Can the airline industry make a sustainable landing after Covid-19?

Before the pandemic hit, progress on airline sustainability was gathering pace, passenger numbers were expected to increase steadily, and airlines were expecting to expand. Covid-19 has suddenly and radically changed the outlook. What is the extent of the pandemic’s disruption of the industry? And what might it mean for the future of air travel?

In recent years, rising concern about sustainability has added to the urgency of existing efforts to improve efficiency in a variety of ways.

One promising approach is through technological advances such as the composition of jet fuel. “Some airlines are cooperating to find alternatives to kerosene,” explains Lutz Beck, Partner, Mazars. “For example, Lufthansa Group has a programme with ETH Zurich to produce sustainable aviation fuel. They are also looking into technology to convert wind and other forms of renewable energy into fuel and developing jet engines to use it.” One early-stage fuel production method is known as ‘power-to-liquid’ – in which fuel is produced using water, renewable electricity and captured CO2. It’s carbon-neutral in that the carbon emissions are equal to those previously removed from the atmosphere in the capturing process.

Other companies are looking at innovations in the design of the planes themselves. “Airbus has announced three concepts for zero-emissions commercial aircraft powered by hydrogen,” says Olivier Guilbert, Senior Manager, Mazars. “And we’re seeing the first steps towards the use of hydrogen in drones. Currently, the biggest challenges to overcome are how to fit pressurised fuel tanks in the fuselage and to maintain liquid hydrogen under -250°C during transport.” Planes that seat passengers within the wings might also cut fuel consumption by as much as 20%, and some say that such models could be ready for commercial use in the late 2030s.

In some cases, these advances could be boosted by government funding and initiatives. In July, for example, the UK government announced new public funding for high performance plane engines, new wing designs, and lightweight cabin seats, to be matched by private funding. In France, the government has launched an aerospace support plan worth €15 billion - including €7 billion of aid already awarded to Air France, which includes R&D for green jetliners. As part of the plan, France has committed €1.5 billion over three years to support research into environmentally-friendly technology, in particular into a carbon-neutral successor to the A320.

Other developments include efforts to reduce the noise of open rotor engines, which are more sustainable than traditional gas turbine jet engines, and intercooled recuperated engines, which save fuel by recovering emitted heat and reusing the energy.

“Airlines have been looking at how they can reduce the amount of fuel they use for some time,” says Beck. “Fuel is a significant cost for them. Lufthansa, for example, might spend €3.7 billion on fuel in a year, over €500 million more than it spends on staff. So, airlines have always had a big incentive to reduce their fuel use for economic as much as sustainability reasons.”

Sustainability moves up the agenda

In recent years, pressure has grown on companies to reduce their emissions, from policymakers, youth-led climate campaigns such as ‘Fridays for the Future’, and the general public. As a result, carbon reduction has been a greater focus for industry leaders. The French government recently announced it would introduce a tax on plane tickets. “From 2020, each flight from a French airport will be subject to a tax ranging from €1.50 to €18, depending on the class of ticket,” says Guilbert, “which the government says will fund greener transport projects.”

In the last year, climate adaptation has moved up the agenda fast in Germany, too. Campaigners have targeted passengers and achieved some success in shifting public opinion. Beck cites public responses such as increased train travel. “In Germany we have good trains, so there is an alternative,” he says. “For example, [German train operator] Deutsche Bahn explicitly markets itself as a greener alternative to flying by saying the trains run on 100% green energy.”

Beck also points to the connection between airport capacity and sustainability. In recent years, he explains, fuel use has been higher than it should be because of delays due to capacity issues at airports. “Often, planes would use more fuel than necessary flying around, waiting for a landing slot to become available,” he says. “Investment in expanding airport capacity can have the knock-on effect of helping airlines become more fuel efficient.”

The pandemic and its immediate effects

Covid-19, however, has been devastating for the industry as a whole. Border closures, quarantine rules, and the rise of videoconferencing have all hit the industry hard. Revenue passenger kilometres (RPK – the number of paying passengers multiplied by the distance travelled) are down nearly 55% compared to 2019, according to IATA. The ICAO estimates that airlines’ revenues will lose up to $400 billion in the full year 2020. IATA has warned that cash losses and persistent low traffic levels could put many in the sector out of business. “The impact of the crisis is worldwide,” says Pilar Castillo, Partner, Mazars, “but the measures to mitigate it depend on the economic, political and social conditions of each country. In Mexico, for example, government aid has focused on the health sector and people in need. This has worsened the financial crisis of the airlines.”

The US border closure was a particular blow in other regions, as trans-Atlantic routes make up such a large proportion of flights for airlines such as Virgin Atlantic and British Airways. Some have reacted to these conditions by doing what they can to reduce losses. “They might use this time to cut some processes,” says Beck. “Buying processes, for example, often involve a lot of people working on the same area.” Airlines may also reduce less profitable routes. Most have at least some which are not profitable, especially given competing train services.

The timescale in which airlines will become commercially viable depends in large part on the development of an international testing system. At present, individual airports and countries have their own system, so a system of international assurance and testing would speed up recovery. Tony Douglas, Etihad’s CEO, has argued that given the urgency, and the speed with which common standards were adopted by the industry on security, a common testing system could be in place relatively soon.

Castillo says that once the acute risk of Covid-19 passes, airlines may also want to invest in extra safety processes. “Post-Covid, information about passengers’ medical condition, body temperature, blood pressure and general biomedical information may well be required to board a plane.” She adds, “Some will say that this will make travelling by plane more complicated, but it could make it safer and more comfortable too. It could be an opportunity for the industry to develop more sophisticated protection technologies and systems.” Beck adds that airlines may also want to invest in extra cleaning processes and advises that passengers may also be willing to pay for the extra space that distancing practices require.

Green-interrupted? Implications of Covid-19 on sustainable air travel

The pandemic is likely to delay the transition towards more sustainable technology and practices in the short term, simply because it has forced airlines into survival mode. “Some airlines are likely to reduce or pause investment in research and development into alternative fuels,” says Beck, although he says that ultimately the research is an issue of survival too. “In the long run they will need to continue this work, as there will not be a lot of oil, so they need alternatives.”

Advancing aircraft and component designs is difficult, and development cycles are long. ‘Greening’ fleets will take time – and improving airlines’ sustainability requires investment, coordination, experimentation, and the right policy framework to create opportunities.

While Covid-19 has devastated the industry in the short term, airlines may – over the long term – be able to make a public case that the cost of a green recovery should be shared with

taxpayers. Indeed, demand for change from passengers is rising. In Britain, for example, the Aviation Index 2020 found that 70% of respondents believe climate change should be the industry’s top priority. Support for greener aviation is likely to continue to rise, especially if passengers understand that they will benefit from more sustainable options for long-distance travel and a safer customer experience. “New rules, restrictions, experiments and innovations will be implemented that will shape the flight experience for decades to come,” concludes Castillo. “We must allow ourselves to imagine that they will make air travel a pleasant, safe and comfortable experience for all of us.”