In order to boost its decarbonisation efforts, Singapore is set to become the first country to ask a sustainable aviation fuel (SAF) levy from air passengers. The measure will go into effect as of October 2026.
In the transition towards the goal of net-zero carbon emissions for international aviation by 2050, as set by the International Civil Aviation Organization (ICAO), sustainable aviation fuel is considered an important asset. Made from waste products and plant material, SAF could reduce greenhouse gas emissions by up to 80% compared to normal fossil jet fuels, according to Neste, a Finnish oil refining and marketing company.
At the moment, however, demand far surpasses supply, making SAF a costly subject. To make the decarbonation process of its aviation industry more feasible and to support Singapore’s goal of having 1% of all jet fuel used at the Changi and Seletar Airports come from SAF by 2026, the Civil Aviation Authority of Singapore (CAAS) has announced the introduction of a state-wide SAF levy.
“The introduction of the SAF Levy marks a major step forward in Singapore’s effort to build a more sustainable and competitive air hub. It provides a mechanism for all aviation users to do their part to contribute to sustainability at a cost which is manageable for the air hub. We need to make a start. We have done so in a measured way, and we are giving industry, businesses and the public time to adjust”, said Han Kok Juan, director general of CAAS.
One levy, multiple factors
The levy will apply to all passengers departing from the country (those who are simply transiting will not be concerned) as of 1 October 2026. Tickets sold from 1 April 2026 onwards will be subject to the tax, the amount of which will depend on two factors.
Firstly, the cabin in which the passenger will be flying will determine part of the tax. Economy and Premium seats will be categorised as ‘Economy’, while Business and First Class seats will be considered as ‘Premium’. Secondly, the distance travelled by passengers will play a role. Destinations have been categorised by four geographical bands:
- Southeast Asia
- Northeast Asia, South Asia, Australia, and Papua New Guinea
- Africa, Central and West Asia, Europe, the Middle East, Pacific Islands, and New Zealand
- The Americas
Following that categorisation, prices will range from S$1 (€0.66) for economy class passengers flying to Bangkok or S$10.40 (€6.89) for those travelling to New York. Levies for Premium travellers will be multiplied by four. Cargo will be taxed by the kilogram, while general and business aviation flights are to be charged on a per-aircraft basis.
The new levy will be paid directly by the passenger and will be displayed as a distinct line item on airline tickets. Thereafter, all levies will go into a statutory SAF fund to be managed by CAAS.
“The Singapore Sustainable Aviation Fuel Company Ltd. (SAFCo) will manage the procurement, allocation, and administration of SAF and EAs, to get the best value for money and ensure transparency and accountability in the use of the fund. CAAS will continue to engage airlines, aircraft operators, and other industry stakeholders in the coming weeks and work with them on implementation”, CAAS declared in a statement.
Whether or not passengers will end up paying the full levy themselves or not, remains to be seen, as it is possible that airlines will adapt their fares accordingly in order to remain competitive in the region.
