Airfares are becoming more expensive as airlines continue their efforts to reduce their carbon footprint through the use of newer planes, better technology and greener fuels, according to an industry expert.
irlines have ramped up their decarbonization strategies, with some promising to become carbon neutral. IAG, owner of Aer Lingus, has committed to be carbon neutral by 2050.
Airlines and other companies are increasingly focused on so-called ESG (environmental, social and governance) challenges that are shaping the way they do business today and in the future.
The world’s aviation sector is responsible for about 2.1 percent of total global CO2 emissions – about as much as the shipping industry produces.
“The large and growing global scale of commercial aviation means that the development and deployment of mitigation measures for its environmental impact will take decades, not years,” said Dick Forsberg, senior aviation finance consultant at PwC Ireland.
“Sustainable fuels are being developed and scaled to become a crucial bridge for the inevitable technology gap between current, fossil-fuel aircraft and future generations of electric, hydrogen and other propulsion options,” he said.
He noted that research and investment in these green alternatives has continued during the pandemic, with a number of high-profile initiatives being taken by airlines, lessors, and aircraft and engine manufacturers.
Ryanair has set a target of producing 12.5 percent of its total fuel needs from sustainable aviation fuel by 2030. Last month the company announced that the Dutch arm of Finnish company Neste would supply the airline with enough sustainable aviation fuel for a third of the airline’s flights from Amsterdam Schiphol Airport using a 40-part biofuel blend.
However, Mr Forsberg said embedding ESG and sustainability across the aviation sector will come with a financial cost as new technologies are developed.
“While the additional costs will initially be borne primarily by industry stakeholders, over time they will trickle down to customers, leading to more expensive air fares in the future,” he predicted.
Mr Forsberg addressed the ISTAT Sustainability Symposium on the Aviation Industry in partnership with Airfinance Journal and PwC in Dublin on Wednesday.
It kicks off this week in the capital with the international aviation show Airfinance Journal, which attracts thousands of executives from around the world. Another international aviation congress – the Airline Economics Event – is also taking place in Dublin next week. Due to the pandemic, the congresses will take place physically here for the first time since 2019.
Yvonne Thompson, Head of Aviation Finance at PwC Ireland, also attends Wednesday’s event in Dublin. She said the aviation sector continues to face “several challenges”.
“Having started to recover from Covid-19 and despite the war in Ukraine, we see an industry that is resilient, responsive to consumer preferences and will return to new growth patterns that serve its purpose for society “, she said.
