Lufthansa Cargo on Tuesday announced it will levy a surcharge on shipping customers to cover the cost of mandated purchases of sustainable aviation fuel, mirroring a decision in May by Lufthansa Airlines to add an SAF fee on passenger tickets. Other airlines are expected to follow suit as European and other governments take action to decarbonize the aviation sector.

Lufthansa’s cargo subsidiary said it will apply an SAF surcharge to freight departing European Union countries beginning Jan. 1, 2025. The move is a response to new EU regulations requiring airlines to mix in 2% of SAF with conventional kerosene jet fuel, with the SAF quota gradually increasing to 6% by 2030. By 2035, 20% of aviation fuel in the EU must be SAF. The quota will increase to 70% by 2050.

Lufthansa Cargo is a cargo airline that is also responsible for managing all cargo shipments moving on several passenger airlines in the Lufthansa Group, including Austrian Airlines, Brussels Airlines, Eurowings, Discover and SunExpress. It took delivery of its 18th Boeing 777 freighter in August and also operates four standard-size Airbus A321 converted freighter.

Sister company Swiss International Airlines also said its cargo division will include a mandatory SAF surcharge on the shippers’ invoice at the start of next year. Swiss only has a passenger fleet and handles its own cargo operations.

Lufthansa Cargo and Swiss WorldCargo will add SAF to their inclusive surcharge that covers additional costs, such as jet fuel costs above certain benchmarks and airport security prices, over which the airline has no control. A standardized index calculation system is used to track all applicable costs and set the surcharge, which is added to the net price of each shipment. The carriers decide to adjust the airfreight surcharge if indexed costs move up or down by a certain amount.

Lufthansa Cargo’s surcharge can vary by country, based on how governments treat the pricing mechanism.

Countries outside the EU are also planning to introduce or have already introduced mandatory SAF quoatas. The government of India, for example, is developing a mandatory SAF quota of 1% to 5% starting in 2027. Singapore is requiring airlines to add 1% SAF to flights departing from Changi Airport starting in 2026, with a target of 3% to 5% by 2030. The United Kingdom and Japan will require a 10% SAF blend on flights at the end of the decade.

As a so-called “drop-in” fuel, SAF is compatible with kerosene and can be easily added to it.

Governments are mandating higher SAF use to create a market that drives energy producers to invest in production of SAF from bio-based sources, such as recycled animal fats or plant material, in an effort to reduce the airline industry’s climate-warming carbon dioxide emissions.

Alternative jet fuel produces similar amounts of emissions at the tailpipe as regular jet fuel. Emissions reductions are realized at the production source. Over its entire life cycle, SAF made from organic plant-based waste materials has a carbon footprint about 80% lower than fuel made from crude oil, according to energy and aviation experts. But benefits can be undercut if it takes lots of fuel to transport SAF long distances to airports. Bio-sourced SAF is currently available in small quantities and is three to five times more expensive than conventional jet fuel.

Lufthansa Cargo has set a climate protection target of net-zero carbon neutrality by midcentury. By 2030, the company aims to halve net carbon emissions through reduction and offset measures, including acquisition of more fuel-efficient aircraft and optimizing flight operations, compared to 2019 levels. Lufthansa Cargo gives businesses the option to contribute to the purchase of SAF and claim the environmental credits for their supply chain. It is also in the processing of installing a high-tech film that mimics a sharkskin on all 777 freighter aircraft to improve aerodynamics and fuel efficiency.

By Eric Kulisch

Source: Freightwaves. https://www.freightwaves.com/news/lufthansa-cargo-introduces-environmental-surcharge-to-meet-saf-quotas. 30 September 2024.

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