Airlines warn budget raid will drive up passenger fares

Britain's leading airlines have warned the government that a little-noticed budget measure risks pushing up airfares for passengers.

Sky News has seen a letter sent by Tim Alderslade, chief executive of Airlines UK, to Treasury minister Dan Tomlinson seeking urgent talks over proposals to extend the Carbon Border Adjustment Mechanism (CBAM) to refinery products such as aviation fuel.

In the letter, Mr Alderslade, whose members include British Airways and Virgin Atlantic, said the extension "would place a further cost on the sector".

"Fuel is one of the most significant elements of an airline's operating costs and the United Kingdom relies on imports for a substantial proportion of its jet fuel supply," he wrote.

"Our members are therefore concerned that the proposals, taken without consultation with UK airlines, would place a further cost on the sector, coming in addition to the carbon obligations carriers already meet under the UK Emissions Trading Scheme, CORSIA and the SAF Mandate, and more widely through Air Passenger Duty, the highest tax of its kind in the world, and at a time of rising fuel costs owing to instability in the Middle East."

His warning emerged just hours after the Ryanair chief Michael O'Leary said the Dublin-based carrier would take an axe to its cost base partly as a result of its soaring fuel bill in the wake of geopolitical events this year.

CBAMs are used as policy tools to prevent decarbonisation efforts by domestic producers being undermined by foreign rivals.

However, the UK's dependence upon aviation fuel imports at a time when airlines are already concerned about the costs of hitting sustainable aviation fuel (SAF) targets has alarmed the industry.

One aviation source said: "Britain imports the vast majority of its jet fuel, so this a tax on air travel by the back door.

"Passengers will pay for it via higher fares."

(c) Sky News 2026: Airlines warn budget raid will drive up passenger fares