Domestic low-cost carriers (LCCs) are accelerating the introduction of sustainable aviation fuel (SAF) blended fuel, an eco-friendly alternative fuel. In anticipation of mandatory SAF blending regulations coming into effect in 2027, they plan to gradually increase the number of routes and refueling frequencies. However, as SAF prices are higher than conventional jet fuel, there are concerns that LCC operators, sensitive to expense reductions, may face increased burdens.

According to the airline industry on the 12th, LCC operator AIR BUSAN noted that it used SAF blended fuel on a flight from Incheon to Narita Airport in Japan on the 3rd. The airline plans to use SAF blended fuel on domestic flights to Japan in the first quarter.

Currently, the SAF blended fuel used by domestic airlines consists of about 1% SAF obtained from waste cooking oil, animal fats, and corn production waste, mixed with 99% conventional jet fuel. SAF is considered an eco-friendly fuel because it can significantly reduce carbon emissions compared to conventional jet fuel.

Illustration=ChatGPT DALL·E

Domestic airlines have been using SAF blended fuel on a limited basis for one flight a week on Japan routes since the fourth quarter of last year. As this is the first time using SAF blended fuel, they started pilot applications on the shortest international route to Japan. The Ministry of Land, Infrastructure and Transport plans to mandate the use of SAF blended fuel on all international flights departing from domestic airports starting in 2027.

The first to implement the SAF blended fuel was Korean Air, a major airline. Korean Air has been using SAF blended fuel on its Incheon-Haneda route since August of last year. Following that, Asiana Airlines also applied it to the same route.

Among LCCs, T’way Air was the quickest to adopt SAF blended fuel, starting from September of last year on the Incheon-Kumamoto route. Jin Air then introduced it on the Incheon-Kitakyushu route in November of last year. Last month, Eastar Jet and Jeju Air began using SAF blended fuel on the Incheon-Kansai route and the Incheon-Fukuoka route, respectively.

SAF is reported to be about three times more expensive compared to conventional jet fuel. Currently, the SAF blended fuel, consisting of about 1% SAF, does not show a significant price difference from conventional jet fuel. However, if the percentage of SAF in the blended fuel increases, fuel prices may rise. Fuel expenses are directly linked to airline revenue. European airlines such as Lufthansa and the Air France-KLM Group are already imposing additional charges on tickets due to stricter SAF regulations.

The Ministry of Land, Infrastructure and Transport is preparing various incentives considering the increased expense burden on LCCs. First, they will factor in how much SAF expense is reflected in fare scores when allocating international route operating rights. They are also considering measures to reduce airport facility usage fees for airlines. There is also a plan for the government to grant separate 'carbon mileage' to passengers using SAF flights.

The refining industry is discussing ways to lower the production expense of SAF. Currently, SK Energy, GS Caltex, and S-Oil are creating SAF blended fuel, but none have dedicated facilities for SAF production. They are producing SAF blended fuel using existing refinery facilities. It is said that if dedicated facilities are established, yields could improve further. However, the substantial expenses involved in creating SAF production facilities are causing oil companies to hesitate about investing.

The refining industry argues that incentives are necessary to alleviate the expense burden of SAF production. A representative from a refining company currently conducting feasibility studies said, 'It is expected that introducing dedicated facilities will cost trillions of won, but if there are support measures like temporary investment tax credits, it is believed that more favorable economic results will follow.'