Singapore plans sustainable fuel levy that will push up airfares

Singapore plans to introduce a levy on air fares to pay for sustainable aviation fuel, an early sign of how the industry’s decarbonization efforts will increase the cost of travel.

The levy will vary depending on factors such as the length of the flight and whether the passenger is flying in economy or in premium class, Singapore’s government said Monday at an aviation summit in the city-state.

All flights leaving Singapore must depart with 1% sustainable aviation fuel in their tanks from 2026, rising to between 3% and 5% by 2030, the government said. The levy is designed to fund this initiative.

The proposed tax indicates how passengers will foot at least part of the bill to clean up flying. An estimated $5 trillion of capital investment may be needed to deliver on aviation’s goal of reaching carbon neutrality by 2050. 

Speaking at the summit, Willie Walsh, head of the International Air Transport Association, reiterated that passengers can’t avoid the expense of cutting emissions. “Whichever way you look at this, there will be a cost,” he said.

Read More: Airlines to Hand Passengers $5 Trillion Bill for Greener Travel

The Singapore government, for example, said the fuel levy might add S$3 ($2.20) to an economy fare from Singapore to Bangkok in 2026, while a flight to London would rise by S$16. More details will be announced in 2025.

Sustainable aviation fuel is about three to five times more expensive than conventional jet fuel and the available supply is a tiny proportion of the industry’s requirements.