How to promote sustainable aviation fuel: Is flexibility beneficial to quota policies?

As sectoral emissions rebound post-COVID, decarbonizing aviation has become a pressing priority, and sustainable aviation fuel (SAF) is widely regarded as the most practical short- to medium-term option. To accelerate deployment, many jurisdictions have adopted SAF blending quotas, while some policies now allow flexible quotas by averaging SAF usage across multiple airports rather than meeting the quota at each airport individually. This paper evaluates the operational and network performance implications of such flexibility in a multi-airport, multi-airline setting. Using an analytical game-theoretic model that captures airline competition, economies of scale in SAF production, logistics, transportation costs, and airport-specific SAF co-benefits, the study finds that flexibility enhances network efficiency by lowering SAF costs, increasing total traffic, and facilitating SAF uptake. However, these gains are not uniform across the network: airports and airlines near SAF production facilities benefit the most, while remote or smaller airports may face declining traffic, especially under weak scale economies or strong local SAF incentives. Extensions with asymmetric market and plant locations reveal that mismatches between SAF production sites and demand centers can amplify disparities; in some cases, small airports located near these facilities act primarily as “quota-fulfillment tools” yet still see diminished activity. Furthermore, the Book-and-Claim mechanism maximizes system-wide efficiency by decoupling logistics, but concentrates co-benefits at the hub, depriving remote airports of local incentives. Overall, while flexibility supports cost-effective SAF adoption, it also risks aggravating regional inequalities, which highlights the need for targeted support and coordinated policy design to ensure a balanced and equitable transition.