Singapore last week passed a bill to impose a fixed levy on all departing flights from 2026 to fund the purchase of sustainable aviation fuel (SAF), with the aim of having the cleaner fuel make up 1 per cent of all jet fuel used at the Changi and Seletar airports in its first year.
The IATA warned that such a levy could have a “dampening effect on air travel”, saying it preferred government incentives like those in the United States to encourage the use of greener fuels.
“There is nothing inherently wrong with dampening air travel, if the alternative is more air travel at the expense of planetary and eventually human health,” Ho wrote in a Facebook post on 23 October, responding to IATA’s remarks.
“It is better that the industry pays for its own greening, between airlines and passengers, than to have governments provide incentives for green aviation fuel,” she added. “Government incentives come from taxpayers’ money. Why should the broad base of taxpayers support the minority of flying passengers?”
IATA’s reservations
At the IATA World Sustainability Symposium on 22 October, the association’s senior vice-president for sustainability and chief economist Marie Owens Thomsen said the levy “may have a dampening effect on air travel” and that IATA “may not recommend such a policy elsewhere,” The Straits Times reported.
While acknowledging that Singapore’s circumstances warranted a different approach, Thomsen said IATA preferred “government incentives to raise the adoption of SAF”, as seen in the United States, which offers tax credits to green fuel producers.
“I wouldn’t want to necessarily say that that’s the policy I would want to see for the global SAF market,” she said, as cited by The Straits Times. “If you put a mandate on a product that doesn’t exist, the price is just going to go up.”
IATA’s director-general Willie Walsh also expressed concern about the policy, noting that while the principle of a levy “makes sense”, the details “are not aligned with what we had expected to happen,” the Singaporean daily reported.
He said the association would “further study the legislation that has come into place and better understand the objective there.”
Several other countries in Asia are also moving to promote SAF, though most rely on mandates rather than direct passenger levies like Singapore’s.
South Korea, for instance, will require all international flights departing the country to use at least a 1 per cent SAF blend from 2027, with the target rising to between 3 and 5 per cent by 2030.
Indonesia and Thailand have announced similar goals, with both countries planning to introduce SAF blending requirements of around 1 per cent from 2026 to 2027.
‘Pragmatic solution’
But Ho said she believes the Singapore model offers a “pragmatic solution” for a small country with limited capacity to produce its own green fuel.
She noted that SAF currently costs three to five times more than conventional jet fuel, partly because of the “chicken and egg” problem of insufficient demand to justify large-scale investment in production.
According to Ho, under Singapore’s approach, economy-class passengers will pay an estimated S$3 (US$2.31) levy for short-haul flights, S$6 (US$4.62) for medium-haul flights, and S$16 (US$12.33) for long-haul flights such as to London. The revenue, she said, will go into a fund managed by the Civil Aviation Authority of Singapore (CAAS) to buy SAF in bulk for use at Changi and Seletar airports.
“With a fixed levy, airlines can predict their operating costs without [the] highly volatile tweedle of SAF fuel supply volatility,” she wrote on Facebook. “This is godsend to the potential suppliers to deal in bulk with a highly trusted off-taker.”
She added that having a “triple-A-rated off-taker” like CAAS or Changi Airport would help reduce financing costs for potential investors in SAF production facilities, encouraging scale and innovation that could eventually bring costs to parity with conventional aviation fuel.
When the Singaporean parliament passed the SAF levy bill on 14 October, the city state’s senior minister of state for transport Sun Xueling said subsidies and incentives require “large and recurring fiscal commitments, which are not fiscally sustainable for Singapore”.
The levy aims to help the country achieve its target of having SAF constitute 1 per cent of all jet fuel used at Changi and Seletar airports by 2026, rising to 3 to 5 per cent by 2030.
