European Airlines Say Sustainable Fuel Targets May Mean Higher Fares, Consolidation
10.13.2023 By Tank Terminals - NEWS

October 13, 2023 [Reuters]- European airline chiefs said on Thursday the industry needs to make more money and may consolidate further to pay for sustainability targets, a trend likely to lead to higher fares for passengers on top of rising demand for air travel.

 

The head of British Airways parent IAG (ICAG.L) told reporters at a CEO roundtable that there was a more than a 90% risk that the industry would not meet a European Union mandate for the availability of sustainable aviation fuel (SAF) in 2025.

The European Union has adopted rules requiring flights departing from EU airports to carry a progressively increasing amount of SAF, starting with 2% of total fuel in 2025.

Gallego said Europe’s tougher rules, compared to other regions, risked making its fragmented industry less competitive, putting pressure on airlines to continue a recent wave of partnerships.

“The problem we have in Europe is we have a small group or a small airline competing in a global war with mandates of sustainability that are ahead of others. We are not going to be competitive,” Gallego said.

“So we need to consolidate the industry, you know, in order to afford all these, for example, sustainability ambitions that we have. And that’s the reason why we are trying to be bigger, more efficient, and to develop better platforms for our customers.”

Speaking to Reuters on the sidelines of the Brussels event, Ryanair (RYA.I) Chief Executive Michael O’Leary forecast more consolidation with IAG best placed to buy Portugal’s TAP ahead of rivals Air France-KLM (AIRF.PA) and Lufthansa (LHAG.DE).

He expressed surprise that Air France-KLM had bought a stake in Scandinavian SAS.

He also reiterated predictions that low-cost rivals Wizz Air (WIZZ.L) and easyJet (EZJ.L) would fall to consolidation, with easyJet snapped up by IAG or Air France-KLM, or both, and Wizz Air getting bought by Lufthansa or a Middle Eastern buyer.

“Riyadh (Air) have lots of plans, but they have no access to aircraft,” he said.

The comments drew a frosty response from easyJet. Other carriers were not immediately available for comment.

“Millions of consumers in Europe will be relieved to hear there is no realistic prospect of Ryanair becoming the only low cost airline in Europe,” an easyJet spokesperson said.

Pro Trial: Access 12,600 Tank Terminal and Production Facilities

12,600 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

Vopak Ups Outlook as Demand for Energy Storage Boosts Profit
05.20.2024 - NEWS
May 20, 2024 [Reuters]- Tank storage company Vopak VOPA.AS on Wednesday raised its full-year prof... Read More
China Energy to Complete New Serbian Refinery in Four Years - Report
05.20.2024 - NEWS
May 20, 2024 [SeeNews]- China Energy International Group is expected to build a 2.4 billion euro ... Read More
UAE's ADNOC Buys Stake in NextDecade's Rio Grande LNG Facility, Signs Supply Deal
05.20.2024 - NEWS
May 20, 2024 [Reuters]- Abu Dhabi National Oil Company (ADNOC) has acquired an 11.7% stake in Nex... Read More
OMV Petrom Commissioned the Largest Crude Oil Storage Tank in Romania, at Petrobrazi Refinery
05.20.2024 - NEWS
May 20, 2024 [The Diplomat]- OMV Petrom, the largest integrated energy producer in Southeastern E... Read More