Is Aviation in the mood for a Festival?

In an industry as dynamic and transformational as aviation, the notion of a “festival” might seem frivolous. After all, we’re talking about a sector responsible for the safe and efficient transport of millions of people and shipments every day around the globe.

I’m asking the question of mood because my mind is in two places at the same time. On the festive side, you have heard that passenger volumes have recovered pre-Covid levels after three years of crisis, and States have agreed on a net zero CO2 emissions goal by 2050.

At the serious side, we are moving into an era of uncertainty related to energy transition environmental sustainability, and you can hear, especially in Europe, that the public is skeptical about the aviation’s goal to cut their share of CO2 emission, currently at 2% of the world’s total emissions.

While the continuous benefits of aviation and the new developments are worth gathering and celebrating, the pressure on decarbonizing faster is a growing concern.

 

 

Reducing aviation’s environmental impact

The big picture of CO2 emissions is that the industrial age, powered by fossil fuel combustion, is generating greenhouse gas (GHG) which contribute to climate change and global warming. The official source for data on this topic is the Intergovernmental Panel on Climate Change[1] (IPCC), which is the “United Nation’s body for assessing the science related to climate change”. Their latest “Summary for Policymakers” provides trends, by type of emission or by region, and solutions, by type of energy, to limit global warming.

For simplicity, according to 2016 figures[2], with global GHG emissions of 50 billion tonnes, see below, the industry roughly represents 24% of GHG emissions, agriculture 18%, buildings 17%, and transport 16%. All sectors have got their respective plans to reduce their emissions. In transport, road (12%), air (2%) and maritime (2%) add up to the 16%. While road has started deploying electric vehicles powered by batteries, the plan for air transport is a new synthetic fuel called SAF (for Sustainable Aviation Fuel).

Air transport needs an energy transition away from fossil fuels. In some regions the transition is driven by the pressure of climate change and global warming forecast, in other regions the end of the supply of fossil fuels in the coming decade will require a similar transition. In the last 12 months, States, collectively under their organization for aviation, ICAO, have adopted a Long-Term Aspirational Goal[3] for net-zero emission by 2050, and the airlines’ association, IATA, has published their plan, called Net Zero Roadmaps[4]. While there is a long way to go, and 2050 sounds far away, it is re-assuring to know that States, airlines and the entire aviation industry has a goal and a roadmap to reduce their CO2 footprint.

The real challenge, for aviation and the world, may be elsewhere, in the geographical differences and geopolitics. If you look at the CO2 emissions in the world in the past 50 years, the world went roughly from 17 Bn tonnes to 37 Bn tonnes, more than double. At a personal level, the CO2 in atmosphere was 332 parts per million when I was born in 1973 and is now 411 ppm. Interestingly, Europe’s emissions have decreased in the past 50 years, from about 4 Bn tonnes per year to 3 Bn, while the rest of the world grew indeed from 13 Bn to 34 Bn. The population in Europe (and the developed world) benefits from a mature economy and from historical infrastructure investments which help reduce emissions, while the rest of the world has a developing economy and growing needs for energy, production and transport.

 

 

We’ve almost recovered from COVID

Air traffic has almost fully recovered post-Covid, reaching in June 2023 95% of the same period in 2019[5]. During this year of recovery and mechanically strong growth (traffic was 31% higher than same period in 2022), demand grew faster than supply, as airlines and the supply chain struggled to put aircraft quickly in the sky. The result of the supply / demand profile is higher airline fares and consequently strong profitability.

For example, Emirates reported their most profitable year, at US$ 3 billion profit for 2022-2023. This profit alone however is not big enough to compensate for the Covid losses. Similarly, IAG reported record Q2 profit in 2023 at €1.2 billion[6]. At industry level IATA expects profits $9.8 billion in 2023[7], which is only 1.2% profit margin and not enough to make the industry financially sustainable.

If traffic numbers airlines have recovered from Covid, and airlines have shown profits recently, airlines have not compensated the losses accumulated during the Covid crisis and the entire industry is still fragile.

 

Benefits of aviation

The suspension of air travel during Covid reminded everyone of the benefits of aviation. We remember the value of something once we miss it. The impossibility to visit friends and family, to go on holidays or to meet clients and partners for business made us travel. The limitations on the cargo supply chain slowed down the entire economy, reducing the food deliveries or availability of consumer electronics. Some countries, like island states, which are highly dependent on aviation, suffered the most from the suspension and isolation from the rest of the world.

The alternative mode of transport often quoted to replace air transport is rail. In mature markets like Europe, where a broad network is available, the operational (environmental) cost of rail is lower than air transport. However in the majority of the world where rail is not available, the (environmental) cost of building the rail infrastructure is very high. Studies show $1m to $2m for 1km of conventional rail, much more for high-speed rail. If we add a tunnel or bridge, the cost is $10m to $100m per kilometre. It means that a developing country has a choice of paying nothing to connect two airports by air over a distance of 1000km or paying $1bn-$10bn to connect the two train stations over the same distance. Whenever the transport infrastructure budget competes with health, education and other budget, the decision to invest billions in railway infrastructure is not obvious. For the same cost, would you build one railway or a thousand schools and hospitals for your country?

 

Time for gathering but too early for celebrating

Given the climate change issues and the benefits of aviation, the debate may not be so much about the value of air transport, but about the viability if we don’t implement sustainable solutions quickly. The energy transition, away from fossil fuels, at global level, translates for the aviation sector into the production and distribution of new fuels.

The World Aviation Festival is the opportunity for gathering and debating many topics which can make the air travel experience better and the air travel industry more sustainable. The aviation sector has faced major challenges since the inception of the international framework in 1944, including the unprecedented events of 9/11 and Covid-19. The next challenge may be its biggest ever, but it is not a surprise: the need to decarbonize the industry, while dealing with a reduced growth in traffic.

Personally, I will attend the World Aviation Festival in Europe, as I’m in the mood for gathering with passionate people who want to make air travel sustainable. Europe has demonstrated the ability to cap CO2 emissions over decades, and may be able to lead the way to net zero emissions in aviation.

 

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Article by Eric Leopold

[1] https://www.ipcc.ch/

[2] https://ourworldindata.org/emissions-by-sector

[3] https://www.icao.int/environmental-protection/Pages/LTAG.aspx

[4] https://www.iata.org/en/programs/environment/roadmaps/

[5] https://www.iata.org/en/pressroom/2023-releases/2023-08-08-01/

[6] https://www.gridpoint.consulting/blog/record-second-quarter-results-at-iag

[7] https://www.iata.org/en/pressroom/2023-releases/2023-06-05-01/