The rich should pay higher fares to clean up aviation, says Heathrow boss

Rich travelers will have to pay more to fly if the aviation industry is to transition to greener fuels, the boss of one of the world’s biggest airports said Tuesday.

Speaking on a panel at the World Economic Forum in Davos hosted by CNN’s Richard Quest, Heathrow CEO John Holland-Kaye said that wealthy individuals and companies should pay extra to fly with sustainable aviation fuel (SAF) in order to bring the costs down for everyone else, particularly people in developing countries.

He said that financiers and energy suppliers should invest in SAF production, including in emerging markets.

“But as individuals and companies we need to be paying the premium for sustainable aviation fuels so that we can get the cost of it down so that the mass market and developing countries don’t have to pay for the energy transition. The wealthy people in this room and wealthy nations should be funding the energy transition in aviation to help support developing countries,” he added.

Holland-Kaye said the solution to sustainable aviation was not to fly less, which was not necessarily an option outside Northern Europe, but to use cleaner sources of energy to travel.

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SAF is viewed as critical to reducing aviation’s carbon emissions but its green credentials come at a hefty price. Some airlines allow passengers to offset their CO2 emissions by paying more for their tickets to cover the extra cost of using SAF, but very few travelers currently make use of this option.

Holland-Kaye said that companies can play a major role accelerating the adoption of SAF because business travel accounts for about 30% of fuel used in aviation. He cited the example of Microsoft (MSFT), which has an internal carbon tax for travel that requires each business unit to pay a fee based on its carbon emissions.

Produced mainly from recycled food and agricultural waste, such as used cooking oil, SAF is a type of biofuel that cuts greenhouse gas emissions by 80% compared to conventional jet fuel.

It also costs between two and eight times more than its fossil-fuel based alternative, which is why in 2019 it accounted for just 0.1% of jet fuel used in commercial aviation, according to a report by the World Economic Forum and McKinsey.

In 2021, the industry pledged to replaced 10% of global jet fuel supply with SAF by 2030. This year, Virgin Atlantic plans to fly a Boeing 787 from London to New York powered solely by SAF in what has been billed as the world’s first net-zero transatlantic flight.

Clean energy investments need a major boost if the world is to meet its climate goals, according to Fatih Birol, executive director of the International Energy Agency. Russia’s invasion of Ukraine has prompted a surge in investment in renewables as countries race to secure alternative energy supplies, but much more needs to be done, he said.

Speaking on another Davos panel hosted by CNN’s Julia Chatterley earlier on Tuesday, Birol said that for every dollar invested in fossil fuels, the world is now investing $1.50 in clean energy. That needs to increase to $9 to keep global warming below 1.5 degrees Celsius, he added.

— Anna Cooban contributed reporting.