Oil Marketing Companies Push for Incentives to Propel Sustainable Aviation Fuel Adoption without Delays
The government has established an indicative target to blend one percent sustainable aviation fuel (SAF) into jet fuel for international flights starting January 2027, with incremental increases to two percent and five percent by 2028 and 2030, respectively. State oil marketing companies have expressed confidence that the ongoing geopolitical tensions in West Asia will not hinder this initiative. However, they have urged the government to consider fiscal incentives such as viability gap funding and tax rebates to mitigate the high costs associated with SAF, which is currently priced three to five times higher than conventional aviation turbine fuel (ATF).
This initiative represents a significant shift towards more sustainable aviation practices and could affect airfare pricing for the common citizen, as airlines may need to introduce surcharges to offset increased operating costs. Initial projections suggest a potential increase in ticket prices of ₹100-200 due to the introduction of SAF mandates. While air travel costs may rise slightly, the long-term environmental benefits and regulatory alignment with global standards may offset these price hikes. Airlines in Europe and Singapore have already begun implementing similar charges to meet SAF requirements, indicating a trend that may influence pricing strategies in India as well.
Looking ahead, the government is actively working on formulating a comprehensive SAF policy, with an emphasis on substantial investments required for production. Companies like Indian Oil Corporation and Bharat Petroleum are at the forefront of this transition, with plans to commence SAF production in the coming years. The government intends to engage in discussions with airlines and oil companies to resolve any challenges related to SAF procurement and pricing. This proactive approach aims not only to support sustainable aviation but also to woo foreign investments and enhance India’s position in the global aviation market.