Airlines and Social Responsibility
Air travel has been one of the most important developments of the past century. Journeys from location to location became not only faster, but also much safer. For example, traveling from New York to London used to take over three days by boat, but that trip is a mere 10 hours today by air[1]. Travel by flight has created a more connected world, bringing about huge cultural and economic benefits.
Nevertheless, air travel is not without its downsides. On the environmental end, aviation produces around 2% of the world’s CO2 emissions (and 12% of CO2 emissions from transportation)[2] and plane exhaust is estimated to cause almost 10,000 deaths annually globally[3]. Moreover, researchers estimate that on a per passenger mile basis, flying is worse than driving in terms of a five-year warming impact by about 50 times on average[4]. The economic and social benefits of air travel have also disproportionately benefitted developed countries. Domestic air travel requires the construction of expensive airports that can cost hundreds of millions to billions of US dollars, which is too expensive for many developing countries to afford. In addition, air travel is still pricey relative to other forms of transportation and is thus inaccessible by large parts of the population. Estimates by World Watch estimate that only 5% of the world population has ever flown on a plane[5].
Our goals for the aviation industry thus span both key environmental and social issues.
- Provide better access to underserved populations where air travel is currently inaccessible or prohibitively expensive
- Support local economies by facilitating foreign investment and the creation of local jobs
- Reduce the environmental impact of air travel by reducing emissions through improvements in technology and operations
Initiatives Today
The airline industry today is in a better position to tackle these issues than in past decades. In 2016 alone, 3.6 billion passengers flew commercially and the International Air Transport Association predicts that the number will double to 7.2 billion by 2035[6]. At the same time, airlines have recently been able to overcome the stigma of being one of the most competitive and least profitable industries in existence. In 2016, airlines globally generated $35.6 billion in total profit, which is the highest ever for the industry[7], due to a combination of lower fuel costs and increased demand.
Most airlines have invested admirably in environmental initiatives. For the airlines, these investments not only create positive social impacts, but also help reduce costs – thus creating a win-win situation. For example, Air France has implemented changes including using more efficient aircraft and installing seats that are 24% lighter to reduce its carbon footprint by 7.2% since 2011[8]. Through the use of route optimization technology called “NextGen” to fly more direct routes, US-based Southwest Airlines hopes to reduce fuel consumption by up to 12%[9].
On the access front, airlines have also made advances. For example, JetBlue launched its routes from the United States to Havana, Cuba, which helped build provide better access to the country[10]. However, in other respects, airlines have mostly kept their route networks in connecting domestic cities with major cities abroad. In this respect, airlines have a lot of potential to invest further.
Partnerships with and Investment in Regional African Airlines: Implementation
1.Additional Routes
Currently, airlines do not support many routes between smaller African metros – often having to route individuals through larger hubs such as Johannesburg or Nairobi. Lacking the freedom to travel serves to disclude remote areas from exchanging ideas, participating in market opportunities, and growing out of potential poverty.
A network of regional African airlines would be more equipped to create new routes between smaller metros that were previously seen as unprofitable. By leveraging their expertise and contact base at local airports, regional African Airlines are best positioned to create new routes to connect people.
Airlines have previously not explored smaller routes because of the perceived cost in the short-term. However, if the regional African network treated the opportunity more as an investment with a longer time horizon, then there would be opportunities for realizing a positive gain after several years. The introduction of routes to new geographies would remove friction / transaction costs in the area, positively affect the local economy, and in turn increase demand for flights.
2.Pool Inventory to Lower Average Seat Cost
The positive social impact of lower fares is the increased access to travel. Previously unaffordable places would now be accessible to more people. A tool to help allow airlines to lowers the average fare in Africa would be to create a network to pool resources.
The arrangement of parallel data and aircraft sharing for routes provides airline alliance partners with the unique opportunity to conduct risk pooling with shared capacity[11]. Pooling the unused inventory of unoccupied seats across a region between multiple carriers, would allow for a more efficient alignment of supply/demand, in order to maximize overall seat utilization. If the region is able to achieve a higher average occupancy per flight, then they could also offer lower average fare per seat.
3.Partner with More Local Governments
In Africa, an estimated 5.8 million people are employed in areas supported by the steady influx of overseas visitors, most of whom arrive in the region by air, and contributed $46 billion to GDP in African economies in 2014.
Tourism as a service industry can play a role in supporting sustainable economic growth. When developed in a responsible and strategic way, tourism can provide important service sector jobs whilst preserving and even celebrating natural resources, rather than depleting them. However, there needs to be a focus by both tourism operators and government to ensure that planned growth is done with sufficient regard to the environmental and social conditions, as well as the economic benefits it can bring.
4.Maximize Shelf Life of Old U.S. Planes
Low cost carriers tend to prefer the Boeing 737 – 737 contributes more than 90% of the combined fleets of the low cost carriers around the world. The 737 has been favored for long haul flights because of the low cost or the aircraft, available maintenance centers, and fuel efficiency.
The regional African network can leverage their now larger buying power to find better deals on used aircraft that are sold from developed markets such as the US or Europe. US and European regulations require higher standards on aircraft in their geographies, which offers opportunities for African carriers to purchase used 737 aircraft for a fraction of the price. For example, a Russian owner was able to purchase a 17-year-old Boeing 737-300 for $3.9 million[12]. A partnership of African airlines would be able to realize better deals on aftermarket aircraft and lower their capital expenditures.
The social impact of bringing several more aircraft to Africa outside of new travel is the new demand for engineering jobs. Aircraft rely on local Maintenance, Repair, and Overhaul (MRO) stations for regular upkeep. The influx of new aircraft through new routes would lead to additional construction of MROs in developing countries, which would positively impact the local economy.
5.Implementing Environmentally Friendly Tech/ Practices
The average consumption per transported passenger by airplane is below 4 liters per 100 km[13]. Airlines would like to push the average consumption to 2 liters, but lack the engine fuel efficiency currently. However, some airlines such as JetBlue have begun using biofuels to reduce their overall carbon footprint per flight. JetBlue submitted an order for 330 million barrels of biofuel to blend with regular jet fuel. The environmental impact is immediate. However, with the cost of a barrel of oil still remaining below $50/barrel, the financial incentive to adopt more biofuels is not as feasible for smaller African airlines that do not have the margin flexibility. An African airline network would have to rely on technology routing optimization software to help decrease their fuel consumption per passenger.
Partnerships with and Investment in Regional African Airlines: Benefits
The most immediate benefit of this initiative is that it will connect people, countries, and cultures that would otherwise not be significantly in contact with each other. The freedom to travel is in many cases a luxury. Our initiative will make travel much more attainable and accessible to African citizens based outside of large economic centers such as Lagos, Cairo, and Nairobi.
Our initiative will also give economically isolated communities access to the global market and economy. With lower-price flights available to those living outside the major economic hubs in Africa, those with entrepreneurial ambitions can correspond much more easily with investors, customers, suppliers, and more in developed countries. And vice versa — entities abroad will be able to partner with and invest in remote African communities.
Another benefit of this initiative is the creation of more jobs in rural African communities.
Lastly, our initiative will spur greater investment in infrastructure in under-developed African communities.
Partnerships with and Investment in Regional African Airlines: Costs/ Risks
Of course, as with any proposal, we must recognize the inherent costs and risks associated with this plan and ideally, this will better prepare us to foresee and prepare for how to mitigate them:
1.Environmental Side Effects of Increased Air Traffic
A natural and obvious reaction is that this increased air traffic would effectively increase environmental pollution through the emission of toxins. Last summer, the EPA “finalized a determination under the Clean Air Act that greenhouse gas (GHG) emissions from certain types of aircraft engines contribute to the pollution that causes climate change and endangers Americans’ health and the environment. The findings are for carbon dioxide (CO2), methane, nitrous oxide, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6), all of which contribute to GHG pollution that represents the largest driver of human-caused climate change. These particular GHGs come primarily from engines used on large commercial jets.”[14] With that said, the airline industry as a whole is cognizant of the global push towards more eco-conscious strategies and experts have put forth many innovative new measures that can be taken in order to significantly reduce the carbon footprint of air travel.[15] For example, by simply choosing to use synthetic fuels, carriers can reduce their CO2 emissions by up to a quarter in the future. JetBlue is one airline that has already been a trailblazer in this space, pioneering efforts to offset carbon emissions. Through a partnership with the CarbonFund.org, JetBlue has offset nearly 1.5 billion pounds of CO2e emissions, invested in using sharklet wing tips (which help reduce its carbon footprint) – among many other investments in renewable energy projects.[16] With the advancement in research around this topic, we, too, believe we can actively set an agenda which will be committed to fighting these dangers.
2.Negative Side Effects of Increased Tourism
We would be remiss to not acknowledge the clear downsides of increased passenger traffic and tourism to conserved and natural wildlife areas, those that are perhaps largely uninhabited except for local civilizations or tribes, and locations which have generally been protected by the very aspect of their remoteness. As mentioned earlier, this proposal would have to take very clear and conscious measures to ensure that the expansion of tourism is done so sustainably and inclusively.
3.Political Risk
Another risk facing this project is ensuring that regulatory agencies and aviation authorities between different countries, as well as governments, can align in terms of safety measures and local aviation procedures according to the law in each region. We recognize that getting buy-in from different political actors across this region – much of which suffers from enormous bureaucratic challenges, the presence of unstable regimes, corruption, and violence – will be a significant hurdle and one that cannot be ignored. One particular risk is that for those regional airlines which are government-owned, this business plan may face pushback as governments seek protectionist measures for their operated carriers (this has already been the case for another company intending to push out a similar plan in the space[17]).
4.Infrastructure Risk
Another risk associated with this proposal is the fact that many of these regional airports and control towers (particularly in extremely remote areas) will not have the adequate and necessary infrastructure to support the increased operation of a fleet of commercial jets. Implicit in this assumption is the cost of needing to prepare the infrastructure to meet the demands of operations and conform to safety measures.
Conclusion
Although it has evolved tremendously and made significant advancements over the last few decades, the aviation industry is still ripe with opportunities for innovation and improvement. The success of this industry is critical to ensuring we can continue to enjoy living in our increasingly connected society. However, commercial flight is not just a channel in which get from point A to point B for leisure or business; it is arguably the most powerful medium introduced by mankind, allowing nations, cultures, economies, and companies to interact with each other, conduct business, trade, improve welfare, provide assistance, save lives, and much more. By enabling these activities, it brings opportunity. We hope that leveraging partnerships and implementing much-needed operational efficiencies of regional African carriers will help to sustainably facilitate the delivery of these benefits.
[1] http://www.lowtechmagazine.com/2008/06/ocean-liners.html
[2] http://www.atag.org/facts-and-figures.html
[3] http://news.nationalgeographic.com/news/2010/10/101005-planes-pollution-deaths-science-environment/
[4] https://www.theguardian.com/environment/blog/2010/sep/09/carbon-emissions-planes-shipping
[5] http://www.worldwatch.org/node/4346
[6] http://uk.businessinsider.com/global-air-travel-could-double-to-72-billion-passengers-in-20-years-2016-10?r=US&IR=T
[7] http://www.iata.org/pressroom/pr/Pages/2016-12-08-01.aspx
[8] http://corporate.airfrance.com/en/csr-strategy
[9] http://airlines.org/blog/how-to-make-flying-more-efficient-while-using-less-fuel/
[10] http://mediaroom.jetblue.com/investor-relations/press-releases/2016/11-28-2016-155419360
[11] https://www.jstor.org/stable/20713686?seq=1#page_scan_tab_contents
[12] http://www.traveller.com.au/aircraft-graveyards-what-happens-to-old-planes-goxrc7
[13] https://www.weforum.org/agenda/2015/09/how-to-create-an-environmentally-friendly-airline/
[14] https://www.epa.gov/newsreleases/epa-determines-aircraft-emissions-contribute-climate-change-endangering-public-health
[15] http://www.pbs.org/newshour/rundown/these-7-simple-airplane-fixes-could-halve-carbon-emissions-at-little-to-no-cost/
[16] https://www.jetblue.com/green/offsetting/
[17] https://qz.com/539440/african-governments-are-making-it-difficult-for-low-cost-airlines-to-thrive/
Regarding the 3rd goal that you highlighted at the top:
Reduce the environmental impact of air travel by reducing emissions through improvements in technology and operations
Have you considered the idea that technology isn’t necessary to address this issue? Of course, technological solutions are “sexy” and “in vogue” and “hotter than Anderson Cooper”, but our societal dependence on technology as a panacea to the world’s ills is a blame-shifting mechanism to absolve ourselves of responsibility and agency.
In fact, I would lobby that shifting consumer behavior to flying less will achieve much greater societal gains than any technological enhancement. Some of the ideas highlighted in the blog post (link below) have outlined ways to achieve this. As an unbiased observer, I strongly support the ideas of the writers in that post.
http://insead.edublogs.org/2017/06/21/why-do-we-love-to-fly-emirates-efficiency-and-effectiveness-in-the-civil-aviation-industry/
kenjesus stop harassing the Wharton exchangers.
This blog post reminded me of an article I recently read in the BBC: http://www.bbc.com/news/world-africa-39979814
Worth a quick read. I disagree with kenjesus – restricting consumption is difficult and ethically dubious. Why should Africans have to restrict their consumption of flights while Americans and Europeans can take $20 flights from Paris to Ibiza every weekend? People, goods, and ideas have to move in order for these countries to develop. Ideas can be spread electronically (still with an environmental footprint but one that pales in comparison to air travel), but people and goods still need to get from A to B in the same amount of time in Africa as more developed areas of the world. Don’t expect consumption to decrease – rather look for ways to mitigate its impact.
nkenninger, we’re saying the same things, brah!
In the blog post I linked to earlier (whoever wrote it, good job!), the author mentioned flying in a more direct manner (fewer stopovers.) This would be beneficial (and also address the issue in the BBC story you linked.)
These are more immediate, actionable solutions than relying on a technological silver bullet.
I like this blog – it recognises aviations role in development and the huge economic benefits it brings. To the responses below – restricting consumer choice is not a solution and there are better ways to tax consumers for indirect roots that are already WIP.
But to develop african aviation, it ultimately has to be a market feasible solution. Certainly governments can support and encourage the development – and airports for example often waiver landing fees to incentivise carriers to fly in, but ultimately the roots have to be self-sustainable in the medium run.
Looks like Hawaiian Airlines is undertaking a big effort to reduce its footprint as well and also contributing to some major greenhouse monitoring initiatives (http://www.huffingtonpost.com/entry/hawaiian-airlines-climate-change_us_58b8711de4b01fc1bde6e3cc). But I wonder really how much of an impact lighter seats and slightly more direct routes will ultimately have in practice.
Who do you think is in a position to open an African airline that connects more cities? An existing carrier or a new one?
Also re: the negative side effects of tourism, I wonder if we should be focusing more on business travel and therefore corporations. Most people do not travel for leisure all year round, so some companies (like consultancies) that buy frequent travel are probably disproportionately responsible for high travel volumes with large environmental footprints. I wonder how many companies think about optimizing large-scale employee travel to minimize their footprint (like sending consultants on assignments closer to home so they have to travel shorter distances).
Since business class tickets can sometimes be 75% of an airline’s profit from a given flight, these corporations can really have an impact on how airlines design their routes. It would be hard to ask individuals to cooperate in the same way for infrequent leisure travel.