Singapore Delays Sustainable Aviation Fuel Surcharge for Cargo Flights to 2028

Singapore’s Ministry of Transport’s Civil Aviation Authority (CAAS) announced that it will push back its new Sustainable Aviation Fuel (SAF) Levy for departing cargo flights by a year to 2028, but plans to go ahead with the implementation of its new requirement to add a SAF procurement fee for all departing passenger flights from the beginning of 2027.

According to CAAS, the move to delay the SAF fee for cargo flights follows feedback from industry, and will provide more time to develop systems to manage the levy collection, noting that cargo operations are more complex than passenger operations.

The upcoming SAF Levy was introduced late last year, following the launch by CAAS in February 2024 of the Singapore Sustainable Air Hub Blueprint, outlining a series of key actions aimed at decarbonizing Singapore’s aviation sector with goals to reduce domestic aviation emissions from airport operations by 20% by 2030, and to achieve net zero domestic and international aviation emissions by 2050. The blueprint included a requirement for all departing flights from Singapore to use SAF, beginning at 1% from 2026, and expected to increase in following years.

The new levy forms part of the blueprint’s initiatives aimed at building an SAF ecosystem. When it launched the blueprint, CAAS said that use of SAF is anticipated to contribute nearly two thirds of the emissions reductions required for the sector to reach net zero by 2050.

The levy is based on the distance travelled by the flight, and the volume of SAF needed to meet the 1% SAF target for 2026 and the projected price premium of SAF over conventional jet fuel and other associated costs, including the cost of certification, blending, and delivery. Fees under the new system will range from S$1.00 (USD$0.79) for an economy-class passenger on a short-range flight to S$41.60 (USD$32.80) for a business-class passenger on an Americas-bound flight.

All collected SAF Levies will be channelled to an SAF Fund and used to purchase SAF or related environmental attributes (SAF EAs). Under the new system, the SAF Levies will be collected by CAAS’ wholly owned non-profit unit, Singapore Sustainable Aviation Fuel Company (SAFCo), which will also be responsible for procuring, managing, accounting for and allocating SAF and SAF EAs.

CAAS’ SAFCo will aggregate the SAF demand arising from the SAF Levies collected, as well as voluntary SAF demand, and procure the SAF and associated EAs. SAFCo plans to launch an RFP for SAF procurement from the SAF Levy by end 2026, with the first batch of SAF expected to be delivered in mid-2027.

In its statement announcing the deferment of the SAF Levy for cargo flights, CAAS noted the greater complexity of cargo operations, which it said involve a wider range of stakeholders, including airlines, air express companies, freight forwarders and shippers, and varying commercial arrangements, with the delay giving the ministry more time to work with industry to develop and implement a robust SAF Levy collection mechanism.

Mr Han Kok Juan, Director-General of CAAS, said:

“CAAS has worked closely with airlines and other global industry partners to set up a robust regime for SAF levy collection, procurement and environmental attributes management. In doing so, CAAS seeks to lay the foundation for Singapore to serve as a trusted hub for SAF-related economic activities in the region.”