The aviation industry has proposed the collective goal of achieving net-zero carbon emissions by 2050. In addition to the existing market-based methods (MBMs), the use of renewable energies, in particular, sustainable aviation fuel (SAF), could be one of the most promising means for achieving this long-term target. This paper investigates how an SAF mandate from the government can lead to heterogeneous impacts on two types of airlines, namely, full-service carriers (FSCs) and low-cost carriers (LCCs), that compete in the same markets. A game-theoretic economic model is constructed that accounts for the different service quality levels and cost structures (i.e., fuel efficiency) between FSCs and LCCs. Our analytical results suggest that the SAF mandate favors LCCs over FSCs. The share of SAF blended into fuel raises the airfares of both types of airlines while reducing the traffic and profit of FSCs. The impacts on the LCC traffic and profit depend on its fuel efficiency relative to that of FSC. When LCCs are sufficiently fuel efficient, the SAF mandate can increase their traffic and profit. The government subsidy on airline's SAF use is also analyzed, deriving the optimal subsidy levels for FSC and LCC respectively to achieve pareto-improvement in social welfare and consumer surplus. We also examine how air passengers’ environmental awareness affects the outcomes of SAF mandate implementation. Our economic model also accounts for passengers’ heterogeneous preferences in terms of service quality and price sensitivity.

中文翻译：

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可持续航空燃料法规对航空公司竞争的影响 — 全服务航空公司与低成本航空公司


航空业提出了到 2050 年实现净零碳排放的集体目标。除了现有的基于市场的方法 （MBM） 之外，使用可再生能源，尤其是可持续航空燃料 （SAF），可能是实现这一长期目标的最有前途的手段之一。本文研究了政府的 SAF 授权如何对在同一市场竞争的两类航空公司（即全服务航空公司 （FSC） 和低成本航空公司 （LCC））产生异质性影响。构建了一个博弈论经济模型，该模型考虑了 FSC 和 LCC 之间不同的服务质量水平和成本结构（即燃油效率）。我们的分析结果表明，SAF 授权更有利于 LCC 而不是 FSC。SAF 混合到燃料中的份额提高了两种航空公司的机票价格，同时减少了 FSC 的客流量和利润。对 LCC 流量和利润的影响取决于其相对于 FSC 的燃油效率。当 LCC 的燃油效率足够高时，SAF 授权可以增加其交通量和利润。还分析了政府对航空公司 SAF 使用的补贴，分别得出了 FSC 和 LCC 的最佳补贴水平，以实现社会福利和消费者剩余方面的帕累托改善。我们还研究了航空乘客的环保意识如何影响 SAF 强制令实施的结果。我们的经济模型还考虑了乘客在服务质量和价格敏感性方面的异质偏好。