Qantas and Virgin float passing SAF costs onto passengers

The submissions, reported by The Australian, appear to form part of several recently-announced consultation papers exploring the use of greener fuel alternatives in the aviation, maritime and freight industries.

It is widely understood that the cost to utilise biofuel blends, including SAF, is between two and five times higher than traditional jet fuels. 

While consultation is ongoing, the Department of Climate Change, Energy, the Environment and Water agreed that it is possible that a sustainable aviation fuel levy could be introduced to passenger airfares to help airlines recover the cost of utilising greener fuels.

Both consultation papers fall under several broader Government initiatives, including the $14.8 billion Fuel Security and Resilience Package, and $1.1 billion Cleaner Fuels Program, which aim to reinforce Australia’s domestic fuel supply and develop on-shore facilities for producing biofuels and sustainable aviation fuels.

Upon announcing these papers in August, Transport Minister Catherine King acknowledged that adopting SAF use in Australia may result in higher airfares for passengers, however noted that other markets overseas have not seen a major impact.

“It’s a consultation paper, and the final outcomes will depend on what model we have. But experience overseas is that they are very small; they are small impacts overall. But I guess the dynamic is: what do you do if you do nothing?” she said at the time.

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“We are, you know, already so heavily reliant on imported fuel, and already, you know, already you’ve seen Qantas and Virgin, for example, start to look at sustainable aviation fuel. Our defence force is using it. The fact that we’re not producing here is a significant loss.”

Both Qantas and Virgin have long pledged their support for both the use of SAF and the development of local Australian SAF production sites. Both airlines have also previously heralded their pre-established use of SAF in commercial flights.

Since 2022, Qantas and Airbus have worked in tandem to support the establishment of local sustainable aviation fuel production through various joint investments under the US$200 million (worth AU$288 million at the time) Australian Sustainable Aviation Fuel Partnership, with Qantas noting at that time that it hoped to see 60 per cent of all its fuel to be derived from SAF by 2050.

In 2023, Qantas partnered with the Queensland government to kick off the establishment of biofuel and SAF production in the state. Then-chief sustainability officer Andrew Parker stated that having a “clear plan to decarbonise air travel” is essential to making sure large states like Queensland stay connected into the future.

“Sustainable fuels are the most significant tool airlines currently have to reduce their emissions, particularly given they can be used in today’s engines and fuel delivery infrastructure with no modifications,” he said.

More recently, in 2025, Qantas again threw its support behind domestic SAF production initiatives, after receiving 2 million litres of unblended SAF from Malaysia – the biggest import in Australian history at the time.

“If established, domestic SAF production has the potential to contribute approximately A$13B in GDP annually by 2040, while supporting nearly 13,000 jobs in the feedstock supply chain and creating 5,000 new jobs to construct and run the facilities,” Qantas said at the time.

Last year, Virgin partnered with Qatar Airways to fund the establishment of a new SAF production facility in the Charters Towers region in North Queensland. Virgin said the facility will look to produce 96 million litres of SAF per year, derived from sugarcane, and supplied to local airports from 2029.

“The commercial aviation sector in Australia – indeed globally – faces an enormous task ahead in working towards a target of net zero carbon emissions by 2050, which we cannot do alone,” said then chief corporate affairs and sustainability officer for Virgin Australia, Christian Bennett.

“Working together with industry partners and government to establish a domestic SAF industry in Australia will be essential – not only to achieve these shared emissions goals, but to strengthen Australia’s liquid fuel security by reducing reliance on global supply chains and creating new, secure jobs for those living in regional Australia.”

Virgin also partnered with Viva Energy last year to trial the use of SAF in departing flights from Whitsunday Coast Airport, utilising a blend of A1 jet fuel and 30–40 per cent synthetic SAF made from waste and residue feedstocks, which the airline says is fully compatible with existing aircraft, fuelling infrastructure and regulatory and safety requirements.