Reuters, Sydney

Tue 12 Oct 2021 00:00

A traveler walks past a Christmas tree on his way through Ronald Reagan Washington National Airport in Arlington, Virginia. Photo: REUTERS / FILE

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A traveler walks past a Christmas tree on his way through Ronald Reagan Washington National Airport in Arlington, Virginia. Photo: REUTERS / FILE

As big companies look for drastic ways to cut carbon emissions from business travel, airlines are preparing for great success with business travel in business class, a major revenue driver, say industry leaders and experts.

Several companies including HSBC, Zurich Insurance, Bain & Company, and S&P Global have already announced plans to quickly cut business travel emissions by up to 70 percent.

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Some are considering a “carbon budget” as they are under increasing pressure from environmentalists and investors to reduce indirect emissions that contribute to climate change. Flights account for around 90 percent of business travel emissions. That makes it the least hanging fruit for companies setting reduction targets.

The aviation industry pledged at a meeting in Boston last week to achieve “net zero” emissions by 2050, decades above corporate travel emissions reduction targets. “It’s going to be tough for the airlines and they have to adapt,” says Kit Brennan, co-founder of London-based Thrust Carbon, which advises S&P and other clients on setting carbon budgets.

“I think what we’re going to see, funnily enough, is more of a business class unbundling where you get all the benefits of business class without the seat,” he said, referring to airport lounges and better meals.

“Because ultimately it depends on the area on the aircraft and that takes up.”

According to a study by the World Bank, the flying business class emits around three times as much CO2 as the economy class because the seats take up more space and more of them are empty.

Before the pandemic, around 5 percent of international passengers worldwide flew in premium classes, which, according to the IATA airline group, accounted for 30 percent of international sales.

The pandemic-related decline in travel and the switch to virtual meetings have prompted many companies to save money by revising their travel guidelines.

Sam Israelit, chief sustainability officer at consulting firm Bain, said his company is evaluating carbon budgets for offices or practice areas to reduce travel emissions per employee by 35 percent over the next five years.

“I think, more generally, it’s something companies really have to start with if they are to successfully achieve the aggressive goals everyone is setting,” he said.

Companies and travel agencies are also investing heavily in instruments for measuring flight emissions based on factors such as aircraft type, flight route and service class.

“We don’t see many companies taking a very draconian approach like simply reducing travel because it affects their bottom line,” said Nora Lovell Marchant, vice president of sustainability at American Express Global Business Travel.

“But we see an increasing demand for transparency so that these travelers can make decisions.”

Global rating agency S&P, which aims to cut travel emissions by 25 percent by 2025, found 42 percent of its business class usage was used for internal meetings, its global leader in business travel, Ann Dery, said at an event hosted by the CAPA Center for Aviation last month .

The US airline JetBlue plans to make around 30 percent of its kerosene for flights to and from New York sustainable within two to three years.

“Companies will naturally want to tackle this issue of climate change aggressively,” said Robin Hayes, CEO of JetBlue, on the sidelines of the meeting in Boston.

“But we think they can do this in a way that continues to make business travel possible.”

The emissions target set by the airlines last week is based on increasing the consumption of sustainable aviation fuel from less than 0.1 percent today to 65 percent by 2050 and on new engine technologies.

“Everyone must do their part if we are to achieve zero net carbon emissions by 2050,” said Greg Foran, chief executive of Air New Zealand.

“It’s not just the airlines. It’s going to be fuel suppliers, it’s going to be governments. And ultimately, customers have to buy into them too.”