The car industry is going green by rapidly developing hybrids and electric cars. Residential and commercial building are adding solar panels. The last place that most people would expect a systematic effort to improve carbon emissions and adopt carbon-neutral programs is the airline industry. The engines for most commercial aircraft are so large that re-engineering them for improved carbon emissions would seem difficult.
Nonetheless, the The International Air Transport Association (IATA) has set itself aggressive green goals. The move may not be at all because of the pressure on all forms of transportation to be more environmentally friendly. Airlines need to rapidly improve engine efficiency to cut operating costs in a recession-pressured business.
The IATA has set several ambitious goals, each of which as a green tint to it and all of which are likely to improve the profits of carriers.
Among the plans set out by the industry association are improving fuel efficiency by an average of 1.5% annually to 2020. That will certainly help financial margins if it can be achieved. As a by-product, carriers will also attempt to stabilizing emissions from 2020 with carbon-neutral growth and work toward a 50% net reduction in carbon emissions by 2050 compared to 2005.
The factors that will make these changes possible are not entirely in the control of the carriers. Boeing (NYSE:BA) and Airbus will have to see that the new goals are in their best financial interests. So will engine manufacturers like GE (NYSE:GE) and Rolls Royce. The greening of the airline industry is only a mirage if suppliers can’t make a profit on the movement.
Douglas A. McIntyre
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