One of the most significant emitters of greenhouse gases, which contributes to climate change, are airplanes. Thus airlines like United Airlines are uniquely exposed to climate change and the broader regulatory effort. Aircrafts generally emit a broad range of greenhouse gases throughout the different stages of flight and they emit gases directly into higher areas in the atmosphere. So despite any potential reduction in emission from increasingly fuel efficient automobiles and factories, growth in air traffic continue to negatively contribute to the overall emission of greenhouse gases. While the growth in air traffic has increasingly contributed to overall emission there has been a lack of international regulation due largely to the negative political and economic ramifications.
Academic studies have indicated that the manifestation of climate change will have substantial effects on airlines like United. There is evidence that suggest that the constant emission of CO2 could lead to the acceleration of jet stream which would increase turbulence and flight quality. This would have huge implications on United’s core business by increasing flight times, airplane maintenance and negatively affects that quality and consistency of air transportation. These developments could compromise one of United’s core competency of providing safe and convenient travel and could lead customers to choose substitutes such as driving or taking the train. This would also likely result in costly additional training for pilots and significant procurement of newer (and denser) planes and technologies. Additionally, climate change also contributes to increasingly unpredictable weather patterns. Increasingly unpredictable weather patterns would introduce additional variability into the scheduling systems and exacerbate many of the scheduling concerns currently experienced by the likes of United. Weather variability would also increase labor cost as United would have increase the number of staff on hand to account for the unpredictable nature of flight schedules. Lastly, while there haven’t been substantial international regulations passed to date, United will likely experience increased regulatory pressure in the future. Earlier this year, the Environmental Protection Agency (EPA) officially declared that jet engine exhaust endagers public health by contributing to climate change. Both the EPA and the International Civil Aviation Organization (ICAO) are working on regulations targeted at reducing overall carbon emission from aircrafts. The contemplated regulations currently supported by US and 22 other countries require a 4% reduction in fuel consumption in new aircraft built after 2028 and from aircraft currently in production delivered in 2013. The implementation of this legislation will increase United’s cost, as their suppliers will likely pass along the additional cost associated with sustainability and efficiency investments.
United is well aware of the overwhelming negative effects of global warming and the ensuing regulations on its business. Thus, it has taken a relatively proactive posture in developing a robust sustainability apparatus and incorporating these initiatives into its core strategy. As part of this initiate United has resolved to: (1) Reduce fuel use and improve fuel efficiency through technology and process innovation (2) Advance and utilize environmentally responsible and cost efficient alternative fuels (3) Improve the sustainability of products and facilities, and responsibly manage wastes generated by business activities (4) Work together with our co-workers and partner with stakeholders — customers, airports, business partners, suppliers, governments and NGOs to promote accountability and protect the environment.
While I believe United is making strong efforts towards addressing the climate change concern, I believe there are a few additional initiatives they could employ to more definitively address the problem. I think United should form a formal partnership with their suppliers to share in the research and development process and share critical learnings across organizations. Additionally, I believe that United should also partner with the governing bodies to help influence the ongoing regulatory discussions. Lastly, I believe that once the suppliers have developed sufficient technologies to satisfy regulatory requirements, United should reinvest in a completely new fleet of new planes to accelerate the sustainability process.