British Airways owner warns green charges will ‘kill’ aviation industry and hike fares

The chief executive of British Airways’ parent company has said planned environmental charges on airlines would “kill” the European aviation industry and push up fares. Luis Gallego, the chief executive of International Airlines Group (IAG), has warned the proposed green charges – which are more burdensome for UK carriers – would hike prices for passengers and cause damage to the aviation industry. The amount of sustainable aviation fuel (SAF) an airline is required to use is due to rise next year, under the proposed rules.

Currently, British airlines’ fuel mix must be 3.7 per cent SAF. After rising next year, this amount is expected to soar to 10 per cent by the end of the decade. Gallego warned that oil companies which produce SAF are not producing enough for them to use in order to meet the mandated green targets. Gallego told the Financial Times: “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,” Gallego said.

IAG’s chief executive added the aviation industry should have “a level playing field, otherwise we’re going to kill European aviation, but we’re not going to save the planet.” This follows UK ministers holding a consultation on the green fuel plans where one official said “a common sense approach” to aviation fuel will enable carriers to “keep costs down and make it cheaper for families to go on holiday.” In the consultation, ministers are considering rules that would mean UK airlines would be required to buy sustainable fuel made from non-food waste or by electricity, known as second or third-generation SAF, which is more expensive than the standard SAF.

Soaring fuel costs hit IAG profit IAG has taken a hit to its profit due to soaring fuel costs, which industry bosses have warned may lead to some airlines collapsing next year. The London-listed firm, which also owns airlines Vueling and Aer Lingus alongside British Airways , saw its pre-tax profit dip 16 per cent to €3bn in the nine months to the end of September. The group said this hit to profit was due to the “significant increase in jet fuel prices from March onwards,” which was caused by the closure of the Strait of Hormuz following the outbreak of war in the Middle East.