Paper #208

Risk-Aware Sustainable Aviation Fuel Procurement under Regulatory Uncertainty: A Two-Stage Stochastic CVaR Model for Airline Networks

Mohamed Abdelmagid, Abdullah Quran and Maher Maalouf

Presenting author: Mohamed Abdelmagid

Session: I13

Abstract

Sustainable aviation fuel is scarce, costs several times as much as fossil jet fuel, and is increasingly mandated by regulation. We study how an airline should commit to forward purchase contracts before observing fuel prices, carbon prices, and supply availability, and how it should allocate physical SAF and voluntary book-and-claim certificates across its network afterwards. We formulate a two-stage stochastic mixed-integer program whose objective combines the expected net compliance cost with its Conditional Value-at-Risk and calibrate one hundred correlated price and availability scenarios entirely from public data. A case study of a Gulf-carrier network with thirteen long-haul routes serving EU, UK, and other international destinations over twenty-four quarters shows that SAF compliance adds about four and a half percent to the fuel-and-carbon bill, and that voluntary certificate flexibility reduces tail cost by about three percent while cutting required forward commitments by more than one third