Jens Flottau, Lori Ranson, Ben Goldstein The airline industry is now aiming for a net-zero emissions target, to be reached by 2050.
Jens Flottau, Lori Ranson, Ben Goldstein
IATA held its first in-person annual general assembly in more than two years in Boston, a major hub for JetBlue. Credit: Joepriesaviation.net
In 2009, when the airline industry committed to cutting its carbon emissions in half by 2050, it was seen as a global front-runner. It was the first industry to commit to an ambitious target before others even acknowledged that there was a climate change problem. Since then, however, the goals set by air transport have been overtaken by reality and become a problem themselves. In short, the situation indicates that the airlines were not prepared to do enough to fight for environmental sustainability.
It is unknown how many hours Willie Walsh, the director general of the International Air Transport Association (IATA), has spent on the phone, handling Zoom videoconference calls or in Microsoft Teams meetings—or even on airplanes—in his struggle to convince IATA members that what they planned 12 years ago is no longer good enough. But in the end, Walsh has managed to bring a large majority of IATA member carriers behind the idea that airlines need to be in line with the climate goals set for many economies at large, including those of the EU and the U.S. The airline industry is now aiming for a net-zero emissions target to be reached by 2050.
It is not quite the entire airline industry though. In several comments put forward online at the Oct. 3-5 IATA Annual General Assembly in Boston, Chinese airlines did not raise concern about the net-zero target per se but rather about the timing. China Southern Airlines suggested that the industry should achieve net-zero emissions in 2060, 10 years later and in line with the road map put forth by the Chinese government. Walsh said the IATA board of governors had discussed the issue but felt it would not have been acceptable elsewhere to push out the target by 10 years.
“Science tells us the situation is worse than we thought,” Walsh said during the conference. “The [previous] target was not ambitious enough.” He conceded that reaching net-zero emissions was going to be “challenging.” But, he added, “It can be achieved. It is the right thing to do.”
Individual airlines, including his former employer International Airlines Group, and regional bodies such as Airlines for Europe had set the same target earlier, but given the diverging interests between airlines from developed and developing countries it took longer to find global consensus. Remarkably, there was no opposition to the plans by state-owned carriers based in oil economies such as Saudia or Etihad.
For IATA, getting the positive vote now was crucial to get ahead of the curve and demonstrate the industry is tackling climate change proactively. In less than a year, the next International Civil Aviation Organization assembly will take place with a heavy focus on the issue of climate change and what aviation should do to tackle it from the regulators’ point of view.
“We have a plan,” Walsh said. “The scale of the industry in 2050 will require the mitigation of 1.8 gigatons of carbon. A potential scenario is that 65% of this will be abated through sustainable aviation fuels. We would expect new propulsion technology such as hydrogen to take care of another 13%. And efficiency improvements will account for a further 3%. The remainder could be dealt with through carbon capture and storage (11%) and offsets (8%).”
IATA’s resolution demands that aircraft and engine OEMs come up with “radically more efficient airframe and propulsion technologies.” As part of the road map, “incremental change on the aircraft is not good enough,” Walsh said. Apart from the Airbus hydrogen program, no other radically different large aircraft designs are on the horizon yet—though engine manufacturers have launched research and development projects for the next generation of powerplants.
But the overwhelming contribution will have to come from sustainable aviation fuels (SAF). The road to get to the targets is going to be long and arduous, and there are different, sometimes contrasting views, about the best way forward.
To United CEO Scott Kirby, the situation is clear: “We need solutions above and beyond what others are doing,” he said. Given that SAF is playing a central role in all scenarios, Kirby pointed out that aviation should not use farm products to make them to avoid competing with food production. Also, Kirby does not want to use offsets that are still a part of the IATA net-zero equation. “Sustainability is the biggest issue we face as a generation,” Kirby added.
As Jennifer Holmgren, CEO of carbon capture specialist Lanza-Tech, stressed: “Climate change is an existential threat to this industry. Carbon capture is the only way forward. It will give the industry the license to fly.”
As for the industrial rollout of SAF, Holmgren believes that the 10% quota targeted in the U.S. by 2030 is achievable. “The 2030 goal is crucial for 2050, and 2025 is important as an intermediate step to get to industrial scale and diffusion,” Holmgren said.
IATA provided its members a pathway detailing five-year increments of what is needed to reach the 2050 goal.
The association came out with its new policy at a point in time when airlines have reason to hope that the worst of the novel coronavirus pandemic is behind them. Still, IATA expects the industry as a whole to return to profitability—U.S. carriers will be profitable in 2022. Following $138 billion in cumulative losses for 2020, airlines globally will lose another $52 billion this year and $12 billion in 2022. As Walsh pointed out, by the end of 2022 the industry will have lost more than $200 billion as a result of the pandemic. But “we are past the deepest point” and on the “path to recovery,” he said.
The fact that IATA was able to hold an in-person annual meeting was “an early symbol” of “how we can live, work and travel” as the virus slowly becomes endemic, JetBlue President and CEO Robin Hayes said.
According to IATA, overall demand for air travel will be at 40% of precrisis levels in 2021 and at 61% of precrisis levels next year. Airlines in 2021 and 2022 will be back at 50% and 67% of 2019 capacity, respectively. There will be large variations between markets and regions, mostly depending on coronavirus case counts and travel restrictions. Overall international demand is expected to reach only 22% this year and 44% in 2022. As supply remains constrained, IATA expects yields to rise by 2% this year and 10% next year. Passenger revenues will increase from $227 billion in 2021 to $378 billion in 2022. By comparison, cargo will contribute $175 billion and $169 billion, respectively.
As the revenue figures illustrate, the cargo sector has been a lifeline for many airlines in the pandemic. And FedEx Express believes there’s still a significant gap between supply and demand in cargo operations that will continue to drive momentum in the freight business.
In terms of the company’s planning process, FedEx Express CEO Don Colleran said that “where we sit today is where we thought we’d be four years from now.”
There are many factors driving that positive forecast including the rapid growth of e-commerce. “There might be some moderation of what we see in the business, but the genie is out of the bottle from an e-commerce perspective,” Colleran added.
Consumers globally also “feel pretty good about where they sit,” he added. “The demand is there, and the supply is at historically low levels because all the airplanes have not come back up internationally,” Colleran said.
Qatar Airways has reached the same conclusion. “Before COVID, globally 66% of the international CTKs (cargo ton kilometers) were carried in bellies. As long as that capacity is not coming back, we will face a shortage of supply,” said Chief Officer Cargo Guillaume Halleux. “And on that front, what I hear from my passenger colleagues is that it’s not going to come back as it was until a number of years.”
As the industry emerges from the crisis, it is facing new issues. Walsh pointed out that a lot of the security measures that were put in place following the Sept. 11, 2001, terrorist attacks have not been, or only slowly, wound back—even though they have been superseded by technology development. In the context of COVID-19, “we cannot make that same mistake again,” he said. But he said there is evidence of that already, not only in the way in which travel restrictions have been handled but also in the long and complicated process of ungrounding the Boeing 737 MAX globally.
How governments manage border restrictions needs to be “dramatically improved,” Walsh continued. “There is little evidence to support blanket border restrictions. Travel is not increasing the risk of COVID-19.” He adds that more risk-based measures are beginning to be introduced with the reopening of Canada, the EU and, most recently, the announcements to open the U.S. and Australia.
“There should be no barriers to vaccinated travelers,” Walsh said. However, IATA is not in favor of making vaccination mandatory for air travel—as many people still have no easy access to vaccines in some parts of the world. Walsh warned that “the recovery could be hijacked by complex made-at-home rules” and believes that already “the situation is a mess.”
Walsh also sharply criticized “some of our so-called partners” for increasing airport and air traffic control charges to recover their own losses. He highlighted Amsterdam and London-Heathrow airports that have announced fee hikes of 40% and 90%, respectively, for 2022. “That is outrageous and needs to stop,” Walsh said. IATA expects infrastructure costs overall to rise by $2.3 billion next year.
