Written Reply to Parliamentary Question on Impact of Sustainable Aviation Fuel Levy on Singapore’s Aviation Sector and Tourism Industry

Mr Yip Hong Weng asked the Minister for Transport with flights departing from Singapore requiring to use sustainable aviation fuel from 2026 

a.     what is the potential impact on Singapore’s competitiveness as an aviation and travel hub; 

b.     what is the likely percentage increase in the prices of air tickets from the levy and how will this affect travel demand; 

c.     whether this policy will drive airlines to use alternative airports in the region; and 

d.      whether other airports charge a similar levy.

Reply by Minister for Transport Chee Hong Tat:

1.     Our approach to build the Sustainable Aviation Fuel (SAF) ecosystem strikes a balance between economic competitiveness and environmental sustainability, to support the long-term growth of our air hub and encourage investments in new SAF production facilities. While other regions have introduced SAF volumetric mandates, Singapore is the first country to adopt a SAF levy, which will allow us to adopt a fixed cost envelope to provide cost certainty to airlines and travellers for the uplift of SAF from Changi. As an indication, we estimate that the levy to support a 1% SAF uplift in 2026 could increase ticket price for an economy class passenger on a direct flight from Singapore to Bangkok, Tokyo and London by around S$3, S$6 and S$16 respectively. Passengers in premium classes will pay higher levies. 

2.     The Member may wish to refer to the Sustainable Air Hub Blueprint published by the CAAS on 19 February 2024 for more details. The Blueprint is available on the CAAS’ website.