Arab airlines criticise EU over cost of green fuel policy

• Fear of 28% leap in costs
• ‘Unfair penalty’ on non-EU carriers
• Threat to narrow margins

Arab airlines have criticised the European Union for its policy on cleaner aviation fuels, which they say could drive their costs up by more than a quarter over the next eight years.

The Arab Air Carriers’ Organisation (AACO) says the EU’s aviation sustainability policies involve inconsistencies that unfairly penalise non-European airlines and drive up costs in an industry already operating on razor-thin margins.

The secretary general of the AACO, Abdul Wahab Teffaha, speaking at the Sustainable Aviation Futures Mena Congress in Abu Dhabi this week, said his members’ costs could rise 14 percent by 2030 and 28 percent by 2033 because of the transition to cleaner fuels.

Under current EU rules, only sustainable aviation fuel (SAF) produced in Europe qualifies for emissions credits, meaning that Gulf and Arab carriers that use low-carbon aviation fuels (LCAF), which also lower emissions, receive no recognition for their efforts.

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The problem is, Teffaha said, that the sustainable aviation fuel that Arab airlines buy from Europe is not recognised by Corsia, the Carbon Offsetting and Reduction Scheme for International Aviation.

Corsia is a global emissions-reduction framework led by the International Civil Aviation Organization (ICAO), which is at odds with the EU’s aviation sustainability policies

Teffaha said: “My main problem, particularly with European airlines, is that Europe has taken the line that ‘What I do is right, whatever is done by others that doesn’t comply with what I did, I won’t accept.’”

A report by the investment research company Morgan Stanley Capital International on the impact of Corsia on just one Arab airline, Dubai’s Emirates, found that fuel compliance costs could reduce the airline’s margins by up to 2.9 percent if they are not passed on to passengers.  

The AACO is calling for mutual recognition of sustainability efforts, saying airlines should receive emissions credits regardless of where they source cleaner fuels.

“The solution is in the hands of the International Civil Aviation Organisation and regulators,” Teffaha said. “ICAO needs to accept that any reduction of emissions using clean energy, according to the law of the land, needs to be accepted by Corsia.”

Global airlines operate on average profit margins of about 3 percent, leaving little room to absorb rising sustainability costs.