Bow-Tie Briefing – myth-buster of net-zero (part 7)

22 November, 2021

Due to the impact of COVID, airlines around the world have already received hundreds of billions in urgent rescue funding from governments, so can further investments in Sustainable Aviation Fuel (SAF) research/development and production be expected from the aviation industry? This raises important policy questions about the role of government in SAFs.

Aviation’s social licence to operate in carbon net-zero economy, and recent trends in climate law, would suggest the onus is on the industry to prioritise such investments. But this will only happen if mandated by governments, for instance through feed-in quotas and carbon taxes.

The significant cost of technology innovation and carbon taxes stand in sharp contrast to the ICAO CORSIA plan, as illustrated in previous articles and its objective of marginal cost increases.

With much evidence that air travel is, to a significant degree, induced by the low cost of flying – as the real cost of flying has decreased by 60% over the past 20 years according to IATA – the implications a technology transition will have for low cost air carriers as well as tourist destination choices and travel patterns remains an important area of future inquiry. Three strategies are the overall general believe by governments:

The first demand management strategy is to restrict overall travel at 2019 levels. And this will impact corporate travel as it comprises over one quarter of pre-pandemic air travel. The pandemic has disrupted business travel and this critical moment of change may provide an opportunity for a long-term shift to achieve this strategy.

A 2020 survey by IdeaWorks discovered that between 19% and 36% of airline business travel will not return after the pandemic. According to Skift Research, more corporations and governments are seeking to avoid, not offset, work related travel.

Furthermore, as more businesses adopt carbon net-zero goals and emission disclosures become mandatory, business leadership may compel emission reductions associated with business travel.

The second strategy is to freeze long‐haul leisure flights (more than six hours) at 2019 levels. This would impact a relatively small proportion of flights but has important implications for primarily long-haul destinations, as well as the tourism focused development strategies of many small island developing states and other least developed countries.

Some analysis of inter-market emission intensities demonstrated there is large potential for source market shifts and demarketing to reduce emissions while maintaining the tourism economy of many nations.

The third strategy requires the modal shift of regional flights of one hour to high-speed rail, where it is available. In Apr-2021, the French government introduced a similar policy banning short-haul domestic flights when rail alternatives could cover the same journey in under two-and-a-half hours. Austria implemented similar bans on certain inter-city routes in late 2020.

According to Reuters, a 2019 survey by the European Investment Bank found 62% public support for banning short haul flights.

The UN COP26 Glasgow Summit was concluded with some success particularly with an unexpected US-China Joint Declaration. In the next edition of “Myth-buster of Net-Zero”, we will continue to investigate more on the details of how these will affect our corporate travel

Bow-Tie Briefing shares the views of Benson Tang, a corporate travel thought leader and executive director of the CTC –Corporate Travel Community. Benson’s remarkable career in travel started more than 25 years ago and his extensive knowledge of the corporate travel sector has made him a sought-after speaker and lecturer.