Sustainable fuel incurs new costs for Vietnamese airlines
Sustainable fuel incurs new costs for Vietnamese airlines
Vietnamese airlines have been active in adopting Sustainable Aviation Fuel (SAF), making Vietnam's aviation sector greener.
New sustainable fuel policies from Europe and the International Civil Aviation Organization (ICAO) will impose additional costs on Vietnamese airlines. However, this shift also strengthens Vietnam's commitment to global environmental sustainability, local insiders have said.
Vietnam Airlines is the first in the country to operate flights to Europe with SAF. |
Proactive adaptation
Vietnam Airlines, the national flag carrier, has become the first airline in Vietnam to use Sustainable Aviation Fuel (SAF) on its flights to Europe. Starting January 1, 2025, all flights departing from European airports will use SAF, beginning with a 2% mix and increasing to 6% by 2030, 20% by 2035, and 70% by 2050. Flights from the United Kingdom will initially use a 2% SAF blend in 2025, with the mix rising to 10% by 2030 and 22% by 2040.
Vietnam aims to operate selected short-haul flights with a fuel mix of at least 10% SAF by 2035 and all flights with 100% green fuel by 2050. This target is outlined in the Action Program on Green Energy Transition, Reduction of Carbon and Methane Emissions in the Transport Sector.
In line with global requirements, two Vietnamese airlines have adopted SAF, contributing to the greening of Vietnam's aviation sector and reaffirming the country's commitment to responsible international aviation practices.
Earlier, the national flag carrier completed its first SAF-powered flight, coded VN660, from Singapore to Hanoi on May 27, 2024, becoming Vietnam's first airline to operate commercial flights with sustainable fuel.
Recently, low-cost carrier Vietjet Air operated two SAF flights from Vietnam to Melbourne in Australia and Incheon in South Korea.
Vietjet Air is working with reputable international partners to deploy SAF to achieve net-zero emissions by 2050, as pledged by Vietnam at COP26.
Vietjet Air first flight with SAF. Photo: Vietjet Air |
Dinh Viet Thang, Director of the Civil Aviation Authority of Vietnam (CAAV), praised Vietjet Air and Petrolimex Aviation's successful operation of international flights with SAF. He noted that this achievement reflects the industry's commitment to sustainable fuel practices.
"This is a proud milestone for the entire sector, contributing to environmental protection and sustainable development, while reinforcing Vietnam's status as a responsible member of the international aviation community," he said.
These activities underscored the responsibility of Vietnamese airlines in the global aviation's emissions reduction targets and comply with the European Parliament's mandatory aviation sustainability regulations (ReFuel EU Aviation).
Starting in 2025, fuel blended at EU airports must contain at least 2% SAF, rising to 6% by 2030, 20% by 2035, and 70% by 2050. These mandates apply to all flights departing from the EU, regardless of destination.
EU-based airlines are expected to face significant challenges as all their outbound flights depart from EU airports. Non-EU airlines, including Vietnam Airlines, will also be affected when flying to Europe, as any refueling at EU airports will incur higher costs due to the required SAF content.
According to the CAAV, SAF prices are currently two to six times higher than traditional fossil fuels. Carriers such as Vietnam Airlines face an additional cost of about US$4.8 million annually to operate flights to Europe using SAF.
"This requirement significantly adds to Vietnam Airlines' operating costs for flights from Europe to Vietnam and reduces the competitiveness of Vietnamese goods in the European market," said Do Hong Cam, Deputy Director of the CAAV.
Financial burden
Alongside the ReFuel EU Aviation initiative, Vietnamese airlines operating on international routes are required to join the ICAO's Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), as agreed by the CAAV. The voluntary phase begins on January 1, 2026, followed by the mandatory phase from January 1, 2027.
According to CAAV, Vietnam Airlines will bear a minimum cost of $13 million to buy carbon credits at $6 each for the voluntary phase in 2026, and up to $92 million if the credit price reaches $40. The airline will also have to spend at least $11.6 million in 2026 due to the combined effects of ReFuel EU and the voluntary phase of CORSIA. Other Vietnamese carriers, such as Vietjet and Bamboo Airways, will also face significant CORSIA-related expenses.
Joining CORSIA represents Vietnam's commitment to an international agreement, so it is important for the government to support airlines with favorable policies, including tax incentives for SAF imports and carbon credit trading mechanisms.
A representative of CAAV said this ensures that Vietnam fulfills its obligations as a reputable nation and contributes to the protection of our sovereignty, aviation safety and the legitimate interests of Vietnamese airlines.
