Qantas moves closer to first major sustainable fuel deal

Financial Review
Reporter Lucas Baird
November 26, 2021

Qantas is weeks away from finalising its first major purchase of green jet fuel as corporate customers such as professional services firms offer to pay extra for more sustainable flying options, chief executive Alan Joyce says.

A more detailed announcement is penciled in for early next year, which will also include interim 2030 targets on Qantas’ road to net zero emissions by 2050, but Mr Joyce has ruled out using much-hyped green hydrogen for now.

“At some stage, hopefully, sustainable fuel is even cheaper than jet kerosene, but it may take us a while to get there,” says Qantas CEO Alan Joyce. Janie Barrett

“That [hydrogen] is a while away,” he said. “You need something that works within the current distribution of fuel and aircraft, and hydrogen is going to take a lot of investment.”

Qantas is instead targeting sustainable fuels based on crops or waste items.

Mr Joyce acknowledged the cost of such fuels would stretch far higher than traditional jet kerosene, yet said there was growing appetite among Qantas’ corporate customers to pay more for greener business trips.

He said professional services firms had been particularly active in this space.

“They are starting to talk to us about if they can be a part of that sustainable aviation fuel purchase. It will cost more at the start, that’s very clear ... but like all technology ... we’ve seen prices dramatically come down over time.

“At some stage, hopefully, sustainable fuel is even cheaper than jet kerosene, but it may take us a while to get there. In the meantime, there are customers who are willing to pay that extra amount.”

The focus on sustainable fuels comes amid growing pressure on the aviation industry to reduce its carbon emissions as travel restarts in parts of the world where vaccines have nullified COVID-19. Aviation represented 2.4 per cent of global emissions in 2018, and the International Council of Clean Transport reckons this will triple and be a quarter of the global carbon budget by 2050.

The International Air Transport Association and its members – including Virgin Australia – committed last month to net-zero by 2050 as scrutiny around the sector’s emissions grows.

But there remains some scepticism from green experts about whether there will be a viable and sustainable alternative to jet kerosene.

‘Green’ frequent flyer tier

Qantas also announced it would add a new “green” tier to its frequent flyer loyalty scheme from early next year to aid its sustainable ambitions, with extra points and status credits for those who record five “sustainable activities”.

This includes offsetting your flight, staying in an eco hotel, purchasing wine from an eco vineyard and offsetting the Qantas Store delivery or installing solar panels. Members can also offset their home and car emissions by using Qantas’ website to calculate their output and buy the equivalent offsets.

Flight pollution is a dilemma for eco-aware travellers, and many try to do the right thing by paying for carbon offsetting.

Qantas Loyalty chief Olivia Wirth said the frequent flyer program – the most popular loyalty scheme in Australia – could “change [member] behaviours”, pointing to the 600,000 people who had registered their COVID-19 vaccine with the airline after it promised extra points, status credits or discounts.

She said the ultimate aim was to get 100,000 members into the “green” tier.

“The 100,000 that I mentioned there, we are looking for that in the first 12 months, but we think that will build up over time.”

Qantas shares fell 5.4 per cent in late afternoon trade on Friday to $5 after news broke of a new COVID-19 variant emerging in South Africa.

But Mr Joyce remained unperturbed.

“This is of interest but not of concern yet. The potential of what we’ve seen is that vaccines are still really effective against these strains,” he said.

“You’re always keeping a watch, you’re always on alert, but you need to be at the same time realistic and optimistic.”

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