Story ID: 326
Business Aviation Customers Feel the RefuelEU Pinch
By: Curt Epstein
Caption: Out-of-scope operators are being erroneously charged
Word Count: 662
Even though the RefuelEU sustainable aviation fuel (SAF) mandate took effect on January 1, there is still some confusion on the process, according to Titan Aviation Fuels International CEO Daniel Coetzer.
“We understand that the RefuelEU mandate is aiming to help the environment, which is important, but it is not a one-size-fits-all regulation,” he noted. “It’s just the way it was put together, I think everything was not thought out very well. As with any new project, there are always hiccups in it.”
The mandate requires in-scope aircraft operators (those who fly more than 500 flights a year) to upload a 2% SAF blend at designated European airports—generally those with larger volumes of operations—with the exception of those in Switzerland, which declined to participate in the program.
“The big issue here is that you end up with people who are out of scope, who are not on the list, but the [airport fuel] suppliers are charging everybody,” said Coetzer, adding someone has to pay for the increased fuel blend cost. “I understand the point in the sense that at the airports where there is SAF, they have a tank and they put 2% of the product molecules in there.”
Coetzer noted that currently there is no mechanism for those who are erroneously charged the 2% SAF surcharge to be able to reclaim it. “We’ve spoken to [EBAA headquarters in] Brussels, and we continue to talk to them,” Coetzer said. “I think they will be working on a reclaim process if I have paid it, but don’t have to pay—like VAT.”
For the airlines, which are by definition in-scope, those extra costs can easily be amortized across a passenger load, but the economics of private aviation do not correspond, leading to disproportionate costs for charter operators. “For a guy with a Citation or a Gulfstream V who is filling up his tank, that 2% is rough for him, and there is only one or two passengers in the airplane paying for it, so it’s a bit different,” Coetzer explained.
SAF still only accounts for a minute percentage of the overall aviation fuel supply and, due to that scarcity, Coetzer noted operators are also being charged for SAF even at some airports that do not have it. “There’s not enough product, the airport is too small to justify taking it, just that type of thing, and there is no SAF, but they still charge the 2%,” Coetzer told AIN. “I think [the regulators] are really taking money out of [the out-of-scope operators] pockets because they pay for the RefuelEU, which they are not supposed to pay but they have no real option…in the worst cases they must pay for it where they don’t even get the product. So I think it’s really unfair for these guys, but that’s just the way it works.”
According to Coetzer, one unintended effect of the mandate is a lessening of the appetite among European business aviation operators to take on and pay for higher blends of SAF where it is available. “I think that demand is falling off because people are fueling and having 2% at all their locations,” he said. “Everyone says, ‘Look at my invoices, I have SAF 2% fee that I pay with all my uploads.’” Titan has taken the step to clearly itemize the 2% surcharge on its customer invoices so they can easily consolidate their RefuelEU charges for reporting purposes.
As it helps its clients achieve regulatory compliance, the company is monitoring which airports must supply the 2% SAF blend and is assisting its out-of-scope customers by offering them options where the mandate is not in effect. “We are noting changes in European flight paths as these operators fly to a different airport to avoid incurring extra fees,” Coetzer observed. “An airport like Cannes is suddenly picking up a lot of traffic from Nice.”