Mr Peter Seah, Chairman Singapore AirlinesBack
Mr Goh Choon Phong, CEO Singapore Airlines and Chairman of the Association of Asia Pacific Airlines
Mr Subhas Menon, Director-General, Association of Asia Pacific Airlines
Mr Conrad Clifford, Deputy Director-General, IATA
Mr Ma Tao, ICAO Regional Director Asia-Pacific
Friends, Colleagues, Members of the Aviation Community
Ladies and Gentlemen,
1. A very good morning to all of you. I am delighted to be here with you at the 67th Assembly of Presidents, of the Association of Asia Pacific Airlines (AAPA). A warm welcome to all our guests, especially those who have flown in from overseas to be a part of this year’s Assembly in Singapore.
2. This year’s Assembly takes place against a backdrop of strong air traffic recovery in the Asia-Pacific region since the COVID-19 pandemic. At the start of the year, international traffic in our region was slightly below half of pre-pandemic levels. Eight months later, international traffic has recovered to about 75% of pre-pandemic levels. Though other regions that had fully reopened their borders earlier, such as Europe and North America, have recovered earlier , I am confident that air travel in the Asia-Pacific region will recover fully to pre-pandemic levels and will grow beyond that over time. The potential for growth is still there. For Singapore, we expect traffic at Changi to recover to pre-COVID levels by next year.
3. It is therefore timely that we look ahead to plan for the next chapter of the aviation story. IATA projects that this region will be the fastest growing for air travel over the next two decades, at an annual average rate of 4.5%, higher than the global average of 3.3%. At the same time, the manner in which air travel grows in the next two decades will be quite different from how it had been in the past.
4. One important change is that the aviation industry needs to be more environmentally sustainable. Last year, the ICAO agreed on a long-term aspirational goal of net zero carbon emissions by 2050, in a historic move for the sector. To meet this goal, we must work together to reduce carbon emissions, even as our travel volumes grow.
5. The theme of this year’s Assembly – “Sustainable Air Transport Growth in the Asia Pacific” – reflects this imperative. For airlines in particular, this is extremely challenging. While new aircraft technologies and greater operational efficiency is expected to contribute to a reduction of carbon emissions in the long run, there are limitations. For example, there are recent reports on the use of electric planes, but these are typically small planes that operate over short distances. They will not be a feasible option for general commercial flights. Consequently, Sustainable Aviation Fuels (SAF) remains a critical lever, accounting for about 65% of the reductions that the industry would require to reach net zero.
6. The supply of SAF globally is currently less than 1% of prevailing global demand. Even after accounting for projected SAF production capacity in 2030, capacity needs to increase by about 30 times to meet the demand in 2050. It is therefore critical that we catalyse the production of SAF to increase global supply, so that we can meet our goal of growing sustainably and eventually achieving net zero emissions.
7. I would like to suggest three areas that we could collaborate and focus on:
8. First, we must send a strong and credible demand signal so that fuel producers have the confidence to make further investments in SAF production in our region. Some countries or regions like the US have introduced subsidies for fuel producers; others like the EU have decided to impose mandates; and yet others like the UK are exploring a combination of mandates and incentives. Each region must consider its circumstances, and we must carefully consider what works best for us in our region, taking into consideration our operating context.
9. Singapore is studying the recommendation by the International Advisory Panel on Sustainable Air Hub on a structured offtake mechanism for the adoption of SAF. The aim of such a mechanism is to give greater assurance to producers to increase the supply of SAF at Changi, from production facilities in Singapore and the region. But this could result in higher cost for airlines and passengers and needs to be balanced against the economic impact to the Changi Air Hub and to the airlines – we cannot pursue sustainability single-mindedly without considering the significant cost impact on the industry. There must be a balance.
10. At the same time, it is also untenable to continue business-as-usual without putting in joint effort to look for more sustainable ways of running our operations. We need to achieve both sustainability and competitiveness to support the growth of the aviation industry in the upcoming decades. I think that this is not only what the industry wants, but also what our shareholders and customers would also expect. Environmental sustainability has to be balanced against competitiveness and financial sustainability.
11. Based on these considerations, Singapore doing a very careful study of the trade-offs and weighing the pros and cons of various approaches, before we announce our strategy to encourage SAF adoption. This is no different to our overall climate change commitments. We want to set a pragmatic yet meaningful target. And once we have committed to a target, we will do our very best to meet it. That has been Singapore’s track record and it will remain our approach for SAF. So we may take a bit more time to think through the approach we want to take and the target we want to set, but as we do in many other areas, once we commit to a target, we will do our very best.
12. Second, we should work together as a region to establish a scientifically driven process to validate the sustainability of SAF feedstock. This includes the feedstock that is abundantly available in our region, such as palm by-products and residues, which may not be as widely accepted in some parts of the world due to perceived environmental risks, even though they are recognised under ICAO’s CORSIA regime. Given the scarcity of SAF supply today – and as I mentioned earlier, we are only at 1% – we need to unlock more feedstock options to drive SAF production, instead of limiting ourselves. I think this is the right and pragmatic approach. It is important for us to come together as a region and to promote an evidence-based approach in determining feedstock and fuel acceptability, to accelerate and scale-up SAF production in a manner which is environmentally sustainable. Now I want to be quite clear that we are not dismissing the concerns over palm by-products and residues, because the way that these products are produced needs to be verified to be environmentally sustainable. But my view is that it is not the plant that makes the difference, it is how you produce the fuel that makes the difference. Whether it is palm or some other plant, it is ultimately how you produce the fuel that determines if it is environmentally sustainable.
13. Third, we must drive and support new pathways to produce SAF. Today, most, if not all, of the SAF that is used is from Hydroprocessed Esters and Fatty Acids, or HEFA. This is because it is currently the most commercially viable pathway of producing SAF. However, there will not be enough HEFA feedstock alone to meet the global demand of SAF by 2050, which will further drive up the cost of SAF, if we only stick to this option.We must therefore push for the production of SAF via new pathways, such as Alcohol-to-Jet (ATJ) or Gasification. I understand some producers are also looking at SAF production using algae. And there are many other possible ideas. We need to continue to invest in R&D and conduct trials on the use of SAF via these different pathways. Keep an open mind and keep our options open, so that we have more possibilities to increase supply that will meet global demand.
14. In conclusion, as we look ahead to the growth of air travel over the next two decades, we must also plan ahead to be able to grow sustainably.
15. As the association for many key flag carriers in the Asia-Pacific region, the AAPA is well positioned to drive the sustainable growth of air travel in the region. I look forward to strengthening Singapore’s partnership with the AAPA and its members to secure a strong and sustainable future for aviation in our region.
16. I wish you a fruitful Assembly, and a pleasant stay in Singapore. Thank you.