Airlines Proved They Can Absorb Fuel Cost Shocks. Can We Do Same for SAF?
Elvis Ebikade, PhD · April 15, 2026
How six U.S. carriers deployed creative pricing mechanisms in weeks and why the same toolkit could scale sustainable aviation fuel (SAF).
Over the past few weeks, every major U.S. carriers: JetBlue, United Airlines, Delta Air Lines, Southwest Airlines, American Airlines, and Alaska Airlines have raised checked bag fees by ~$5-$10 per bag to absorb surging jet fuel costs. Jet fuel has more than doubled since February, from ~$2.50/gal to over $4.80/gal. United' CEO said the spike could add $11B in annual fuel expense, more than double what they earned in their best year ever.
And the latest March CPI report put a number on the downstream impact: airline fares are up 14.9% year-over-year. The Travel Price Index surged 5.8%, its largest monthly gain since January 2022. Energy costs drove nearly three-quarters of the overall CPI increase. And inflation-adjusted weekly earnings slumped 0.9% in March, the steepest decline since the pandemic inflation peak. The cost of flying and the cost of fuel now shows up on everyone's paycheck.
How Airlines Are Absorbing the Shock
What's fascinating is HOW airlines are absorbing this:
Bag fee increases: not flat across all carriers, each calibrated differently
Ticket price hikes of 15-24%: scaled by booking window and route
Schedule cuts on off-peak routes to reduce fuel burn
Delta, uniquely, leans on its Monroe Energy refinery in Pennsylvania. A $150M bet from 2012 that now covers ~75% of its fuel needs and is expected to offset hundreds of millions per quarter
As a former Southwest Airlines team member, I say this with genuine warmth toward my friends and former colleagues across the industry: you are proving right now that creative cost absorption is possible. My question: Can we point that same creativity in a different direction?
The Grey Discount Conversation
Shashank Nigam recently sparked a conversation about the "grey discount". The idea, coined by Gene Gebolys, that artificially cheap fossil kerosene (untaxed in most jurisdictions, subsidized globally to the tune of $6 trillion) has made flying appear far cheaper than it actually is. Patrick Edmond bluntly added: flying is too cheap.
What followed was a very honest LinkedIn discussion on the idea. Some folks disagreed on the framing, on whether fuel costs or route scarcity were driving recent fare hikes, on how fragile airline economics really are. But the thread converged on something important: the industry has always found ways to absorb and pass through cost changes when it needs to. The debate wasn't about whether that's possible it was about willingness and priority.
And the past few weeks proved the "whether" beyond doubt. Six major airlines moved in days. Each found its own mechanism. No one waited for industry consensus. Travelers are still booking. The Wall Street Journal recently noted that companies are "quick to raise prices and much slower to lower them." So when the current crisis eases (and it will, hopefully soon), will bag fees come back down? History says probably not. Which means the pricing infrastructure being built right now will persist. That's not a complaint. Rather, a simple observation about how the industry absorbs structural cost changes.
So here's my question:
If we can find creative, differentiated ways to pass through a fossil fuel spike in a matter of days... why can't we apply the same creativity to absorbing SAF costs?
SAF is currently around 3x the price of conventional Jet-A, much closer to 2x these days (my good friend Arnaud Namer has some recent discussions that might indicate we are closer to a 1:1 HEFA SAF parity at today's jet fuel prices). Even with the significant premium, mechanisms already exist and some airlines are already using them:
KLM Royal Dutch Airlines pioneered both a mandatory environmental surcharge on every ticket AND a voluntary SAF opt-in for passengers integrated into their Flying Blue loyalty program so contributing to SAF actually earns you status. Their two-tier approach has been well-received because it's transparent about what passengers are paying for.
Lufthansa's Green Fares have attracted 4 million+ passengers willing to pay a premium for SAF + climate project packages which are now available worldwide. They've also introduced a separate Environmental Cost Surcharge (EUR 1-72 per ticket) to cover the rising cost of SAF regulatory compliance.
Air France-KLM introduced SAF surcharges back in 2022 before anyone else and their combined group is now one of the world's largest SAF buyer.
International Airlines Group (IAG) (British Airways, Iberia, Aer Lingus) used 291,000 tonnes of SAF in 2025 up 80% from 2024 representing 3.3% of its global fuel use and the #1 global ranking for SAF procurement. They're doing it through a mix of mandated compliance AND voluntary corporate partnerships.
DHL has pushed its own fleet SAF share to 10% (Scope 1) in 2025, with total consumption at 4.4% doubling year-over-year. Cargo carriers are proving this works at operational scale.
And the regulatory floor is rising globally. The EU's ReFuelEU mandate starts at 2% and scales to 70% by 2050. The UK's SAF Mandate requires 2% in 2025, rising to 10% by 2030 and 22% by 2040. India targets 1% for international flights by 2027. Singapore has confirmed 1% by 2026. Japan, Indonesia, Malaysia, and South Korea are all introducing mandates or targets. This is no longer a European phenomenon, it's a global regulatory trajectory.
Aspirational vs. Mandatory. A Critical Distinction
We're already seeing airlines recalibrate their SAF and climate targets as supply constraints and cost realities set in. This week, Bloomberg reported that a major U.S. carrier adjusted its SAF targets and reframed its 2050 net-zero commitment from a "goal" to an "aspiration."
They won't be the last.
I want to be clear: this isn't a failure. Rather, it's an honest acknowledgment of where the industry actually stands. And frankly, that honesty is more useful to the ecosystem: to SAF producers, to investors, to policymakers than a target everyone quietly knows won't be met. But it illustrates a critical distinction that the entire SAF value chain needs to internalize.
Many of the headline SAF and net-zero targets that airlines announce: "net zero by 2050," "10% SAF by 2030" are voluntary, aspirational commitments. They are not mandates. If an airline can't meet them, it adjusts its timeline and communicates that to stakeholders. SAF producers and investors need to understand this distinction: an airline's public target is a signal of intent, not a contractual guarantee. Even government mandates can shift, policies change, buy-out mechanisms exist, targets get revised. The only thing certain is .......... change.
That doesn't make these commitments meaningless. The deeper lesson is this: targets without commercial mechanisms behind them will always be vulnerable to recalibration. The airlines that are leading on are leading because they've moved beyond targets and press releases into procurement, surcharges, offtake agreements, and passenger-facing products, actively building the commercial infrastructure to back their commitments. The gap between aspiration and action is where credibility lives.
Every airline recalibrating its targets right now has the operational scale, the commercial sophistication, and the pricing teams to build SAF into their cost structure. The sustainability teams inside these organizations have been advocating for exactly that. The question is whether the C-suite will prioritize it the same way it prioritized bag fee adjustments this month.
The Toolkit Is Right There
Bag fees. Ticket surcharges. Tiered pricing by cabin class. Voluntary passenger contributions. Loyalty program integration. Route optimization. Vertical integration. Corporate SAF partnerships. The toolkit is right there. And nearly every one of these levers has been activated in recent weeks for fossil fuel volatility.
This isn't about shame. Tough times call for tough measures... something of that sort. On a more serious note, I know firsthand how thin airline margins are and how competitive the U.S. market is. But that's precisely the point! The industry just demonstrated it can absorb cost shocks creatively, quickly, and without destroying demand.
Where the Bottleneck Really Is
I want to be clear about where the bottleneck is, in my opinion. Sustainability teams across these airlines have been pushing for creative SAF integration and procurement for years. The challenge is that final financial decisions: pricing, surcharges, fee structures ultimately require CFO and CEO sign-off. Those are the leaders who just demonstrated exactly the kind of financial agility that SAF adoption needs. The conversation needs to move from the sustainability office to the C-suite pricing meeting.
A Call to Action
So here's my call to action to airline leadership, to Airlines for America (A4A), Airlines for Europe (A4E), Air Transport Action Group (ATAG), International Air Transport Association (IATA) and to everyone in this industry who has a seat at the decision table:
1. Run the SAF exercise. Take the pricing mechanisms you deployed these past weeks and model the same for SAF. You don't need to close the entire 3x cost gap at once. Model what a $1-$3 per ticket SAF contribution looks like. Model a voluntary opt-in at booking. Model tiered contributions by cabin class: business and first class travelers can absorb more. KLM and Lufthansa already proved passengers will pay when the mechanism is transparent.
2. Make it a commercial strategy problem. Rather than treating SAF cost absorption as a sustainability department problem, make it a commercial strategy problem. Your commercial teams just proved they can move fast when you really want it.
3. Back targets with mechanisms, not communications. If you've pledged SAF targets: 10% SAF by 2030, show receipts. The surcharge model, the offtake agreements, the passenger-facing product. If the target needs to be revised, be transparent about why and the industry will respect that. Don't just stop at recalibration, but build the mechanism that makes the next target stick. Credibility comes from honesty, not aspiration.
4. Engage your consortiums. A4A has pledged 2 billion gallons of SAF by 2030, but the mechanisms to fund that remain vague. The same goes for A4E and ATAG. The bag fee playbook shows that individual airlines can move independently AND in parallel. Let's explore doing the same for SAF.
The conversation Shashank Nigam and Patrick Edmond started is the right one. The grey discount is real. And the irony is that in recent weeks, under the pressure of a fossil fuel crisis, the industry demonstrated every capability it needs to begin closing it.
To my friends at Southwest, United, Delta, American, JetBlue, Alaska, and across the global aviation community: where there's a will, there's a way.
Sources: BLS March 2026 CPI, U.S. Travel Association, Airlines for America, IAG Annual Report 2025, DHL 2025 Sustainability Report, WSJ, CBS News, Bloomberg, Skift.
