Lundgren: SAF mandate could 'wipe out' easyJet's profitability
Harry KembleThe outgoing easyJet boss Johan Lundgren says passing on costs from the incoming sustainable aviation fuel (SAF) mandate to passengers may “wipe out” the low-cost carrier’s profitability.
Speaking at the 2024 Abta Convention in Costa Navarino on Tuesday (8 October), Lundgren insisted he was “not against SAF” and admitted the cleaner fuel was one of several levers available to airlines as they target net-zero emissions by 2050.
However, Lundgren, who will step down early next year after seven years at the helm, told delegates how charging passengers possibly up to £8 extra per flight to cover SAF costs would hit the airline’s bottom line.
“People say to me why are you so concerned about the cost? Your average fare is £70, the cost of paying for SAF which is four times more is £8, so why are you complaining? I said you will wipe out the profitability of the company,” Lundgren added.
“I said ‘if I could charge £5 or £6 more, I would do that today’. This where I get a little irritated. This is a debate which is ongoing for rich people. They can pay £5 or £6.
“The students or the seniors are the ones that cannot fly. The family who are not that privileged are the ones that cannot fly.”
Transport secretary Mike Kane told parliament last month the increased costs of SAF would mean higher fares.
The SAF mandate will force airlines to use a mix of sustainable fuel from next year at 2% of the total UK jet fuel demand, which the government expects to raise fares by £4.
’We will achieve net zero’
Lundgren said he felt “passionate” about sustainability. “Every [airline] has moved into a situation where they have a good, thorough, serious roadmap,” he added. “The only concern I have about SAF is we see it as the magical bullet.”
When asked if the aviation industry will achieve net zero emissions by 2050, Lundgren said: “It will happen. We will make it.”
But he added: “You really want to remove carbon as much as you can from source. We will get there.”
Lundgren expects bio-fuels, produced from plant matter, to run out by 2040, adding that e-fuels will “come into play by 2030 or 2031”. However, he noted the added expense of buying e-fuels.
Lundgren will be replaced as chief executive of easyJet next year when the company’s chief financial officer Kenton Jarvis takes over.
When asked what his next move would be after leaving easyJet, Lundgren insisted he had "no plan".
"Kenton will do the role his way," said Lundgren, adding: "I’ve already said this to Kenton. But this job is an amazing one. Even on a really bad day, it’s still a privilege to do."
’EasyJet holidays fights every day’
On easyJet’s in-house tour operator, Lundgren said its chief executive Garry Wilson and his team fought “every day” to make sure it is a success. He said the tour operator was able to use the airline’s huge inventory of 100 million seats.
“We were not really surprised when we got to that 100 million seats and we’re taking it from there,” added Lundgren.
“We have to fight for it every day. We have to execute the plans with our people and our partners. It works because our high quality product is less expensive. You can fly to destinations that you want to with high frequency. It’s as simple as that.”
But he added: “There will come a point in time where its growth has reached a certain level and it’s not so easy but that will take some time. Then we will get some more aircraft.”
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Harry Kemble
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