According to the Guardian, Lufthansa operated 18,000 “unnecessary” flights between January and March 2021 to retain their coveted landing rights at European airports , whilst Greenpeace predicted another 100,000 across the continent this winter . The pandemic has devastated global aviation: the IATA expects revenues per passenger kilometre to remain 57% below 2019 levels this year, largely due to the pandemic’s adverse impact on global economic growth . GDP across high-income economies is approximately 2.5% below its pre-pandemic trend, significantly worsening to 1.6% since the outbreak of Omicron .
Accompanying persistent economic adversity is passengers’ increased elasticity to aviation demand. The consequence of abrupt and restrictive pandemic responses on aviation demand is visible through Cathay Pacific’s expectation of HK$6.1bn ($783m) in losses for 2021, following losses of $12bn this year for the global aviation industry . There will be substantial variation in demand elasticity across passenger types, for example, the extensive implementation of remote working will permanently impair business travel demand. Bloomberg forecast a “structural decline” of 15–20% through 2025 in the business travel sector, worsening the prospects for an already brittle aviation sector as it becomes over-dependent on increasingly turbulent leisure travel .
Compounding this has been the unprecedented rise in fuel costs over the pandemic. The price of oil climbed to a seven-year high in October 2021, causing aviation fuel to almost double in price over the past year . Significantly, following the oil price collapse in the pandemic’s initial phase, many airlines abandoned hedging their future fuel requirements . Thus, exposed to sharp rises in crude prices, airlines are unable to pass these increased fuel costs onto the increasingly price- and income-sensitive passenger, triggering concerns over carriers’ costs as volatile aviation demand persists.
Whilst presenting considerable challenges to global aviation, the uncertainty of the post-COVID recovery offers the opportunity for a system change, whereby aviation can pivot towards a greener and more resilient future. A period of depressed aviation demand induces a lower requirement for alternative fuels, making transition simpler to achieve in the present climate . Similarly, sustained reluctance to fly has raised the competitiveness of rail on highly contestable intra-European routes, where the expansion of established international rail networks is possible. UBS estimates that the extension of high-speed rail networks could contribute to European air traffic growth dropping to 0.1% annually over the next decade, downwardly revised from the 4.1% annual growth predicted in 2019 . Thus, formulating a strategy that maintains aviation’s post-pandemic competitiveness is critical.
Airlines’ adoption of sustainable aviation policy has accelerated recently, particularly in the development of Sustainable Aviation Fuel (SAF) technology. In December 2021, Latvia’s Air Baltic operated a Helsinki–Riga flight using a 37% blend of SAF, the largest volume employed by the airline, and falling marginally short of the 38% EU blending mandate set for 2045 . In the same month, Malaysia Airlines in conjunction with Petronas applied SAF to long-haul travel for the first time, using a 38% blend of SAF on an Amsterdam–Kuala Lumpur flight .
Cooperation between airlines and private capital has also expanded. LanzaJet secured a $50m investment from the Microsoft Climate Innovation Fund in January to support the construction of a SAF plant in Georgia, USA . Following its completion, LanzaJet hopes to contribute one third of the Biden administration’s 3bn gallons a year SAF target by 2030 . Likewise, the Lufthansa Group has partnered with ETH Zürich to produce SAF, whilst simultaneously investing in technologies to convert renewable energy into fuel and developing compatible jet engines .
However, the extent to which the recent sustainability drive can be attributed to cost-conscious airlines is debatable. The aviation industry is complex; governed by extensive regulation, technological developments often occur over long intervals, meaning policymaker support is crucial for the decarbonisation of the sector .
Thus, much of the acceleration in sustainability can be attributed to the coordinated efforts of governments, aircraft manufacturers, airlines, and fuel producers. For example, Exxon Mobil and Finnish firm Neste have partnered to distribute SAF within France. However, such collaboration was undoubtedly aided by the implementation of a national 1% SAF blending mandate in January . Policymakers further accelerated French sustainable aviation policy by launching an aerospace support plan worth €15bn . Whilst primarily supporting aviation’s post-pandemic recovery, the plan included €7bn awarded to Air France, including packages for R&D funding for green jetliners .
Production of SAF within the USA also expanded following the Biden administration’s September 2021 deal with major American airlines to cut industry emissions by 20% by 2030 . This spurred members of Airlines for America into a pledge to make 3bn gallons of SAF available in the USA by the same date . Elsewhere, United Airlines and Honeywell announced a multimillion-dollar investment in Alder Fuels to produce SAF commercially, with a 1.5bn gallons purchase agreement in place over 20 years – the largest ever agreement of its kind . Crucially, the Federal Aviation Administration announced the award of 14 grants totalling $3.6m to facilitate increased SAF development, whilst NASA and the Defence Department both committed to increasing their R&D efforts . This further supports the credentials of a coordinated, cross-agency governmental approach in driving sustainable aviation policy.
Regionally, the EU’s Taxonomy regulation, adopted into EU law in July 2021, classifies economic activities by their environmental sustainability, channelling capital towards desirable projects. Promisingly, this has already stimulated greater investment into SAF production. In September 2021, Shell announced its commitment to produce 2m tonnes of SAF per year by 2030, doubling current global production, by which time at least 10% of Shell’s global aviation fuel sales will be SAF .
Whilst aviation sustainability has taken off recently, this has been largely driven by greater government intervention. This has coincided with an unprecedentedly weak global aviation sector, accelerating airlines’ willingness to implement sustainable policy. However, with forecasts predicting the recovery of international travel to 2019 levels by 2024, the jury is out over whether the current surge in aviation sustainability will remain such an attractive proposition for airlines . This highlights the need for stakeholders, particularly legislators, to capitalise on the current window of opportunity to secure the long-term sustainability of global aviation.
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