Forecasts by the FAA in 2022 suggest that air travel will consistently increase over the next two decades, further escalating greenhouse gas emissions. Sustainable Aviation Fuel (SAF) is pinpointed as a potent solution for greenhouse emissions. However, its higher costs compared to conventional fuels present a challenge for its adoption. We examine the economic ramifications of SAF adoption on U.S. airlines by simulating two distinct scenarios. Our results reveal a 5.9% rise in the marginal costs (MC) of Full-Service Airlines (FSAs) with a 20% SAF blend while Low-Cost Carriers (LCCs) experience only a 1% increase under the same scenario. Alternatively, using a SAF blend that is 20% cheaper in a 50–50 ratio results in an 8.8% increase in the MC of FSAs, compared to just a 2% rise for LCCs. These scenarios suggest that the cost convergence of business models observed in recent years is unlikely to be achieved.
Redefining the skies: How sustainable aviation fuel alters airline cost structure and market dynamics
F. Karanki
International Journal of Sustainable Transportation
International Journal of Sustainable Transportation ; 18 , 8 ; 695-703
2024-08-02
9 pages
Article (Journal)
Electronic Resource
English
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