Mandatory green fuel rules will "kill" European aviation and push fares higher, according to Luis Gallego, chief executive of International Airlines Group (IAG), the parent company of British Airways.

The warning targets proposed environmental charges that fall harder on UK carriers than on rivals elsewhere. Under the proposed rules, the share of sustainable aviation fuel (SAF, a lower-carbon alternative to conventional jet fuel) that airlines must burn rises next year — and then climbs sharply.

British airlines currently must include 3.7 per cent SAF in their fuel mix. That obligation is set to rise next year and reach 10 per cent by the end of the decade. Gallego's core objection is not the target itself but the supply behind it: oil companies, he argues, are not producing enough SAF for airlines to meet the mandates.

What do the mandates actually require?

"We have mandates for things that do not exist," Gallego told the Financial Times. That single sentence frames the industry's case — regulators are demanding volumes of fuel the market has not yet produced.

The competitive stakes extend beyond Britain. "All the European airlines will have a major cost disadvantage to global competitors and this is going to have consequences," Gallego said.

His proposed remedy is structural rather than a retreat from decarbonisation. The industry needs "a level playing field, otherwise we're going to kill European aviation, but we're not going to save the planet," he said. The implication: uneven regional rules shift traffic to non-European carriers without cutting emissions globally.

What does this change for UK passengers?

Fares, most immediately. Gallego said the proposed charges would hike prices for passengers while damaging the aviation industry. Whether prices rise next year depends on how ministers finalise the rules now under consultation.

UK ministers have already run a consultation on the green fuel plans. One official involved said "a common sense approach" to aviation fuel would enable carriers to "keep costs down and make it cheaper for families to go on holiday" — a claim that sits uneasily alongside the industry's cost warnings. Notably, the government has not explained how the second and third-generation fuel requirements it is considering would keep prices down when those fuels cost more than standard SAF.

Within that consultation, ministers are weighing rules that would require UK airlines to buy sustainable fuel made from non-food waste or produced by electricity — so-called second or third-generation SAF. These variants are more expensive than the standard product.

Fuel costs are already biting

The policy fight lands on a weakened financial base. IAG, which also owns Vueling and Aer Lingus alongside British Airways, saw pre-tax profit fall 16 per cent to €3bn in the nine months to the end of September.

The London-listed group attributed the decline to a "significant increase in jet fuel prices from March onwards," caused by the closure of the Strait of Hormuz following the outbreak of war in the Middle East.

Industry bosses have warned that soaring fuel costs may force some airlines to collapse next year. IAG's numbers give that warning weight: a 16 per cent profit dip is absorbed by a group of IAG's scale; smaller carriers have thinner buffers.

The open questions

Gallego's argument has evident commercial logic, but gaps remain. He did not specify what a "level playing field" would look like in practice — a slower mandate trajectory, subsidies for SAF production, or both. Nor did he quantify the fare increases he predicts.

The government's position carries its own untested assumption: that pricier, cleaner fuel and cheaper family holidays can coexist. Until SAF supply scales or the mandate softens, one of those promises is likely to bend.

For now, the numbers tell the story: a 3.7 per cent obligation today, 10 per cent by 2030, a 16 per cent profit decline — and a regulator yet to reconcile its climate targets with the fuel the market can actually deliver.