Aviation’s drive towards net zero emissions by 2050 means embracing a new way of thinking for the route development community, says David Stroud, managing director of global route development consultancy ASM
Last year ASM produced a series of White Papers under the title of ‘Route to Recovery’. In these papers, we tried to set out ways in which our industry should act to rebuild the routes and air services lost or paused by the pandemic. Many of those recommendations still hold true, albeit we had expected the foundations of recovery to be further advanced by now.
In October we had the great pleasure of attending the first World Routes event in two years. Brilliantly hosted by Milan’s airports and tourism authorities, much of the airline and airport industry was in attendance, certainly from the European and Americas markets. Whilst not every market was fully represented, the sense of optimism around the industry was truly tangible. There was a real conviction that many routes and markets would recover through 2022, and a real sense that airlines were looking more closely at new and emergent markets to serve pent-up passenger demand.
Now, our industry is fully concentrating on how to build back as quickly as is feasible and the dialogue during World Routes between airlines, airports, and tourism authorities was, in many ways, as it has been for many years – all parties trying to understand the extent of expected market demand, reviewing the main drivers of that demand – tourism, VFR (visiting friends and relatives), corporate travel, etc – and of course many negotiations about cost reduction, route support, and incentives.
There is, however, a new agenda building that is shaping all aspects of the aviation industry and will have a major influence on route development and the meetings at Routes events moving forward. Anyone who has followed global news will be more than aware of the increasing number of stories, conversations and action plans to address the fundamental challenge of climate change. A Net Zero Carbon emissions agenda for 2050 is a stated aim for many in the industry.
Climate change is going to be the dominant agenda facing society in the upcoming years, and likely for the next few decades. The challenges were also held up front and centre for all of us during COP26 in Glasgow on 31 October to 12 November last year. Indeed, it was certainly a consistent topic of conversation at the various conference sessions in Milan.
Matter of survival
Lena Wennberg, sustainability and environmental manager at Swedavia, said: “We have to show everyone that aviation, especially airports, can be run without fossil carbon. Everyone is focused on this goal of reaching zero – it’s part of the business’ survival.”
The Air Transport Action Group’s (ATAG) Commitment to Fly Net Zero 2050 Statement highlights four key areas by which the decarbonisation of air transport would be achieved:
• Increasing use of sustainable aviation fuels (SAF)
• Research, development and deployment of evolutionary and revolutionary airframe and propulsion systems (including aircraft powered by electric or hydrogen engines)
• Improvements in the efficiency of operations and infrastructure across the air transport system, including airports and air navigation service providers
• Investment in carbon offsets and carbon capture or removal
Beyond these four elements, many believe further action around ‘market-based measures’, such as carbon-based pricing and frequent flyer taxation, is needed to truly achieve a Net Zero industry. These measures will either speed up the movement towards carbon-free flights or depress demand.
As route development professionals, our ability to influence much of the transition to Net Zero feels limited. Today, we work in our own specialist function in the industry, one focussed on serving market potential, driving traffic growth, building connectivity, linking cities and countries together, and enabling the strong economic and social benefits that air transport is so powerful for.
In the post-pandemic recovery, this rebuild of connectivity is needed more than ever. Market-based measures, however, should they become widely introduced, could have a real impact in shaping the extent of route and connectivity growth that we can pursue.
We cannot detach ourselves from the climate change challenge, and we cannot continue to act as if the problems our industry faces are for others to solve. We are part of the problem, the growth that we are driving is the reason why air transport is so problematic for the future, and in many ways, it could be argued that route development runs contrary to the efforts to limit carbon growth.
The 2-3% share of global emissions attributed to aviation today is undoubtedly going to rise significantly because of the inherent growth we are pursuing. Furthermore, other sectors will be able to decarbonise far faster than air transport. By 2050, it is not unreasonable to expect that annual global passenger numbers will have more than doubled from 4 billion to 10 billion. Aviation’s share of emissions, without success in delivery of the above decarbonisation measures, is going to be much more significant than it is today.
The impact of aviation is demonstrably starker when we acknowledge that those who travel by air are drawn from a small proportion of the world’s population; they are often frequent and wealthy travellers. The impact we have and are likely to have is disproportionately higher when considering the real size of the traveller market driving demand.
The role of technology
To add further risk, the success of the measures above is dependent on major advances in technology and innovation. In aviation, these can take many years to be proven, become commercially viable, and be deployed widely enough to achieve the required results. The race is truly on to be ready for 2050. So, whilst the world’s aircraft makers, fuel companies, and policy makers are clearly setting about their challenges, we as route development professionals need to look closely at our profession and do what we can to work towards the Net Zero industry we need.
Indeed, the ability of our profession to support the transition to Net Zero aviation will be reflected in the potential for the industry to grow over the coming decades and the extent of the role it will play in a low-carbon economy post 2050. How then do we start to build the climate change agenda into the work we do? And how can we do things differently?
We at ASM are committed to build climate change considerations into all our advisory and consulting work, whether it be strategy formation, route development representation, or data and analytics. How climate change will influence the practice of route development will evolve over time, but for now we think the core considerations that airports, destinations, cities and airlines should focus on are the following:
1. ROUTE DEVELOPMENT STRATEGY ADAPTATION
For airports, cities and destinations, setting out a strategy is the start of the route development process. It identifies the key priorities of connectivity, routes and airline targets, as well as the incentives and other enabling strategies that will help realise the strategic direction. Such strategies now need to set out more than just the routes and airline targets based on market sizes and gap analysis. They should also consider which routes and airlines would better align with a Net Zero carbon strategy.
Applying a carbon agenda to determining targets will involve:
• Which routes and airlines would deliver the highest load factors, assuming greater efficiency outweighs negative per-passenger carbon impact
• Which routes and airlines would deliver the greater social and economic benefit compared with the resulting carbon impact
• The most fuel-efficient aircraft (airframe and engine propulsion) operated by target airlines
• The ability of target airlines to dynamically change aircraft to better match supply and demand
• Carbon merits of non-stop O&D-serving routes vs hub connectivity
• Optimising inter-modal public transport airport access
• Demographic mix of passengers, which routes offer a balance of demand types, directionality and cabin class usage
New forms of analysis are required to refine these factors and determine the trade-offs between setting a growth ambition and one that offers a more favourable climate impact. In CAPA’s Airline Sustainability Benchmarking Report 2021, analysis was undertaken to show the scale of emissions by airline. The total CO2 emissions by airline in 2019 highlights the largest emitters and the significance of the top 10 airlines relative to total industry emissions.
In determining route development targets, we will go a step further by looking at the specific fleet options an airline can deploy on a particular route, as well as the overall airline’s efforts to achieve Net Zero.
We mention above the need to consider the merits of the non-stop opportunity vs hub connectivity. It is true that hubs provide much-needed connectivity to many markets that would otherwise not sustain non-stop service, so the merits of either option are too opaque to simply declare that one is better than another.
At ASM, we are already helping our clients understand and calculate the carbon cost of their passenger O&D markets, and frame strategies about the best way to serve these through a better mix of non-stop and network-based routes.
2. MINIMISING MARKET LEAKAGE
The extent of market capture of an airport and/or route within a catchment determines competitiveness. This is a data point that is extensively used in route development as airports try to arrest market leakage to a rival, whether this is through ground leakage (as primarily discussed here) or air leakage through indirect connecting flights.
In many markets, airports compete with a nearby alternative, but often leakage can take place over long geographic distances, particularly to major hubs or major airports with long-haul services. Leakage is driven in large part by the varying extent of air services across airports, the price differentials across these services and the ground access advantages one airport may have over another.
Aside from the resulting competitive dynamic between airports, excessive and long-range leakage comes with an additional and likely unnecessary carbon cost, particularly if the leakage mode is by car. Now, ground leakage may not be a major proportion of the overall carbon impact of a flight, but everything counts in the race to achieving Net Zero and reducing unnecessary leakage should be an easy win. As airports, airlines and transport planners, we need to understand the extent of and carbon cost of ‘unnecessary‘ leakage.
Not only as an industry are we providing weak customer service, we are creating a climate change impact that should be easily arrested. In the UK, the government has put the brakes on regional airport infrastructure expansion, apparently as part of climate change constraining measures.
This may well be too simplistic a view of the reasons why certain planning applications approvals across airports have been paused. Understanding better the carbon cost of unnecessary leakage, rather than just pure market leakage, should also help make for better-informed decisions around permitting expansion plans. Having better knowledge of how we are influencing passenger behaviour is a key starting point to working together to reduce the negative impact of air travel through smarter route development and better airport capacity planning.
3. NEW INCENTIVE SCHEMES
Incentive schemes – whether in the form of published reductions of fees and charges, marketing funds, or community-driven support financing – are fundamental building blocks of route development. Airports have historically used fees and charges mechanisms to influence noise mitigation (and engine emissions) and to deter the use of older aircraft; however, the basket of measures deployed in negotiations with airlines are, I would contest, 100% market and revenue based.
This has to change. Incentive programmes and route support need to acknowledge the carbon impact of a new service or operation. Put simply, more support should be given to those airlines and routes that are demonstrating, either generally or specifically on the route in question, real reductions in emissions and progress along the path to Net Zero. Less support, and ultimately no support, should be directed to the opposite.
As an industry, we are going to struggle to look the outside world in the eye if we continue to pump prime our routes and growth with funds, often coming from our communities, that do not factor improved carbon emissions performance into the support funding agenda.
New incentive schemes need to be designed, rigorously implemented and performance audited with a carbon agenda in mind. For route development professionals, the instigation of new incentive schemes and support programmes will be one of the toughest challenges. These programmes are also very much negotiated, and in the heat of negotiation with a business to build back post pandemic, it will be a real test of wills to apply new criteria. This may be made even harder if the cost incurred by airlines working towards Net Carbon Zero means that aircraft and route operating costs rise. This is a challenge we all have to meet.
The air transport sector faces a particular challenge in transitioning to Net Zero as compared with other sectors of the economy. In part, this is because airlines are likely to be legacy users of carbon fuels and emitters of CO2, and in part because the industry is so carbon intensive.
Lifting an aircraft into the sky and propelling it over long distances at rapid speeds requires a significant amount of energy. On top of this, demand for air transport is growing fast and showing no signs of abatement. As a result, we will remain in the public and political spotlight as pressures build to address the worst effects of climate change.
As part of the route development community, we need to start thinking deeply about the impact we play in the future. The economic and social benefits of our more connected world – hugely facilitated through air services – are too great and too important to be heavily constrained, but we cannot sit back and hide behind these benefits as reasons not to be a key part of reaching the Net
Zero goal: we need to aspire for both sides of the equation to be achieved.
Route development itself needs to rise to the challenge and become a key part of the solution and not the problem. Route development professionals have always been some of the most innovative, creative and solutions-driven people in the industry, and I am certain we will face these challenges head on.
