Analysis: Corporate business travel ‘carbon budgets’ loom for airlines

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  • About 90% of business travel emissions are from Hawaii
  • Big companies are setting reduction targets faster
  • Business-class emissions 3 times higher than economy class
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SYDNEY/BOOSTON, Oct 11 (Businesshala) – As major companies look at drastic ways to cut carbon emissions from corporate travel, airlines are poised for a major hit to business-class travel, a key revenue driver, of the industry. officials and experts say.

Several companies such as HSBC (HSBA.L), Zurich Insurance (ZURN.S), Bain & Company and S&P Global (SPGI.N) have already announced plans to cut business travel emissions by up to 70%.

Some are considering “carbon budgets” as they come under increasing pressure from environmental advocates and investors to reduce indirect emissions that contribute to climate change.

Flights account for about 90% of business travel emissions. This cut makes it the lowest-hanging fruit for target-setting companies.

The airline industry at a meeting in Boston last week committed to reaching “net zero” emissions by 2050, decades beyond corporate travel emissions reduction goals.

Kit Brennan, co-founder of London-based Thrust Carbon, which is advising S&P and other clients on setting a carbon budget, “It’s going to be tough for airlines and they need to adapt.”

Referring to airport lounges and good food, he said, “I think what we’re going to see, funnily enough, is more of an unbundling of business class where you get all of the business class without a seat.” benefits can accrue.” “Because ultimately it all comes down to the plane’s field of view and takes it up.”

According to a World Bank study, flying business class emits almost three times more carbon than economy class because the seats take up more space and more of them are empty.

change already

Pre-pandemic, around 5% of international passengers globally flew in premium classes, which account for 30% of international revenue, according to airline group IATA.

The pandemic-related decline in travel and the switch to more virtual meetings has prompted many companies to save money by resetting travel policies.

Sam Israel, chief sustainability officer at consulting firm Bain, said his company is evaluating carbon budgets for offices or practice areas to help cut emissions per employee trip by 35% over the next five years.

“I think more broadly, this is something that companies will really need to start if they’re going to be successful in meeting the aggressive goals that everyone is putting in place,” he said.

Companies and corporate travel agencies are investing heavily in equipment to measure flight emissions based on factors such as aircraft type, routing and class of service.

“We don’t see many companies taking a very drastic approach like cutting bus travel because it affects their bottom line,” said Nora Lovell Merchant, vice president of sustainability at American Express Global Business Travel. “But we are seeing an increased demand for transparency so that those travelers can make decisions.”

Global rating agency S&P, which plans to reduce travel emissions by 25% by 2025, found that 42% of its business class use was for internal meetings, its global corporate travel leader Ann Derry told the CAPA Center last month. Said at the For Aviation event. .

Airlines are going green

US carrier JetBlue (JBLU.O) plans to use about 30% of its jet fuel for flights in and out of New York within two to three years.

“Businesses, of course, want to aggressively address this climate change issue,” JetBlue chief executive Robin Hayes said on the sidelines of the Boston meeting. “But we think they’re going to be able to do it in a way that still enables business travel.”

The emissions targets airlines set last week depend on new engine technologies as well as increasing the use of sustainable aviation fuel from less than 0.1% today to 65% by 2050.

“If we are to achieve zero carbon emissions by 2050, everyone has to play their part here,” said Greg Foran, chief executive of Air New Zealand (AIR.NZ). “It’s not just the airlines. It’s going to be the fuel provider, it’s going to be the government. And eventually customers will have to buy into that too.”

Reporting by Jamie Freed in Sydney and Rajesh Kumar Singh in Boston; Editing by Mieong Kim and Gerry Doyle

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