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Sustainable Aviation Fuel Quota Mandates and Optimal On-Airport Fuel Facility Ownership

Strategic Insights

— 1 min read

Aviation is a crucial sector in the world's transportation network, with a growing need to reduce its carbon footprint. Sustainable Aviation Fuel (SAF) has emerged as a key strategy for decarbonization, with governments implementing policies such as SAF quota mandates. However, the impact of these policies on the aviation fuel supply chain, particularly the ownership of on-airport fuel facilities, remains poorly understood. Researchers from Hong Kong Polytechnic University have conducted a study to analyze the effect of SAF quota mandates on the optimal ownership structure of on-airport fuel facilities.

Key Takeaways:

  • The study develops a theoretical model to analyze the influence of SAF quota mandates on the optimal ownership structure of on-airport fuel facilities, comparing three observed arrangements: third-party, airport-owned, and airline-owned.
  • The research finds that airport or airline ownership increases traffic volumes and profits for off-airport suppliers, airports, and airlines compared to third-party ownership.
  • Third-party ownership maximizes social welfare under low SAF quotas and small market sizes, while higher quotas favor airport or airline ownership, suggesting a potential need for ownership transitions as SAF mandates escalate.
  • The choice between airport and airline ownership hinges on market size and the SAF quota level, with intensified airline competition introducing significant market instability.
  • Alternative stakeholder objectives can introduce significant market instability, with a welfare-maximizing airport creating an equilibrium that is vulnerable to exploitation by a profit-maximizing supplier.
  • Finite SAF production capacity imposes a fundamental trade-off, rendering ambitious mandates incompatible with large-scale aviation activity.
  • A more competitive upstream fuel market raises the market-size threshold at which integration becomes socially optimal.

Statistics:

  • 200: The article number of the research paper "The Impact of Sustainable Aviation Fuel Quota Mandates On the Optimal On-airport Fuel Facility Ownership" in Transportation Research Part A-policy and Practice.
  • 125: The page number of the news report from NewsRx LLC, "New Findings from Hong Kong Polytechnic University Update Understanding of Sustainability Research (The Impact of Sustainable Aviation Fuel Quota Mandates On the Optimal On-airport Fuel Facility Ownership)".

Sources:

  • The Impact of Sustainable Aviation Fuel Quota Mandates On the Optimal On-airport Fuel Facility Ownership. Transportation Research Part A-policy and Practice, 2025;200.
  • NewsRx. New Findings from Hong Kong Polytechnic University Update Understanding of Sustainability Research (The Impact of Sustainable Aviation Fuel Quota Mandates On the Optimal On-airport Fuel Facility Ownership). Ecology, Environment & Conservation. October 17, 2025; p 125.

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