Once upon a time in the early days of jet travel, business travelers accounted for three-quarters or more of the total passenger business of the major U.S. airlines (known as “trunk” carriers back in the day). Fares were long set by Federal regulation and family-friendly, tourista-friendly fare packages were scarce or non-existent. Airlines relied on the “have-to-travel-for-business” crowd.
As the U.S. transport regulations were significantly relaxed (scheduled carriers through Federal “de-regulation” in 1979), the number of U.S. airlines soared from 75 or so to 400 companies…and then began to steadily shrink as carriers merged or went out of business. But passenger travel continued to grow.
Consider: The Federal Aviation Administration reports 2.7 million passengers move across 29 million miles of controlled airspace on 44,000 flights within the U.S. each day! (See Air Traffic by the Numbers for full details): https://www.faa.gov/air_traffic/by_the_numbers/media/Air_Traffic_by_the_Numbers_2019.pdf
IATA reports four billion annual passengers traveled on a global basis between 20,000 “city pairs”, doubling the global 1995 city pairs available to fliers (the airport centers) in 2017. Passenger traffic was heaviest in Asia-Pacific (more than one-third of the total); Europe and North America each had a quarter of the total number of passengers. More information for you at: https://www.iata.org/pressroom/pr/Pages/2018-09-06-01.aspx
In response to this steady growth in passenger demand, as set fares were de-regulated airlines and seat price points steadily fell, airlines developed a bewildering array of fare offerings (“stay overnight on Saturday” etc). And those reduced fares helped to bring many more non-business fliers to the American skies.
Outside of the U.S., what were once “national flag carriers” (like British Airways, Air France, Al Italia and many others owned by governments) are now private sector companies -- and these long-established carriers and their newer competitors are similarly filling their planes through offer of attractive fares and generous “packages” for retail customers, and connecting business and tourism fliers with many more cities.
And so – as author Stephan Rice points out in his Forbes commentary – IATA, the industry’s International Air Transport Association -- sees the global commercial airline passenger business doubling over the next 20 years.
More flying customers means more passenger airliners will be needed (with much more fuel consumed), more airports needed to accommodate the “to and from” of air travelers (or airports will have to be expanded and upgraded) …and all this means more pollution.
Passengers are now more aware of the impact of air transport on the environment and demanding more sustainable practices. And they are willing to pay for it, some surveys show.
As air travel volume builds, what can be done to reduce the impact of air travel on the global environment? Dr. Rice suggests airports can be re-designed to be more sustainable (he cites enhancements at SFO International and Boston Logan as U.S. examples). Indira Ghandi International in Delhi has the first Leadership LEED Gold certificate.
Airlines could use biofuels; KLM had a biofuels test flight from Amsterdam to Paris; Honeywell arranged a flight over the Atlantic using petro-based fuel and camelina (a derivative of a flowering Mediterranean plant!); Singapore is using biofuels over the Pacific.
A 2017 survey of 700+ consumers showed that passengers were willing to pay an additional fee (up to 13% more) for a flight using biofuels -- “…a portion of consumers value green initiatives and appear willing to contribute financially to support it…”
The U.S. carriers’ trade organization is “Airlines for America”; it promotes the “A4A’s Climate Change Commitment” for member airlines and is part of a worldwide aviation coalition committed to a global framework on aviation and climate change with emissions target goals (the “Aspirational goal” is 50% reduction of CO2 emissions by 2050 relative to 2005 levels).
Information at: http://airlines.org/a4as-climate-change-commitment/
IATA, the airline industry’s global trade association, has set three targets and four pillars to mitigate CO2 emissions from air transport. Information and fact sheets are available at: https://www.iata.org/policy/environment/Pages/climate-change.aspx
Author Rice describes the results of additional consumer surveys on the topic in his Forbes commentary. He concludes: “It is clear that the public wants sustainable aviation…and are willing to pay at least some costs for this. Some airlines and manufacturers are taking the lead, but the rest of aviation need to follow very quickly or get left behind.” Read the details in his commentary, which is this week’s Top Story for you.
Stephen Rice is a professor at Embry-Riddle Aeronautical University and received his Ph.D. from the University of Illinois.
This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view full issue.
KEYWORDS: business & trade, Corporate Social Responsibility, csr, G&A Institute, GRI, Governance & Accountability Institute, G&A, SRI, SWF, socially responsible investing, Sovereign Wealth Funds, sustainability, Corporate Citizenship, esg