Due to a mismatch between short-term business travel ambitions and the airline industry’s 2050 net zero target, certain airlines face failure if they do not decrease carbon emissions faster in the next three to five years, according to an industry report released by CAPA Centre for Aviation and Envest Global.
The report also noted that the risk of shareholder activism is also faced by airlines.
This report was released at a time when concerns about climate change have been publicly expressed by major fund managers such as BlackRock Inc, Vanguard Group Inc, and State Street Corp.
“The pressure from customers and governments and investors is going to probably demand an acceleration of the journey to net zero, which is clearly going to put pressure on airlines,” said David Wills, advisory executive director at Australian carbon reduction strategy firm Envest.
“The conditions are right for airlines who get it wrong to find themselves in a potential failure situation,” he added.
HSBC Holdings plc, Zurich Insurance Group Ltd, Bain & Company, and S&P Global Inc have all declared commitments to reduce business travel emissions by up to 70 per cent in the near future.
Alan Joyce, the CEO of Qantas Airways, announced last week that his company was working on a 2030 emissions target.
“Our view is that smart airlines will pivot to reinforcing not only 2050 but enhancing their definitive views on 2030 because they will be looking to engage with their corporate customers more,” said Brett Mitsch, Envest’s executive director of investment.
According to the CAPA/Envest research, the top quartile of 52 worldwide airlines studied released 30 per cent less greenhouse gases per passenger kilometer flown in 2019 than the worst quartile.
Low-cost carriers with younger fleets and greater load factors, such as Wizz Air, Ryanair, and AirAsia, were among the top performances, while Turkish Airlines, Japan Airlines Co Ltd, and British Airways were among the worst.
According to the analysis, based on 2019 results, JAL was able to break even with a carbon price of more than $160 per tonne, whereas many airlines with weaker profit margins would have reported a loss with a carbon price of $30 per tonne.
(Adapted from NDTV.com)