Airline prices to change by ‘less than cost of coffee’ with green fuel guarantee

Air fares will change by “less than the cost of a cup of coffee” amid efforts to stabilise the price of greener fuels, a minister has said.

Keir Mather promised that ticket prices will be “kept under continual review”, once the Sustainable Aviation Fuel Bill clears both Houses of Parliament.

MPs approved the draft new law at third reading in the Commons, and it faces further scrutiny in the Lords at a later date before it can become law.

The Bill paves the way for a new Government scheme to promote a “clear, predictable market price” for sustainable aviation fuels (Safs), by paying producers if Safs are sold for under a guaranteed “strike price”.

Where Safs are sold for above that price, the producers will pay back into the scheme.

It would be initially funded through a levy on aviation fuel suppliers.

The Conservatives called for a legal duty on the scheme’s managers to report on its impact on passenger air fares.

Shadow transport minister Greg Smith told the Commons: “This has been one of the most contentious areas surrounding this Bill and indeed the Government’s whole approach to net zero – what does it actually cost real people?”

He added his proposed amendment to the Bill, which did not pass by 319 votes to 151, majority 168, would “give the Government the opportunity – that in theory they should cheerfully embrace – to lock in that which they profess to believe, namely that the provisions of this Bill will have a plus or indeed minus £1.50 impact on air fares”.

At the despatch box, Mr Mather said the Government “is committed to delivering value for money” in the scheme by “controlling both the scale and the number of contracts entered into, and through the prices negotiated in each contract”.

He continued: “The impact on air fares is likely to rise or fall by less than the cost of a cup of coffee.

“And the costs of the scheme and the impact on ticket prices will be kept under continual review.

“Passengers should also benefit from the lower prices generated from the lower project risk and reduced cost of capital for Saf producers, therefore, this Bill and the measures in it will not limit people’s ability to fly.”