Opening access to jet fuel infrastructure to capitalise on investment in low carbon liquid fuels

The Labor Government's announcement of a record $1.1 billion investment in the low carbon liquid fuel industry signals the importance of opening access to jet fuel infrastructure to facilitate the reduction of carbon emissions in the aviation industry.

To capitalise on this investment, airport operators may consider the benefits of owning and operating their joint user hydrant infrastructure (JUHI). Transferring JUHI ownership to airport operators involves more than simply an asset sale agreement – a new ecosystem of interconnecting contracts and an open access model for its use must be created.

Current fuel setting

Climate change and industry's desire to reduce carbon emissions is reshaping global aviation. Airlines have committed to achieving net zero carbon emissions by 2050 and identified that sustainable aviation fuel (SAF) is essential to achieving this goal. In Australia, SAF will be required for two-thirds of domestic flights and all international flights to meet the net-zero goal; as electrification and hydrogen offer medium-term solutions for short flights, SAF will be required for flights over 1000km.

While today SAF accounts for less than 0.1% of aviation fuel consumed, the aviation industry is working to ensure that the foundations are in place to enable adequate SAF supply at Australian airports by 2050. One of the key foundations is open access to jet fuel infrastructure. Any restrictions to access in the jet fuel supply chain in Australia may pose barriers to SAF supply and lessen competition between suppliers. In this article, we highlight how Australian airports are opening access to jet fuel infrastructure and the legal issues to consider in these transactions.

Sustainable aviation fuel: the local industry

SAFs are fuels used in commercial aviation which can reduce CO₂ emissions by 80%. It contains the same hydrocarbons as fossil-based jet fuel, but the hydrocarbons are derived from sustainable sources. While fossil fuels add to the overall level of CO₂ by emitting carbon, SAF recycles the CO₂ which had been absorbed by the biomass used in the feedstock. At this stage however SAFs are more expensive to produce and limited in their availability compared to conventional jet fuel.

Recent developments in the local SAF industry include:

• Qantas has committed to using 10% SAF in its fuel mix by 2030, and in May this year accepted delivery of Australia's largest SAF import with nearly two million litres arriving in Sydney.

• Between March and July 2025, Viva Energy supplied Virgin Australia with blended SAF (consisting of conventional Jet-A1 and a 30-40% synthetic blend made from waste and residue feedstocks) for flights departing from Proserpine, Queensland.

• IFM Investors, GrainCorp and Ampol have signed a Memorandum of Understanding to assess the feasibility of a renewable fuel facility, including SAF, at Ampol's Lytton refinery in Brisbane. This project  will explore the production of SAF from Australian feedstock and reduce Australia's dependence on overseas fuel imports.

Two of these projects (among others) are supported by the Government's Sustainable Aviation Fuel Funding Initiative. 

A necessary ingredient in the industry's success is SAF suppliers having access to jet fuel infrastructure to supply their customers. The jet fuel infrastructure is a critical element in the complex supply chain dominated by vertically integrated fuel suppliers.

Jet fuel supply chain in Australia

The Australian jet fuel supply chain is complex and comprises both off- and on-airport infrastructure, including JUHI and pipelines on airport land leased by airport operators from the Commonwealth. Jet fuel is typically shipped from an overseas refinery, transported to a local refinery by tanker or pipeline, then pumped into the fuel tanks at the JUHI facility via a pipeline owned and operated by a fuel supplier.

JUHI owners are often vertically integrated fuel suppliers involved in an unincorporated joint venture which owns and operates the JUHI. Often the only means by which a new entrant can supply fuel to an airline is to purchase an equity stake in a JUHI joint venture.

Australian airport operators have traditionally not owned or operated the JUHI, but since 2020 the position has begun to change. Below is a snapshot of the fuel infrastructure ownership at major Australian airports:

Case study – Sydney Airport

To increase competition among fuel suppliers, in October 2020, Sydney Airport purchased the JUHI assets from the JUHI joint venture for $85 million. Up to then, the JUHI JV had operated the JUHI assets under a sublease from Sydney Airport.

A transaction of this nature would have involved a complex suite of agreements, including:

• Asset sale agreement (or similar) between Sydney Airport and the JUHI JV;

• Operations and maintenance agreement between Sydney Airport and Skytanking, the appointed operator of the JUHI;

• Fuel supply agreements between Sydney Airport and fuel suppliers to use the JUHI facility;

• Access agreements between Sydney Airport and the into-plane fuel suppliers to access the JUHI facility and airside infrastructure; and

• "Tarbox" agreement between the fuel suppliers to allocate liability for aircraft refuelling risks.

While there is a raft of legal issues to consider in structuring such a transaction, some of the more interesting issues from an airport operator's perspective arise when appointing an operator of the JUHI facility. These issues include:

• Role of operator: a question for airport operators to consider, when implementing an open access / common user model, is whether to permit the operator to supply fuel to airlines or provide into-plane (ITP) fuel services. The risk in permitting an operator to perform multiple roles is that it may, in discharging the role of operator, be subject to commercial conflicts of interest in relation to its position as a fuel supplier or ITP fuel provider. From a competition perspective, the preferred position is for the operator to be restricted from supplying fuel or providing ITP fuel services.

• Transition to new operator: a thorny issue to manage is the transition from the incumbent operator (usually a fuel supplier) to the new operator, which may have no relationship with the JUHI joint venture. This issue manifests in both the terms of the sale agreement for the JUHI facility and related infrastructure and the operations and maintenance agreement with the incoming operator. The agreements will need to clearly articulate the scope of any transition support provided by the incumbent operator and what services are to be provided by the incoming operator prior to handover of the JUHI facility. It is also important to consider the end of term obligations of the incoming operator to ensure a smooth transition to a future operator as required.

• Development of common user principles: the airport operator will need to consider and develop the common user principles under which it will provide access to fuel suppliers and ITP fuel providers to the JUHI facility, and the role of the operator in administering the common user principles. For example, the operator may be required to assess applications for access to the JUHI against qualifying criteria and support the airport operator in managing the relevant contracts, which may involve acting as an agent for the airport operator.

As a result of Sydney Airport's purchase of the JUHI facility, any prospective fuel supplier that meets the qualifying criteria may lodge an application to supply fuel, subject to Sydney Airport's terms and conditions. This contrasts with the pre-2020 position in which a prospective fuel supplier would have been required to purchase an equity stake in the JUHI JV.

Adelaide and Perth airports have followed Sydney by purchasing the on-airport jet fuel infrastructure in 2021 and 2023 respectively and now operate open access, common user jet fuel facilities.

Putting the aviation industry on the path to net zero

The implementation of open access, common user infrastructure models at Sydney, Adelaide and Perth airports is a positive step in readying the industry for SAF.  From a legal perspective, the transactions underpinning the transfer of JUHI ownership from the JUHI JV to airport operators involve more than simply an asset sale agreement. They necessitate the creation of a new ecosystem of interconnecting contracts and an open access model for the use of the JUHI. As the participants in the new ecosystem, airports, fuel suppliers, JUHI operators and ITP fuel providers must ensure their contractual access rights and obligations accommodate the supply of SAF at scale on the industry's path to net zero.