The International Air Transport Association (IATA), representing approximately 350 airlines worldwide, estimates that reaching this critical environmental goal will cost carriers a staggering $4.7 trillion, or an annual expenditure of $174 billion. A portion of this substantial cost is likely to be translated into higher airfares for passengers.
Sticking to the Target, Raising Criticisms
Despite earlier suggestions of growing skepticism among some airlines about the feasibility of the 2050 target, IATA successfully avoided reopening the sensitive debate on net zero during its annual meeting in New Delhi. Airline bosses emphasized the narrow window available for the industry to meet its objectives, signaling a collective resolve.
However, they intensified their criticism of both energy companies and planemakers. Energy companies were accused of imposing arbitrary charges in Europe for sustainable fuels, while aircraft manufacturers faced scrutiny for failing to deliver efficient new jets on schedule.
"We still have time to get there, but we do need to see more action on the part of all of the partners in the value chain to make sure that the industry can get there," stated Willie Walsh, IATA Director General. His comments in April had previously warned that the net zero agenda was "sliding off course," seemingly intended to spark discussion about the inherent challenges. On Tuesday, Walsh confirmed that there had been no discussion of delaying the target at this week's summit.
The SAF Dilemma: Supply vs. Price
The aviation industry's sustainability efforts heavily rely on plant-based Sustainable Aviation Fuels (SAF). Yet, current supplies cover only a tiny fraction of airlines' extensive fuel requirements. Consequently, carriers are strongly urging governments and energy firms to significantly ramp up production.
"The oil companies are obviously not producing [enough] SAF," remarked Marie Owens Thomsen, IATA’s Chief Economist.
Conversely, the energy industry maintains that sufficient SAF is currently available in Europe, citing recent investments and suggesting an oversupplied market. Carl Nyberg, Senior Vice President, Renewable Products Commercial at SAF producer Neste, told Reuters, "Contrary to what some are saying we believe we have an oversupply situation currently in the SAF market." Nyberg suggested that the core issue is more about price, as the cost of SAF ingredients makes it approximately three times more expensive than traditional fossil jet fuel.
However, Walsh countered that many airlines globally are unable to procure SAF without importing it over vast distances, which would undermine the fundamental goal of reducing emissions. European industry association FuelsEurope did not respond to requests for comment.
Shifting Tones and Remaining Challenges
The summit revealed a noticeable shift in tone within the industry, barely four years after airlines committed to accelerating their climate change plans under increasing pressure from regulators and environmental groups. Patrick Healy, Group Chair at Cathay Pacific, observed, "There’s a level of scepticism and perhaps you could even say sort of waning enthusiasm for the overall energy transition."
Despite these challenges, airlines anticipate higher profits in 2025, cushioned from the worst impacts of global trade tensions by falling prices of traditional jet fuel. Rob McLeod, Head of Energy Risk Solutions at Hartree Partners, advised airlines to leverage these savings to invest more in SAF, addressing concerns about funding the transition.
Adding to the industry's complex outlook, U.S. President Donald Trump’s tariff war has cast a shadow by driving up operating costs and impacting travel demand. Furthermore, while new fuel-efficient jets are crucial for decarbonization, production delays at major manufacturers like Boeing and Airbus have forced carriers to continue operating older generation aircraft.
"Everyone’s realising that it’s a lot more complicated than we thought a few years ago," Healy admitted, reflecting the growing understanding of the complexities involved.
The summit, hosted by budget airline IndiGo, also served as a testament to India’s emergence as a vibrant aviation market. In a rare appearance by a major leader, Prime Minister Narendra Modi announced that Indian carriers are poised to continue their growth, having placed "orders for more than 2,000 new jets." The event also marked a new chapter for the 80-year-old IATA with the induction of low-cost pioneer Southwest Airlines as a member, signaling an evolving landscape within the global airline industry.