This is an industry that plans for the long term—a necessity, given the “astronomical” levels of investment required to build and operate airplanes, explained Patricio Sepúlveda, a former CEO of LAN Airlines who now heads a Miami-based aviation consulting firm he founded, called Aeronex.
In recent years, he said, the entire aviation sector—which includes manufacturers, airlines, airport operators, and other players—has adopted and “internalized” steps to reduce its CO2 emissions. “I would say that this has not stopped, nor will it, due to the pandemic,” Sepúlveda said in a recent interview.
That is not to minimize the impact of the pandemic on aviation. In April of this year, at the height of the shutdowns, global passenger traffic was 94.4% below what it had been in April 2019, according to Airports Council International, the trade association of the world’s airports. International travel, it said, “almost came to a halt,” with all regions recording declines of more than 98%. The decrease in global air freight was less severe, though volumes in April were down by close to 23% compared with the year before. Latin America and the Caribbean registered nearly twice the decline in freight volume.
Air traffic has started to pick up somewhat, depending on the region, but Sepúlveda estimates that on average, industry activity in 2020 will end up being only about 30% of what it was in 2019. While he is convinced people will eventually embrace air travel again, he thinks it will take about three years for the industry to recover from the impacts of the pandemic.
“This is the most profound crisis aviation has had in its entire history,” he said.
In recent weeks, airplane manufacturers have announced layoffs, and airlines have cut routes and slashed jobs. Sepúlveda noted that three of Latin America’s “emblematic” airlines—Aeroméxico, Avianca, and LATAM—have filed for Chapter 11 protection under U.S. bankruptcy laws. He believes they will survive but will have to operate differently.
The International Air Transport Association (IATA), which represents some 290 airlines comprising more than 80% of global air traffic, warned in June that airlines were facing some hard months ahead, and called on governments around the world to provide financial assistance and policy measures to help the industry. “Airlines are expected to post a loss of $84.3 billion in 2020 and government financial relief is a lifeline to many airlines,” the association said in a press release.
The current crisis led to one change that has drawn criticism from environmental organizations, an adjustment of the rules for implementing an international agreement to offset emissions in the aviation industry. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) was adopted in 2016 by the 193 member states of the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations. A three-year pilot phase begins next year among the more than 85 countries that have opted to participate from the outset. (Participation in CORSIA becomes mandatory in 2027.)
Under the original CORSIA plan, a baseline level of emissions would be established for international flights, using combined averages for 2019 and 2020. Airlines would have to offset any emissions above that baseline through the use of carbon credits.
In late June, the ICAO Council decided to use only 2019 emissions as the CORSIA baseline, to avoid what it called an “inappropriate economic burden” on airlines. If 2020 emissions were taken into account, that would mean airlines’ offset requirements would be greater “although they are flying less and generating less emissions,” ICAO said in a press release.
“Council States today have made a measured assessment and have come to the most reasonable solution available given our current and very extraordinary circumstances,” ICAO Council President Salvatore Sciacchitano said after the decision was adopted.
The Environmental Defense Fund (EDF) was among the organizations that had urged ICAO not to change the rules. An EDF analysis published in May said that under most scenarios, the effect of the change would be to “eliminate all offset requirements for three to five years” and undermine “investor confidence in aviation’s commitment to a low carbon future.”
In a written statement issued after the ICAO Council decision, EDF International Counsel Annie Petsonk said that even though airlines have been “hit hard” by the Covid-19 crisis, they “can’t afford to ignore the looming global crisis of climate change.”
“Real leadership means setting the aviation sector on a path toward net zero climate impacts as swiftly as possible,” she said. “The sooner that the costs of carbon control are included in the costs of doing business, the sooner new technologies will be developed.”
For its part, the airline industry association IATA welcomed the ICAO Council decision, saying that “at a time of extreme volatility, it provides immediate certainty and a clear path forward for the successful implementation of CORSIA.”
In a press release, the Director General and CEO of IATA, Alexandre de Juniac, stressed that airlines remain committed to carbon-neutral growth through CORSIA. “Aviation was the first industry sector in the world for which governments agreed to a global carbon offsetting measure,” he said. “Airlines know that sustainability is their license to grow.”
Aviation does not account for a large percentage of overall carbon emissions, but the industry’s emissions had been growing rapidly before the current slowdown. A study by the International Council on Clean Transportation (ICCT), an independent, nonprofit organization, estimated that emissions from commercial aviation—both passenger travel and freight—totaled 918 million metric tons in 2018.
“That is 2.4% of global CO2 emissions from fossil fuel use and a 32% increase over the past five years,” the study said. Citing ICAO projections, the study said aviation emissions are expected to “roughly triple” by 2050, “at which time aircraft might account for 25% of the global carbon budget,” assuming other sectors meet their decarbonization goals under the Paris Agreement.
The industry has taken significant steps over the years to curb its emissions, according to Sepúlveda, who once served as IATA’s Regional Vice President for Latin America and the Caribbean and in that capacity, participated as an observer at United Nations Climate Change Conferences.
“Aviation was the first sector that, as a sector, adopted an emission reduction program,” he said. In 2008, the industry set a target to cut its net CO2 emissions in half by 2050, compared with 2005 levels, and to improve fuel efficiency.
Sepúlveda is confident that these efforts will continue—even during the downturn—and that they are more critical than ever, considering the progress that still must be made on the climate front. He also expects that once there’s an effective vaccine for Covid-19 and treatments have improved, people will be eager to take to the skies again. In 2018, airlines carried an estimated 4.3 billion people on scheduled flights, more than double the volume seen in 2005, according to ICAO figures.
“I always say that travel is like a drug,” Sepúlveda said. “People who travel once want to do it again, and they want their children to travel and their relatives to travel. I think that’s great.” Once the pandemic is under control, he added, they will have thought of even more places they want to visit someday.