There are increasing pressures on the airline industry to reduce its carbon emissions. Aviation contributes about 2% of global greenhouse gas emissions, and while far from the most polluting industry, is receiving more and more public scrutiny and needs to clean up its act.
In this report we investigate current emission reduction performance of the six largest airline companies: Air France-KLM, American Airlines, Delta Airlines, International Airlines Group, Lufthansa, and United Airlines. We use IATA’s short, medium, and long-term targets for emission reductions to analyze each company’s commitment to run a more environmentally sustainable operation.
We found that most companies come close to achieving short-term fuel efficiency targets, but fall short on medium- and long-term targets, providing only limited evidence that they are making concerted efforts to achieve these targets. As these six companies are frontrunners in the industry in many ways, it leaves us worried that the readiness of the industry as a whole to achieve emission reduction targets is lacking.
What You'll Learn From This Report
- The airline company leaders and laggards in emission reduction.
- How the aviation industry tracks and reports its emissions, and how this can be improved.
- The targets set to reduce emissions by airline bodies and individual airlines.
- How close the largest airlines are to achieving short-, medium-, and long-term goals.
- The shortcomings of current metrics and initiatives to meet medium- and long-term goals.
There are increasing pressures on the airline industry to reduce its carbon emissions. Aviation contributes about 2% of global greenhouse gas emissions, and while far from the most polluting industry, is receiving more and more public scrutiny.
To provide more information about their current emissions and efforts to reduce them, many large airline companies are filing reports with the CDP. We have used these reports to analyze how the six largest airline companies are performing in terms of current emissions, and targets to reduce these. Airlines included are Air France-KLM, American Airlines, Delta Airlines, International Airlines Group, Lufthansa, and United Airlines.
In 2009, The International Air Transport Association (IATA) presented three sequential targets for the aviation industry to address its climatic impact to the United Nations. We use these targets to rate how each airline is performing.
Short-term goal: An annual average fuel efficiency improvement of 1.5% from 2009 to 2020.
Fuel efficiency is integral to an airline’s financial success. That doesn’t mean, however, that airlines are able to be equally efficient. Looking at fuel consumption per revenue tons kilometers, we found that the European airlines are more efficient than Delta and American in particular.
We focused on the last five years, 2015 to 2019, to check whether and how fuel efficiency improved for the airlines. None of the companies achieved consistent annual fuel consumption reductions of 1.5%, but on average Lufthansa and IAG achieved the target. The other companies came close, achieving between 1.2 and 1.4% reductions in fuel consumption per RTK.
Medium-term goal: Stabilize net CO2 emissions at 2019 levels with carbon-neutral growth.
The medium-term goal looks for companies to stabilize absolute CO2 emissions at 2019 levels, which means any increase beyond the 2019 level will have to be offset by airlines starting 2021. We know that technological advancements and sustainable aviation fuels are not yet reducing emissions enough to allow for carbon-neutral growth from 2021 onwards, which means that companies will need to start offsetting their additional carbon emissions.
Delta is the only company that has actually offset their carbon emissions since 2012, and is therefore a clear frontrunner.
All analyzed airline companies, however, have put voluntary offset programs in place which allow customers to pay towards offsetting the emissions of their flights. We found that so far these schemes are grossly insufficient, offsetting only between 0.1% and 2% of all scope 1 emissions.
With the adoption of Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) starting in 2021, all airlines will have a binding responsibility to cap their emissions and offset the spillover emissions, and we look forward to seeing a much higher percentage of emissions being offset.
Long-term goal: Reduce aviation’s net CO2 emissions to half of what they were in 2005, by 2050.
All airlines have a long way to go to achieving the 2050 goal, and while they still have 30 years to get there, the current trend of emissions is up instead of down. American Airlines is the only company that has seen its total scope 1 emissions stabilize in the past few years, with all other companies registering significant increases in emissions year over year.
Total emissions need to be reduced between 45% and 68% between now and 2050. Company filings highlight each company’s assumption that technological innovations and sustainable aviation fuels can help them achieve these targets, but current achievements in innovation do not yet support this assumption.
Overall, our analysis shows that Delta Airlines, IAG, and Lufthansa are better positioned to achieve emission reduction goals than Air France-KLM, American Airlines, and United Airlines.
However, no company stands out as a clear frontrunner, and it would be reasonable to assume that the overall aviation industry is likely to be even further behind the trajectory towards the medium- and long-term goals than our analysis shows.
Mounting Environmental Pressures on Airlines
In Delta Airlines’ 2021 environmental report, CEO Ed Bastian notes that: “Travelers should not have to choose between seeing the world and saving the world.”
Up to this point, however, there is little doubt that connecting the world to increase their bottom line has been more important to airlines and their investors, as well as the vast majority of travellers, than protecting the environment.
Research shows that if the aviation sector were a nation, it would be among the top 10 global emitters. In fact, one return flight from Montreal to London emits as much carbon emissions as heating a European home for an entire year. The aviation industry is vital to keep economies running and people moving, but it comes at a high environmental cost.
Transportation accounts for about 16% of greenhouse gas emissions, with aviation accounting for 1.9%. Road transportation accounts for much higher levels of emissions (at 11.9%), but aviations’ total impact goes beyond just greenhouse gases, contributing to cloud formation and other warming activities.
Aviation emissions have increased consistently over the past decades. During the 2010-2019 period, revenue passenger kilometres (often abbreviated to RPK, calculated by multiplying the number of passengers carried by the distance flown) increased by approximately 6.5% per year. Over the same period, the absolute CO2 emissions increased at an average of 5% per year.
Exhibit 1: Emissions have increased in sync with kilometers flown
This means that the industry is getting slightly more efficient, but absolute levels of emissions are continuing to rise.
With aviation demand continuing to increase, a business-as-usual approach would see emissions increase exponentially. -A report commissioned by the European Parliament calculated that international aviation could make up 22% of global emissions by 2050, if the industry would not take any action while other industries stuck to targets set under the Paris Agreement, which sets out that global temperatures should not move above 2°C beyond pre-industrial levels.
The complete lack of action from the aviation industry is, of course, unlikely to happen, and indeed the industry has recognized that it needs to take action, not least because there is mounting pressure from governments, investors, the public, and media.
Active involvement of environmentalists and rising public awareness is evident in campaigns like Flygskam in Sweden and the ‘Flight Free 2020 Campaign’ across Europe. Sweden witnessed a substantial year-over-year decrease in passengers owing to the flight shame movement in 2019. During JetBlue’s fourth quarter earnings call in 2020, CEO Robin Hayes expressed that the flight shame movement could also spread to the U.S.
Governments are also working towards reducing carbon in a concerted manner. The French Government has banned domestic flights on routes that can be covered by train in under 2.5 hours as a measure to cut carbon emissions by 40% in 2030, compared to 1990 levels. In March 2021, the UK Government announced that they plan to increase tax revenues from long haul flights as a measure to achieve net-zero greenhouse emissions by 2050.
If more governments implement regulations to curb carbon emissions, airlines run the risk of having to pay increasing amounts to carbon offsets. Based on an analysis of international flights done by the Committee on Aviation Environmental Protection (CAEP), the aviation industry would need to offset between 443 to 596 million tonnes of CO2 by 2035 to achieve carbon-neutral growth from 2020. The cost of this offsetting for operators would be somewhere between $5 to $24 billion, approximately 0.5% to 1.4% of total revenues from international aviation in 2035.
As said, this only accounts for international aviation, as domestic aviation still comes under the purview of respective governments. Since international aviation contributes approximately 65% of CO2 emissions from aviation, a quick back-of-the-envelope calculation shows that the actual costs of carbon offsetting are likely to be closer to anywhere between $8 and $37 billion by 2035.
Given the squeeze on operating margins due to factors like fuel price volatility, decreasing passenger yields, and rising maintenance costs, carbon offsetting will certainly put pressure on the bottom line, and it therefore makes good business sense for companies to achieve carbon reduction targets.
And climate change will only further increase business risk, beyond the cost of carbon offsets. Temperature changes affect aircraft performance, infrastructure, and demand patterns. Changed precipitation patterns and stronger storms expected as a result of climate change could lead to increased schedule disruption. Changing wind patterns could increase turbulence and cause network disruption. Enough reasons for airlines to take this issue seriously.
Quantifying and Targeting Airline Emission Reductions
Global aviation – which includes both passenger and freight – emitted 1.04 billion tonnes of CO2 in 2018. And jet engines emit other greenhouse gases as well, and contribute to cloud forming through contrail formation, which all have further warming potential. There remains a high level of uncertainty around the exact impacts of these other factors, but according to research by Lee and colleagues (2021), CO2 might only contribute about a third of all warming attributed to aviation.
That said, CO2 remains the single largest contributor to climate change, and its impact is extensively studied and agreed upon. The aviation industry is increasingly tracking their CO2 equivalent (or CO2e) emissions. CO2e takes CO2, as well as the other predominant greenhouse gases methane (CH4), nitrous oxides (nominally N2O) and hydro-fluoro carbons (HFC), which all have a different greenhouse warming potential, and calculates a single CO2e figure which allows us to compare companies’ emissions from all these greenhouse gases.
Overall, the aviation industry is estimated to account for 3.5% of atmospheric warming. Emissions by major airline companies pale in comparison to some of the heaviest polluting companies, mostly from the oil and gas industries, but nevertheless contribute considerable amounts of emissions. American Airlines alone emitted over 50 million tons of CO2e in 2019 (see Exhibit 3).
In 2009, The International Air Transport Association (IATA) presented three sequential targets for the aviation industry to address its climatic impact to the United Nations. IATA represents 230 airlines, accounting for 82% of total air traffic.
- Short-term goal: An annual average fuel efficiency improvement of 1.5% from 2009 to 2020.
- Medium-term goal: Stabilize net CO2 emissions at 2019 levels with carbon-neutral growth. (The baseline was initially set at 2020, but has since been changed by ICAO to 2019 on account of the negative impact COVID-19 has had on the industry.)
- Long-term goal: Reduce aviation’s net CO2 emissions to half of what they were in 2005, by 2050.
The industry goals are in line with the Paris Agreement, which is considered to be the most significant global climate agreement in history. The Paris Agreement requires countries to set emission reduction goals with the aim of keeping global temperature rise below 2°C and pursue efforts to keep it below 1.5°C, compared to pre-industrial levels.
To keep the temperature rise below 1.5°C, estimates are that global CO2 emissions can only be increased by 205 billion tonnes between 2015 and 2050. Analysis done by Carbon Brief shows that in the business-as-usual scenario where the industry grows by 5% every year, the aviation industry alone would emit 27% of the 205 billion tonnes by 2050.
To ensure this footprint does not materialize, the aviation industry focuses predominantly on the development of new fuel efficient aircraft, operational efficiency, better infrastructure, and the use of sustainable aviation fuel.
However, an analysis done by the International Civil Aviation Organization (ICAO) suggests that in the most optimistic scenario, where the highest level of technological improvements along with infrastructural improvements is expected, there will still be a gap of 1 billion tonnes from the desired 2020 capped level.
The ICAO therefore proposed a Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which aims to stabilise the CO2 emissions at 2020 levels by requiring airlines to offset the growth of their emissions after 2020.
As the name suggests, CORSIA only applies to international flights and offsetting remains voluntary until 2027, with the current program ending by 2035. These parameters make it that it is expected that CORSIA will only offset about 25% of international aviation emissions.
What we end up with is a patchwork of commitments and targets by the industry and individual airlines, but no single body that oversees this and ensures the industry as a whole will be achieving emission reduction targets in accordance with the Paris Agreement.
Report Rationale and Parameters
This report will contribute to the available information about actual performance of some of the largest airlines in the world, highlighting the achievements and shortcomings of individual companies. (See our Sustainability in Travel 2021: Emissions Benchmark of Six Global Hotel Companies report for our analysis of the hotel industry.)
As a framework for our research we use the three goals proposed by IATA, which we set out above.
Most of the data discussed in this report is from company filings and reports filed with the CDP (formerly known as the Carbon Disclosure Project), a non-profit organization that encourages companies to disclose their environmental impact.
We scoured the CDP website to find as many airline filings as possible. This resulted in a list of 14 airlines that have reported on their 2019 climate change targets and emissions (as of the end of March 2021). Another two airlines, Cathay Pacific and Virgin Atlantic, have so far only filed up to 2018.
The 16 companies had a combined topline revenue of $353 billion in 2019, and accounted for more than a third of all passengers carried, RPKs flown, and CO2 emitted that year. Amongst these 16 players, the six largest global airline companies by revenue accounted for the majority of these key indicators. In total, the six largest companies account for almost a quarter of all passengers carried, kilometers flown, and CO2 emissions. We will therefore predominantly focus on these six companies: Air France-KLM, American Airlines, Delta Airlines, International Airlines Group (IAG), Lufthansa, and United Airlines.
Exhibit 2: The top six companies account for 23% of global aviation emissions
We focus on the Climate Change CDP filings, which specifically report on the environmental impact of company operations. Within the environmental parameter, we further narrow our focus on activities which have warming potential through greenhouse gas emissions only. For airlines, the vast majority of this comes from burning fuel to fly their aircraft, which is what this report focuses on. We exclude emissions from ground operations and maintenance, as it is hard to compare these from airline to airline.
In CDP filings, reporting airlines provide their CO2e emissions by scope. As explained before, there are a number of predominant greenhouse gases, including carbon dioxide (CO2), methane (CH4), nitrous oxides (nominally N2O) and hydro-fluoro carbons (HFC). Each has a different greenhouse warming potential. To be able to compare companies’ emissions from all these greenhouse gases, the industry calculates a single CO2 equivalent (CO2e), which is normally expressed in metric tonnes (MT).
Many companies have adopted the Greenhouse Gas Protocol (GHG Protocol), standards put forward by a partnership between the World Resources Institute (WRI) and the Business Council for Sustainable Development (WBCSD).
Per the Greenhouse Gas Protocol, greenhouse gas emissions are divided in three “Scopes”.
- Scope 1: Direct emissions from the activities of the organization including fuel combustion through gas boilers or vehicle emissions. For airlines the main emissions come from the burning of jet fuel. Where this jet fuel is produced in airline-owned refineries, the emissions from production are also included here.
- Scope 2: Indirect emissions from electricity purchased and used by the organization. For airlines, this is mainly the electricity used at head office and airport terminals. Compared to scope 1, this is a small contributor to overall airline emissions and excluded from analysis in this report.
- Scope 3: All other indirect emissions (also referred to as upstream and downstream emissions). Most importantly, and often neglected in airline reporting, are the production emissions of jet fuel bought from third parties.
In our data calculations of airline emissions we take both Scope 1 and 3 emissions into account where possible. This is an important consideration, since most targets and publicity revolves around airlines’ scope 1 emissions only. CDP filings show that Scope 3 emissions from jet fuel production and burn, however, are considerable.
For American Airlines, scope 3 emissions from purchased fuel account for 23% of the company’s total fuel emissions. Delta has the lowest scope 3 emissions because it has its own refinery falling under Scope 1, meaning that in many publications (which focus on scope 1 emissions only) it comes out as the worst performer, which is misleading.
Exhibit 3: Scope 3 emissions from jet fuel should be included in calculations
Reporting on Targets
As a starting point, we look at the reporting of environmental targets and initiatives by the six largest airline companies. Reporting levels can be seen as a proxy for the importance airlines put on their environmental commitments, or at the least for the value they believe their stakeholders put on these initiatives.
We analyzed the public availability of information regarding carbon-related activities, reduction targets, efficiency improvement measures, carbon offsetting schemes, and other initiatives.
All six airlines report on carbon-related activities in some form. While Air France-KLM only makes reference to its sustainability initiatives on its website, the other airlines also mention it in their annual report and specific sustainability reports.
All companies consider carbon as a business risk and have signed up to the Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD provides guidance and standards for companies who seek to disclose financial climate risks in a consistent manner, with a focus on providing information to investors, lenders, insurers, and other stakeholders. All six also had a Climate Change 2020 report filed with the CDP.
IATA targets were reiterated across the board, while five of the companies presented additional targets. The airlines unanimously mentioned CORSIA and their willingness to comply by offsetting their excess carbon, next to quantifying the impact of their carbon-reduction measures in the form of fuel and CO2 emission savings.
Exhibit 4: Reporting on emission targets and performance by the six largest airline companies
As shown, all the major airline companies are reporting on the emission reduction targets, and their respective commitments. But are they anywhere near achieving the short-term goal of increasing fuel efficiency by 1.5% per year? And how about the more challenging targets of no longer increasing absolute CO2 emissions, and eventually reducing them by 50%?
Short-Term Goal: Progress Towards Fuel Efficiency
Short-term industry goal: An annual average fuel efficiency improvement (fuel consumption per RTK) of 1.5% from 2009 to 2020.
Using information from company filings, we are able to determine which airlines are the most efficient. We used information about kilometers flown and fuel consumption to calculate fuel efficiency for each major airline company.
The industry uses a number of key performance indicators to calculate performance. Amongst these are Available Seat Kilometers (ASK), Revenue Passenger Kilometers (RPK), and Revenue Ton Kilometers (RTK). It is standard for the industry to calculate fuel efficiency, as well as emissions, by dividing them by RPK or RTK. While not a perfect measure because not every airline achieves the same load factors, the weight of the aircraft has a major impact on consumption and so RPK, and especially RTK, effectively accounts for load factors.
Fuel efficiency is integral to an airline’s financial success. American Airlines’ energy bill is about 17% of revenue. Lufthansa spends about a quarter of all income from ticket sales on jet fuel, and for Ryanair fuel accounted for approximately 36% of total operating expenses in FY2019.
However, there is still huge variance among airlines in their fuel efficiency levels. Of the 16 companies that have filed reports with the CDP, low cost carriers Ryanair, Easyjet, and Pegasus have the lowest fuel consumption per RPK flown. Asian carriers All Nippon, Cathay Pacific, and Korean Air are at the high end. The top six companies all fall around the mean of 0.041 liters per RPK.
Exhibit 5: Low-cost carriers most efficient per RPK
There are many factors impacting fuel efficiency, with the length of routes flown (as extra fuel needs to be carried adding to weight) and age of the aircraft two important factors. Another important consideration to make is the amount of cargo flown by the airlines, as revenue passenger kilometers can be misleading when different airlines transport different quantities of cargo. The Asian airlines, for example, carry much more cargo than Western carriers, and legacy carriers tend to carry more cargo than low-cost carriers.
We therefore have collected cargo data as well, to calculate revenue ton kilometers (RTKs), which combines both passengers and cargo into a single figure. To do this, we needed to set the average weight per passenger including luggage, with the industry using a few different numbers. We have decided to stick with the commonly used figure of 150 kg per passenger, which includes their luggage.
When including cargo, the picture looks very different. Ryanair remains the most efficient airline, but now Cathay Pacific is actually one of the most efficient. European airlines Lufthansa and Air France-KLM are most efficient from the top 6, whereas the U.S. airlines consume more fuel per RTK than the average.
Exhibit 6: Asian carriers more efficient when adding cargo
When looking at this data over time, and we focus on the last five years only here, we can see that none of the top six airlines had delivered consistent fuel efficiency improvement of 1.5% on an annual basis. Note that we did not have the required data for Air France-KLM as they do not provide fuel consumption data regularly.
On average, however, most airlines scored close to or above the required efficiency levels. While average levels are close to hitting the mark, it is worrisome that major fluctuations are present, with United Airlines for example registering decreasing efficiency in 2019.
Lufthansa, the best scoring company, relies heavily on 2017 to hit the overall target. In 2017 it saw a strong increase in total kilometers flown, to the tune of 13%, as compared to 2016, which allowed it to be more efficient. The annual average increase of kilometers flown for the other years was 3.5%.
Exhibit 7: No airline company achieved consistent fuel consumption reductions
Overall, then, airlines have been largely able to become more efficient in their fuel usage, which will have resulted in CO2 emissions per RTK going down as well. Whether this efficiency improvement is enough to hit longer-term targets will be discussed next.
Medium-Term Goal: Progress Towards Carbon Neutral Growth
Medium-term industry goal: Stabilize net CO2 emissions at 2019 levels with carbon-neutral growth.
The medium-term goal is a forward-looking measure to stabilize absolute CO2 emissions at 2019 levels, which means any increase beyond the 2019 level will have to be offset by airlines starting 2021. We know that technological advancements and sustainable aviation fuels are not yet reducing emissions enough to allow for carbon-neutral growth from 2021 onwards. So in this section we will explore how and if airlines have been offsetting their excess carbon emissions up to this point.
Note that this analysis does not include the offsets being made by the airlines under the European Union Emissions Trading Scheme (EU ETS), requiring airlines operating within the European region to buy carbon allowances to offset their emissions, but focuses on voluntary emission offsets only.
In the world of offsets, Delta Airlines stands out as a frontrunner. Delta is the only major airline to voluntarily cap carbon emissions at 2012 levels by purchasing carbon offsets. Since 2013 the airline has purchased offsets for more than 14 million tons of CO2e, well ahead of the IATA goal of capping international emissions starting in 2021.
The airline also introduced the U.S. aviation industry’s first carbon offset program in 2007, for customers and corporates to reduce the environmental impact of their travel. This is a path that all other airlines are also following.
Like Delta, Lufthansa has since 2007 offered its passengers the option of compensating their CO2 emissions, by cooperating with climate foundation Myclimate. In 2019 the company introduced two new schemes: a carbon neutralization service to the PartnerPlus Progress Program, where Lufthansa will pay 50% of carbon offset costs for its corporate loyalty members when corporates pay the other 50%, and Compensaid, a product by the Lufthansa Innovation Hub which offers travelers the ability to replace fossil fuels with sustainable aviation fuel by paying the price difference, buy carbon credits, or a mix of both.
United Airlines was also an early adopter. United introduced its CarbonChoice offset program in 2007, but our analysis shows that it still only offsets about 0.04% of its total Scope 1 emissions.
British Airways, which contributes to 55% of IAG’s total capacity, launched its British Carbon Fund Scheme in 2011. Under this scheme the airline has been working with Pure Leapfrog. Aer Lingus also launched its carbon offsetting program for passengers in 2020.
Air France-KLM has CO2 emission calculators and offset facilities on its websites, and Air France is also partnering with A Tree for You association, giving their passengers the option to contribute to a tree-planting project.
American Airlines was late to the party and only launched a customer-facing carbon offset program in 2020.
So, with the exception of Delta Airlines, which has been offsetting its emissions since 2012 besides running a consumer-facing program, all other major airlines have primarily put the onus on the consumers to offset emissions using market-based mechanisms.
We have estimated the amount of carbon being offset through the voluntary schemes in 2019, using the data provided by airlines in their CDP filings and sustainability reports.
It is clear that carbon offsetting is receiving a lot of publicity from the airline companies, but we are talking about largely insignificant amounts of carbon actually being offset. For example, American Airlines, which launched its offsetting program in 2020, set an initial goal of facilitating 50,000 tons of CO2e offsets in the first year. This translates to only 0.1% of their Scope 1 emissions.
Exhibit 8: Voluntary carbon offset programs fall overwhelmingly short
Although the airlines can be credited for preemptively framing carbon offsetting schemes in the past, the offset programs implemented by the airlines are inconsequential in their efforts to achieve carbon-neutral growth. Passengers either believe carbon offsets are too expensive, are not alerted to the opportunity to purchase them, or do not want to offset their carbon for other reasons. But either way, relying on consumers to offset any excess carbon appears to be a smokescreen which allows airlines to continue with their business-as-usual practices while promoting offset programs that have little effect.
With the adoption of CORSIA starting in 2021, all airlines will have a binding responsibility to cap their emissions and offset the spill over emissions, and we look forward to seeing a much higher percentage of emissions being offset. Uncertainty remains, however, since there is at present no clarity on how EU ETS and CORSIA will work together, which could lead to a failure to address aviation’s emissions altogether.
Long-Term Goal: Progress Towards Halving 2005 Emissions by 2050
Long-term industry goal: Reduce aviation’s net CO2 emissions to half of what they were in 2005, by 2050
While the medium-term goal focuses on ‘carbon offsetting’, the long-term goal focuses on ‘carbon reduction’. To achieve this goal airlines will be required to reduce the absolute CO2 emissions to 50% of 2005 levels by 2050. This will reduce CO2 emissions from aviation to 325 million tonnes, compared to the estimated 1,040 million tonnes in 2018. This means a 69% reduction in emissions between now and 2050.
As we have already seen earlier, the overall energy efficiency of the aviation industry is improving, with fuel consumption per RTK declining. This has a positive impact on CO2 emissions as well.
While 142 grams of CO2 per RPK was being emitted in 2010, this reduced to 125 grams in 2019, which translates into a 12% decrease in CO2 per RPK.
However, while this improvement has a positive impact on average emissions per kilometer flown, the impact has been offset by the industry’s exponential growth. During this same time period, the absolute emissions increased by 55%. If the industry keeps growing at the current rate, it will lead to exponential increase in emissions.
Exhibit 9: Emissions per RPK are decreasing, but overall emissions increase
The Transition Pathway Initiative (TPI) analysed 23 airlines to check if their commitments to efficiency increases aligned with the IATA reduction target. To do so, the airlines’ projected 2050 emissions intensity was compared with required emissions to hit the target. TPI found that 87% of the airlines’ trajectories do not align with the IATA goal.
To validate this further, we mapped out the absolute emissions of the six major carriers along with the emissions per RTK. Evidently, over 2005-2019, the carriers witnessed a substantial decline in emissions per RTK but the absolute emissions were consistently higher in 2019 than in 2005.
On average, absolute emissions of the six carriers grew by 17% between 2005 and 2019. Delta Airlines and United Airlines were the only airlines which witnessed a minor decrease in absolute emissions in 2019 as compared to 2005.
Exhibit 10: Airlines need to make considerable cuts in total emissions to reach 2050 targets
On average, the major carriers need to reduce their 2019 carbon emissions between 45% and 68% in the next 30 years in order to achieve the long-term goal. Although in some ways airlines are moving in the right direction, data shows that the incremental improvements will not help the industry address its growing carbon footprint and contribution to global emissions and the industry needs to take some drastic measures to cut down its emissions contribution.
Exhibit 11: Long way to go to targeted 2050 emissions
Analysis of the initiatives taken by major airlines shows that airlines primarily focus on improvement in fuel efficiency through fleet renewal, route optimization, weight reduction, auxiliary power unit savings, investment in better navigation technologies, and other fuel saving measures.
On top of these measures, the industry seems adamant that sustainable fuels and technological innovations in the next 30 years will come to its rescue to achieve its long-term target. In its targets, IATA notes: “Achieving this ambitious goal will require continued investment in new technologies and strong government support mechanisms for the deployment of sustainable aviation fuels.”
In other words, the industry can continue with its current business practices, as long as some money is being invested in biofuels and electric planes.
There are two clear issues with this approach. Firstly, airlines are banking on the use of sustainable aviation fuels in the future, which they expect to reduce greenhouse gas emissions by up to 80% compared with conventional, petroleum-based jet fuel, but recent studies suggest that sustainable aviation fuel’s greenhouse gas emissions might only be 40% lower.
Secondly, there is currently a massive shortage of biofuel to support airline operations. The present level of sustainable fuel production can support Delta’s operations for only a single day. American Airlines committed to purchasing nine million gallons of sustainable aviation fuel over three years, representing less than 1% of the airline’s total annual fuel consumption.
In this report we have analyzed the environmental performance of the six largest airline companies. We have done this by using IATA’s three environmental goals as a framework for this report. As a final step, we will score each company based on our findings.
It is too early to ‘fail’ airlines for their medium and long term goals, since there is still time to change operations. However, some airlines are currently in a much better position to adapt to the changes needed to achieve these goals. You will therefore not see any F-grades on the report card, but there are certainly differences in grades based on current efforts and projections.
Overall, our analysis shows that Delta Airlines, IAG, and Lufthansa are better positioned to achieve emission reduction goals than Air France-KLM, American Airlines, and United Airlines.
Exhibit 12: Airline report card (click to enlarge)
In terms of reporting, which is not a goal in itself, but we believe an important part of involving stakeholders in achieving future goals, all companies perform well.
The short-term goal, which refers to improving fuel efficiency between 2009 and 2020, saw a mix of performances. In our analysis of the past five years, IAG and Lufthansa were the only companies to achieve an annual average fuel efficiency target of more than 1.5%. The other companies came close, but just missed the mark.
The medium-term goal starts in 2021 and requires companies to offset any emissions above 2019. We analyzed current offsetting performance and systems in place, and found that Delta is the clear frontrunner. All other players have some systems in place for customers to offset their carbon, with Lufthansa the most innovative, but all these companies will need to either increase these efforts or commit to purchasing carbon offsets moving forward. The fact that all have committed to CORSIA will ensure that at least their international flights should be offset from 2021 onwards.
The long-term goal, which targets a 50% reduction of 2005 total emissions by 2050, is still a long way away, but already we can see differences in current emission trends and the gap to be bridged by each company. Here, Delta has the smallest reduction to make, and American is the only company that has seen total emissions largely flatten out over the past years. All other companies continue to see increasing emissions, and will therefore have to make drastic changes to their operations to achieve the 2050 goal.
Overall, no company stands out as a clear frontrunner, and it is hard to shake the idea that companies are doing what is necessary or advantageous to their bottom line, without making the drastic changes needed to achieve longer-term targets.
It is worth noting that we have focused on the six largest companies, which are all filing with the CDP. It would be reasonable to assume that many other companies, which are not filing their emission reports with CDP, are likely to focus even less on emission reductions. The overall aviation industry is therefore likely to be even further behind the trajectory towards the medium- and long-term goals than our analysis shows.
It is clear that airlines will be unable to reduce their carbon footprint alone, and that governments, regulatory bodies like IATA and ICAO, and other stakeholders in the aviation value chain like airports, consumers, fuel suppliers, and technology providers all need to come together and work towards the common objective of making aviation a carbon-neutral industry.