Airfare Alert: Rising Costs and Carbon Tax Shift May Spark Price Hikes on Short Flights
May 20, 2025
He highlighted that airlines cannot absorb these costs indefinitely, especially for short-distance flights, which may see price increases as a deterrent to travel.
Moura noted that airlines have warned that short-distance travel may become more expensive due to the increasing costs of raw materials and taxes associated with SAF, which is derived from waste materials like used cooking oil.
He suggested a shift towards more intercontinental flights operated by larger aircraft, which could optimize airport slot usage by increasing passenger capacity from 120 to 240 per flight.
Currently, airports in Portugal experience significant traffic to cities like London, Paris, and Madrid, typically serviced by smaller aircraft that may not be as efficient as larger planes.
Low-cost airlines are not exempt from these rising costs, as they are subject to the same taxes and fees as traditional carriers, which could alter travelers' perceptions of their overall travel expenses.
Moura emphasized that while low-cost airlines may offer lower fares, they will still face increased costs, leading to greater transparency for travelers regarding their total travel expenses.
The carbon tax introduced in July 2021 aims to offset aviation emissions and will partially support the aviation sector, with up to 40 million euros earmarked for decarbonization initiatives, including sustainable fuel production.
Moura advocates for utilizing carbon tax revenues to promote sustainability in aviation rather than directly benefiting airlines, with a focus on making sustainable aviation fuel (SAF) production more viable in Portugal.
Currently popular routes, such as those to London, Paris, and Madrid, are primarily serviced by smaller aircraft, which may become less viable if costs continue to rise.
António Moura Portugal, in a recent interview, expressed concerns about the financial implications of rising costs for airlines, particularly regarding how these expenses may be passed on to consumers.
The rising costs for airlines are also influenced by U.S. tariff wars and the EU's mandate that sustainable aviation fuel must constitute at least 2% of all flights starting January 2025.
For the first time, revenue from the carbon tax on air passengers will partially revert to the aviation sector, marking a significant shift in funding.
Summary based on 6 sources