Consumers are paying more attention to their carbon footprint and it could cost airlines billions of dollars, Citi said in a note to clients.
The firm said Tuesday that “flight shaming,” which it defines as “the inherent guilt that an individual feels as a result of one’s aviation-related carbon footprint” is causing consumers to explore alternate modes of transportation when possible, and also to look for ways to offset their carbon emissions.
Citi estimates that over the next five years the cost of carbon offsetting economy flights will grow to $3.8 billion per year. It will either be absorbed by the consumer or the airline. But really the airline gets hit in both scenarios since if the price is absorbed by passengers, the higher cost could lead to an overall slowdown in air travel.
“If this burden were to be fully absorbed by the consumer, our price elasticity analysis shows that there would be a shortfall in volume growth of -0.4% per annum vs. current forecasts. And while this does not sound detrimental, if this onus were to fall on the (largely fixed cost base) airlines, the cost of carbon offsetting all leisure consumption could be as much as c.27% of airlines’ profits by 2025,” analysts led by Mark Manduca wrote.
And that’s just for leisure travel. Corporate travel, which for ease of estimation the company defined as business-class seats, will cost another $2.4 billion. That would reduce airline profits by an additional 17%. The firm said that these estimates could be conservative and that the actual cost could be 10 times higher. To read the entire article, click here.
The personal opportunity to participate and contribute to the worldwide Carbon Footprint Reduction effort was why I got into this business in the first place 10 years ago. And even though that doesn’t seem like a long time, it was way before it was mainstream or the “norm” concerning Sustainable Renewable Aviation Fuels. My small Team and I believed in this effort then, and even more so now.
I was raised in Oklahoma as a child and worked with Tribes across the country for over 40 years. My mother was a Creek and Cherokee Indian. These experiences and my Native American Heritage have given me a sense of responsibility that demands I pay attention. However, multi-national companies like Delta and tkIS have also recognized this problem for years and, like us, have endured multiple years of effort to address this crisis. Now, new and larger numbers are being discussed to offset our growing carbon footprint, like the article stipulates.
What this means is this; a new and exciting industry has been solidified, taken hold and has its own momentum worldwide. This new industry challenge is creating jobs, tax revenues for cities and states, and profits for companies like ours for years to come. Various industries, like the article mentions, are going to be revived, recognized and appreciated by the masses.
This is a good place to be in right now. No one company can “fix” this problem. But by Integrating solutions from multiple world-class companies, which is what we have done, you can provide real solutions. I compare the sustainable renewable aviation fuel industry’s potential, and current reality, to the late 70’s and early 80’s when the software and hardware for new microcomputers were being developed and finally took hold. That industry has revolutionized the world of information and communications. I was there then, and this is just as exciting and in many more ways………beneficial to the world.
If you have an interest in discussing the merits of our Project, please contact us at email@example.com.