Singapore's New SAF Levy: How Will Air Cargo Shippers Be Taxed in 2026?

The Civil Aviation Authority of Singapore (CAAS) has announced a new mandatory Sustainable Aviation Fuel (SAF) levy. This levy will apply to all departing flights from Singapore, including both passenger and cargo services. The policy is a key initiative within the nation's Sustainable Air Hub Blueprint.

Tickets and services sold from April 1, 2026, will include the charge. The levy officially takes effect for all flights departing from Singapore on October 1, 2026. Singapore is the first country globally to impose a blanket levy on all departing flights to fund SAF procurement.

New Costs for Air Cargo Shippers

The SAF levy introduces a direct cost for the air freight industry. Unlike passenger flights, the charge for cargo will be imposed on shippers, not the aircraft operators. This fee is calculated on a per-kilogram basis. The exact amount varies depending on the geographical distance of the destination.

For example, shipments heading to Northeast or South Asia will incur a levy of S$0.04 per kilogram. This mechanism ensures that the cost is distributed across the entire supply chain. It directly links the environmental impact of the shipment to its cost. This new fee will affect global logistics and supply chains that rely on Singapore Changi Airport (SIN) as a major hub.

SAF Targets and Financial Mechanism

The primary goal of the levy is to achieve Singapore's initial SAF uplift target. The Civil Aviation Authority of Singapore has mandated a 1% SAF blending target for 2026. The long-term goal is to raise this target to between 3% and 5% by 2030. This increase is contingent on global developments and the wider availability of SAF.

CAAS is implementing a fixed cost envelope approach for SAF procurement. The levy collected from passengers and shippers will be used to centrally procure SAF. A new government-owned, non-profit entity, the Singapore Sustainable Aviation Fuel Company (SAFCo), will manage this process. This centralized approach is designed to provide cost certainty to airlines and travelers. It also aims to encourage investment in SAF production by providing a clear demand signal. The funds collected will be used solely for the purchase of SAF and its environmental attributes. Transit passengers and humanitarian flights are excluded from the levy.

Industry Impact and Global Context

This policy positions Singapore as a regional leader in aviation decarbonization. However, the move introduces a new cost layer for airlines and cargo operators. Singapore is already considered a relatively expensive air hub in the region. Aviation stakeholders must now factor in the new SAF levy.

The move aligns with global efforts to reach net-zero emissions by 2050. The International Air Transport Association (IATA) has emphasized that SAF is critical for achieving this goal. Global SAF production remains low, representing only about 0.3% of jet fuel use in 2024. IATA has warned that production growth is slowing. This slowdown complicates the ability of airlines to meet their own sustainability commitments. Singapore's mandatory levy and central procurement model is a unique strategy to address the challenges of high SAF prices and scarce supply.

Get breaking commercial aviation news and expert airline analysis at flying.flights.