as positive news because it means that the European Commission sees the value of consolidation, to have a stronger airline industry in Europe," he noted.