Airbus Group: Fasten your seatbelts, it’s going to be a bumpy century.
Aircraft manufacturers such as the European conglomerate Airbus have been very vocal about the “unfair” pressure that they are facing from environmental activists and organizations to reduce GHG emissions and drive greener innovation. But the aviation industry might not only be facing reputational issues: climate change could ultimately challenge their profitability and alter their whole business model.
Aviation’s contribution to climate change: The infamous 2%
Contribution of the global aviation industry to climate change accounts for 2% of total manmade CO2 emissions, six times less than road transport4, but still a sizeable contribution coming from a relatively small industry. That share is projected to grow in the coming years, contrasting with the constant innovation in fuel efficiency that manufacturers have carried out since the 60s. Back then, the main goal was to reduce the impact that fuel price and its volatility have on the airlines’ P&L. However, fuel expenditures still account for a third of the operating costs of airlines3, and are listed as one of the major hurdles in their struggle for profitability.
The sector has already committed to reducing impact in a considerable way by laying out a roadmap for the next 40 years: manufacturers have agreed to improve fleet fuel efficiency by 1.5%, effectively stabilizing net carbon emissions by 2020. By 2050, net aviation carbon emissions are projected to be half of what they were in 20054.
Aggressive targets, coupled with new regulatory systems that include the EU emissions ‘cap and trade’ system5, will create a market of over US$1 trillion, as airlines renew their fleet to the tune of 12,000 new aircraft to comply4.
Yet while air transportation is set for strong growth in the foreseeable future, public perception calls for a revolution within the industry: it’s no longer about reducing the size of the problem, it’s about being an active part of the solution.
Headwinds en route: battling the (un)expected
In October 2012, Hurricane Sandy cost airlines an estimated US$0.5bn in revenues6. While weather events like hurricanes and winter storms are the most obvious consequence of climate change to the aviation industry, subtler occurrences are already worrying some analysts. The increase in turbulence and change in the jet stream7 might challenge flight times, safety, and ultimately impact the bottom line due to an increase in fuel expenditures. Revenues might also be in danger due to higher temperatures, as warmer weather inhibits the plane’s lift and might add some restrictions to the passenger and cargo payload8.
While airlines have been footing the climate change bill so far, we can anticipate market pressure for manufacturers to deliver new innovative systems and aircraft that shortcut the abovementioned challenges. In our minds, one thing is clear: in the innovation challenge that is ahead of us, the winner takes it all.
Future by Airbus: a roadmap for the first half of the century
With new competition coming from China and oil prices not likely to remain at its current levels, the two main aircraft manufacturers are set for a bumpy ride in the next 40+ years.
Airbus wants to get ahead and has already set a roadmap for its innovation efforts: in 2010, the company launched ‘Future by Airbus’10, a report in which they outlined their vision for the future.
- Smarter Skies: five concepts developed to drive efficiency and comply with the goals set for 2050.
- Eco-climb: assisted takeoffs using renewably-powered, propelled acceleration;
- Express skyways: “free flight” environmentally friendly routes, plus bird-like formation flight for the future intelligent aircraft;
- Free-glide landings;
- Low-emission ground operations, and
- New sustainable aviation fuels, such as biomass, electricity, hydrogen, solar and more).
- Airbus Concept Plane: the plane that Airbus envisions is made out of lightweight ‘smart’ materials that react to loads, has full reconfigured structures for less drag and more internal space, and uses environmentally-friendly manufacturing processes.
Some steps of the roadmap have already been achieved: in 2011, Airbus launched its eco-partnerships11 with key industry shareholders such as airlines (Air France, Air Canada, British Airways), airports (Heathrow) and navigation providers around the world. As an example, Airbus partnered with Air France to accomplish the so-called ‘perfect flight’, saving up to 50% in fuel by combining the use of sustainable fuels (e.g. cooking oil), optimized air traffic management and ground operations. The company has also been measuring ozone levels on its in-service aircrafts and providing the data to the scientific community (Project MOZAIC) since the 90s.
The Roadmap 2.0.
The additional steps to complement Airbus’ plan have one thing in common: collaboration. In the new highly interconnected world, crowdsourcing efforts to complement in-house R&D are key to driving innovation and challenging preconceived ideas. Universities, start-ups, scientific organizations and complementary industries will be invaluable in setting a new standard for the future.
We envision this collaboration in different ways: from acquisition of new relevant start-ups in the cleantech sector and joint ventures with industry leaders, to greater interconnectivity among leading universities in the world.
Stakes are sky-high to solve humanity’s most pressing problem and with over 3bn minds12 connected to the same network, we have never been better positioned to change the course.
(797 words).
Endnotes
1 Cover photo: ‘Airportraits’. Source: Mike Kelley.
2 The Times of India, April 9, 2008, “Airbus boss says aviation unfairly targeted over climate change”, accessed at http://economictimes.indiatimes.com. Comment shown in introduction to the post.
3 Second photo: Aircraft on the tarmac of Hongqiao airport. Source: Peter Parks/AFP via Getty Images.
4 Air Transport Action Group, May 2016, accessed at http://www.atag.org/facts-and-figures.html.
5 European Commission, accessed at https://ec.europa.eu/clima/policies/transport/aviation/index_en.htm.
6 International Air Transportation Association, “The Impact of Hurricane Sandy”, November 2012, accessed at https://www.iata.org/publications/economics/Documents/hurricane-sandy-impact-nov2012.pdf.
7 K. Karnauskas, J. Donnelly, H. Barkley and J. Martin, “Coupling between Air Travel and Climate”, July 13, 2015, accessed at http://www.nature.com/nclimate/journal/v5/n12/full/nclimate2715.html.
8 E. Coffel and R. Horton, “Climate Change and the Impact of Extreme Temperatures on Aviation”, January 23, 2015, accessed at http://journals.ametsoc.org/doi/abs/10.1175/WCAS-D-14-00026.1?af=R&.
9 Third photo: Airbus concept plane, accessed at http://www.airbus.com/innovation/future-by-airbus/the-concept-plane.
10 Airbus, accessed at http://www.airbus.com/innovation/future-by-airbus.
11 Airbus, accessed at http://www.airbus.com/company/eco-efficiency/eco-partnerships.
12 International Telecommunication Union, May 2015, accessed at https://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFactsFigures2015.pdf.
Juan’s assessment of Airbus’s future is insightful – it’s true that aircraft makers will need to create new designs in order to meet the challenges of the next century. Time is also a critical factor, as Airbus may face challengers like Tesla’s electric airplane. The question I’d pose is: are innovations in fuel alternatives or energy utilized by the aircraft enough? As aircrafts face increasing problems caused by heat, flooding, turbulence, and route changes, what are the additional design enhancements that can improve the experience for travelers?
While I do like the overall spirit of the “Future by Airbus” initiative, especially in pursuing sustainable aviation fuels, one of the key aspects here is to get buy-in from airline companies. Pursuing these sustainability initiatives will likely increase airlines’ cost base since sustainable fuels are less cost-efficient. With declining oil prices, I question how aligned the incentives are for these airline companies to pursue sustainable initiatives to cut oil use since there is less of a profit motive. Perhaps Airbus’ sustainability initiatives would garner more buy-in from airline companies if Airbus could lobby governments to get rebates for using sustainable fuels and aid with the economics of sustainable planes?
The aviation industry is facing an interesting turning point where air travel seems to be steadily on the rise. It is interesting to read about the initiatives that Airbus has laid out for the coming years. These technological innovations seem to have great potential in reducing emissions. However, I am curious how the entire aviation industry will react to these initiatives. In order to scale the vision that Airbus is working towards, it requires major operational changes for airline carriers as well as airports. Will airports be willing to embrace these changes in the coming years? It will be extremely difficult for Airbus to be able to sell any low-emission airplanes to airline carriers if airports have yet to embrace and act on the necessary sustainability initiatives.
With the prevalence of discount airliners in the world, how will Airbus convince these companies to embrace these newer, sustainable airplanes that may cut into these airliners’ profitability due to higher price tags on these aircrafts? I agree that the change must began with the aircraft manufactures. We have also seen that Boeing has set out similar sustainable goals with its development of green diesel and biofuel aircrafts. However, how can these manufacturers work with all the other players in the aviation industry to make the dream of sustainable air travel a reality?
Thanks for an interesting read, Juan! I wonder if the true driver for creating more fuel efficient features on aeroplanes will be concerns about Climate Change. I imagine that the biggest driver will actually be economic pressure. As low-cost carriers (like Ryan Air) shift from being local players to disrupters of global routes, I imagine that competition amongst aircraft manufacturers will intensify to produce aircraft capable of being efficient enough to allow these carriers to offer the low-costs that consumers will demand. In any case, the end-state will be the same: success for the environment!