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Could COVID-19 make aviation greener?

Michael Graham explores the relationship between COVID-19 and the long-term environmental outlook for the industry. He assesses the market based on aircraft type and draws attention to the usage patterns of newer more fuel efficient aircraft

The Coronavirus, or Covid-19, has created a disruption in aviation unprecedented in its modern history, grounding nearly 70% of the global commercial passenger fleet. Many airlines are relying on government assistance to stay afloat and IATA is now predicting that passenger numbers may not recover to pre-Covid levels until 2023. Faced this with this reality, airlines are now grappling with the question of how to rationalise their fleets.

Could COVID-19 make aviation greener?

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As the global tally of confirmed cases of Covid-19 has risen sharply, commercial air traffic has collapsed. Cirium Tracked Utilisation data shows that In the US, daily arrivals have fallen from over 25,000 in January to just over 10,000 today. This follows the implementation of  travel restrictions and lockdown measures, in an effort to control the spread of Covid-19 and limit the loss of life.

Partly in response the general decline in travel demand, oil prices have been in freefall, even briefly turning negative in April, before stabilising as Saudi Arabia and Russia agreed to suspend their ill-fated price war, and reduced production by 10m bbl/day. The net result, however, has been that jet fuel prices are now at levels not seen since the early 1990s, which, incidentally, was the last time the global in-service commercial fleet was as small as it is today.

Early evidence however, suggests that many operators have not used cheap fuel to keep less efficient types flying during the pandemic. If we compare the reduction in global tracked flights between the beginning of 2020 and today, we can see that a greater proportion of newer types are being utlilised. For example, within regional jets, the more fuel efficient Airbus A220 has seen a 77% decline in usage through Covid-19, whereas older types such as the Embraer E190 E1, as well as the BAE 146 have seen sharper falls. Similar trends can be observed across both narrowbodies and widebodies.

Fleet in-service rates also tell a similar story. A simple method of assessing an aircraft type’s environmental impact is to measure its CO2 emissions per RPK, ranging from less than 100g/RPK (about the same as the most efficient family cars) through to more than 120g. According to Cirium Fleets Analyser, when looking at the top and bottom five aircraft types in terms % of fleet in service, we can see that among the top five, three types have emissions of <100g. Conversely, within the bottom five, all aircraft types have emissions well in excess of 100g per RPK.

So is this is just a temporary blip, or evidence of an accelerating shift to lower emission aircraft as the result of Covid-19? Recent announcements by major carriers give some reasons for optimism. In the US, Delta, United and American have accelerated plans to retire many older types within their respective fleets, including in the Boeing 757 and 767, MD-80 & 90, as well as older examples of the Embraer E190 and Airbus A330. Elsewhere, BA, Qantas, Virgin and Air France/KLM are bringing forward 747 retirements, while Lufthansa and Iberia are evaluating removing A340s earlier than planned. Not surprisingly, values for many of these types have been negatively impacted.

So why do older types appear to be being phased out early? Especially given that low fuel prices should make them cheaper to operate. For a start, fuel is not the only cost concern for operators; maintenance is also a significant expense, especially for older types which are less likely to be on cost-per-hour agreements. Furthermore, many airlines’ fuel hedging positions have not allowed them to fully participate in the fall in fuel prices. It’s also worth remembering that unless fuel is free, fuel costs for newer aircraft will always be lower. However, environmental concerns are also major consideration. If the industry is hit its ambitious emissions reduction targets, fleet fuel efficiency must improve by at least 2% per annum between now and 2050. Indeed, some governments have even made emissions reduction a proviso for financial aid for airlines. This is all of course, in the context of existing obligations under CORSIA.

The Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA, commits airlines to achieving carbon neutral growth from 2020, onwards through a number of measures such as air traffic operational improvements, sustainable aviation fuels and crucially, new, more efficient aircraft technology. Fuel burn per RPK has already more than halved since the 1990, but achieving further savings will be a considerable challenge. As such, the industry is acutely aware that it cannot afford to use low fuel prices as an excuse to delay retiring older aircraft types.

Covid-19 undoubtedly presents the commercial aviation industry with its greatest challenge since the Second World War and in the short term, its very survival will depend both on government support and hard-headed financial decisions by industry leaders. However, those same leaders are also mindful of the fact that, aviation is under intense environmental scrutiny from policy makers, investors and an increasingly environmentally conscious public. Therefore, if it is to thrive over the longer term, it cannot be seen to be shirking its environmental responsibilities. Fortunately, despite Covid-19 and a collapse in fuel prices, early evidence suggests that those responsibilities continue to be taken seriously.

Watch as Michael Graham provides insight on utilization patterns by aircraft type, assesses the influence of low oil price during the pandemic and provides insight on environmental schemes such as CORISA, which commits airlines to achieving carbon neutral growth from 2020.

 

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