In Delta Air Lines’ 2021 environmental report, CEO Ed Bastian notes that: “Travelers should not have to choose between seeing the world and saving the world.”
Up to this point, however, there is little doubt that connecting the world to increase their bottom line has been more important to airlines and their investors, as well as the vast majority of travelers, than protecting the environment.
In Skift Research’s latest report, launched last week, we investigate the environmental performance of the six largest airline operators: Air France-KLM, American Airlines, Delta Air Lines, International Airlines Group, Lufthansa, and United Airlines.
We do this using targets proposed in 2009 by the International Air Transport Association (IATA), for the aviation industry to address its climatic impact. IATA represents 230 airlines, accounting for 82 percent of total air traffic.
- Short-term goal: An annual average fuel efficiency improvement of 1.5 percent from 2009 to 2020.
- Medium-term goal: Stabilize net CO2 emissions at 2019 levels with carbon-neutral growth.
- Long-term goal: Reduce aviation’s net CO2 emissions to half of what they were in 2005, by 2050.
Our investigation found that none of the companies achieved consistent annual fuel consumption reductions of 1.5 percent, as per the short-term goal, but overall airlines have been able to increase efficiency and come close to achieving this goal. Airlines, however, have a long way to go to achieving the medium and long-term goal, as we set out in the report.
Overall, our analysis shows that Delta Air Lines, IAG, and Lufthansa are better positioned to achieve emission reduction goals than Air France-KLM, American Airlines, and United Airlines.
However, no company stands out as a clear frontrunner, and it would be reasonable to assume that the overall aviation industry is likely to be even further behind the trajectory towards the medium- and long-term goals than our analysis shows.
Last week, we published our latest Skift Research report, Sustainability in Travel 2021: Environmental Performance of the Six Largest Airlines. Below, we share a snippet of the report.
Short-Term Goal: Progress Towards Fuel Efficiency
Short-term industry goal: An annual average fuel efficiency improvement (fuel consumption per RTK) of 1.5 percent from 2009 to 2020.
Using information from company filings, we are able to determine which airlines are the most efficient. We used information about kilometers flown and fuel consumption to calculate fuel efficiency for each major airline company.
The industry uses a number of key performance indicators to calculate performance. Amongst these are available seat kilometers (ASK), revenue passenger kilometers (RPK), and revenue ton kilometers (RTK). It is standard for the industry to calculate fuel efficiency, as well as emissions, by dividing them by RPK or RTK. While not a perfect measure because not every airline achieves the same load factors, the weight of the aircraft has a major impact on consumption and so RPK, and especially RTK, effectively accounts for load factors.
Fuel efficiency is integral to an airline’s financial success. American Airlines’ energy bill is about 17 percent of revenue. Lufthansa spends about a quarter of all income from ticket sales on jet fuel, and for Ryanair fuel accounted for approximately 36 percent of total operating expenses in fiscal year 2019.
However, there is still huge variance among airlines in their fuel efficiency levels. Of the 16 companies that have filed reports with the CDP, low cost carriers Ryanair, EasyJet, and Pegasus have the lowest fuel consumption per RPK flown. Asian carriers All Nippon, Cathay Pacific, and Korean Air are at the high end. The top six companies all fall around the mean of 0.041 liters per RPK.
There are many factors impacting fuel efficiency, with the length of routes flown (as extra fuel needs to be carried adding to weight) and age of the aircraft two important factors. Another important consideration to make is the amount of cargo flown by the airlines, as revenue passenger kilometers can be misleading when different airlines transport different quantities of cargo. The Asian airlines, for example, carry much more cargo than Western carriers, and legacy carriers tend to carry more cargo than low-cost carriers.
We therefore have collected cargo data as well, to calculate revenue ton kilometers (RTKs), which combines both passengers and cargo into a single figure. To do this, we needed to set the average weight per passenger including luggage, with the industry using a few different numbers. We have decided to stick with the commonly used figure of 150 kg per passenger, which includes their luggage.
When including cargo, the picture looks very different. Ryanair remains the most efficient airline, but now Cathay Pacific is actually one of the most efficient. European airlines Lufthansa and Air France-KLM are most efficient from the top 6, whereas the U.S. airlines consume more fuel per RTK than the average.
When looking at this data over time, and we focus on the last five years only here, we can see that none of the top six airlines had delivered consistent fuel efficiency improvement of 1.5 percent on an annual basis. Note that we did not have the required data for Air France-KLM as they do not provide fuel consumption data regularly.
On average, however, most airlines scored close to or above the required efficiency levels. While average levels are close to hitting the mark, it is worrisome that major fluctuations are present, with United Airlines for example registering decreasing efficiency in 2019.
Lufthansa, the best scoring company, relies heavily on 2017 to hit the overall target. In 2017 it saw a strong increase in total kilometers flown, to the tune of 13 percent, as compared to 2016, which allowed it to be more efficient. The annual average increase of kilometers flown for the other years was 3.5 percent.
Overall, then, airlines have been largely able to become more efficient in their fuel usage, which will have resulted in CO2 emissions per RTK going down as well. Whether this efficiency improvement is enough to hit longer-term targets will be discussed in the report.
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