Malaysia Aviation Group said on October 19 that it is considering a green surcharge to help cover the high cost of sustainable aviation fuel (SAF). According to Sina Finance, group head Nasaruddin A. Bakar said the airline must balance emissions targets with passengers’ ability to pay, and that passing all fuel costs on to customers could dampen travel demand.

Options under review include asking passengers to help cover SAF’s additional costs. Bakar said the final decision on a green tax rests with the Malaysian government and that regulators, fuel suppliers, and airlines need to work together to lower SAF costs. He said further fare increases were possible, but their scale would depend on fuel costs.

Singapore has announced a mandatory aviation green levy starting in January 2027, with charges varying by destination and cabin class. It is the first country to announce such a measure, which is intended to support SAF use. SAF accounts for less than 1% of global aviation fuel consumption, according to the International Air Transport Association. It can be made from renewable materials such as used cooking oil, animal fats, and agricultural residues, but its higher production costs and limited supply constrain adoption.

Malaysia Aviation Group has ordered 40 Airbus A330neo aircraft and 55 Boeing 737 MAX aircraft to reduce fuel consumption. The Iran war has also driven up conventional jet fuel prices, adding to airline costs. Bakar said the airline’s ability to pass fuel costs on through higher fares is limited, and that very high SAF costs would be difficult to recover fully from passengers.

Aviation accounts for about 2.5% of annual global carbon emissions, according to the International Energy Agency. The International Civil Aviation Organization has set a net-zero carbon emissions target for 2050 and estimates that SAF could reduce aviation emissions by about 65%.