The director general of the International Air Transport Association (IATA), Willie Walsh, has said that while airlines have sent “unambiguous demand signals” for sustainable aviation fuel (SAF), the gap between demand and supply is widening.
As Walsh told the IATA’s 82nd Annual General Meeting, production of SAF this year is set to reach 2.4 million tonnes, enough to cover 0.8% of airline fuel needs. The industry’s goal is to cover 65% of airline fuel needs – or 500 million tonnes – by 2050, indicating the scale of the shortfall.
“The gap is wide and not closing fast enough,” Walsh commented. “It’s not surprising considering cancelled or downsized SAF projects in Sweden, the Netherlands, Germany, Spain, Denmark, the UK, and Singapore – all since the fuel sector joined the net zero commitment. Subsidies to extract fossil fuel are just too appealing, as are the returns.
“The consequences on climate change and energy security are obvious and demand we do better. Promoting SAF in support of sustainability, jobs, and energy security should a ‘no brainer’ for governments.”
Mandates and incentives
As he explained, governments have two main policy tools at their disposal, mandates or incentives, with many opting for the former, despite positive production indicators linked to incentives.
“In the case of the EU and the UK, the situation is absurd,” Walsh added.”Airlines are paying billions in ‘compliance add-ons’ associated with fuel supplier mandates.
“This compensates fuel suppliers for the full penalties they – the fuel suppliers – would pay for not making sufficient SAF. That’s irrespective of whether they supplied SAF or not. And that’s despite airlines wanting to buy more SAF than is being made. You could not make this stuff up!”
‘Still hope’
Walsh added that while there is “still hope” for the 2050 goal to be achieved, that continues to fade.
“We need an urgent dialogue to determine a realistic timeline given the current state of affairs,” he said. “That dialogue must be action oriented – to agree who can and will do what, and by when.
“Maybe the conclusion will be that 2050 is still possible. The more likely outcome, however, is a new timeline that hits a sweet spot – realistic within the broader context of the global energy transition and sufficiently near-term to meet the urgencies of climate change and energy security.”
A challenging year
Elsewhere, during his speech, Walsh noted that the global airline industry is facing a significantly more challenging operating environment in 2026, with profits expected to fall significantly as a result of soaring fuel costs, aircraft supply shortages and geopolitical uncertainty.
As he noted, the industry’s net profits are forecast to decline from $45 billion in 2025 to $23 billion this year, while net profit margins are expected to fall from 4.2% to 2%.
At the same time, he acknowledged that aviation remains one of the world’s most important economic drivers, supporting more than 86 million jobs globally and facilitating approximately $4.1 trillion in international trade each year.
“Aviation makes the world a better place by bringing people together,” he said. “We offer hope and enable freedom. That’s what motivates our collective efforts to make flying ever safer, more efficient, and sustainable.” Read more here.
