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Airlines are constantly disclosing their fuel consumption. nice. Airline CO2 emission models are improving and becoming more accessible. nice. Companies are estimating travel-related carbon emissions. nice.
Buyers are using the wrong KPIs to judge airlines on CO2 emissions. not good. Travelers are using the wrong metric to choose the least harmful flight. not good.
There is no question that measuring the absolute amount, say 2,000 metric tons of travel-CO2 emissions, is important. This absolute measure is very important because it reports what must be reduced to protect the climate.
The relative problem
The problem is that relative metrics are designed to compare the CO2 emissions of one airline or itinerary to another. Examples of current relative metrics are CO2 per passenger or CO2 per mile flown. These seasonal metrics seem well suited to the task of comparing airlines, measuring travel schedules, and assessing the weather impact of different flight options within a city pair.
It seems clear that a smaller number, such as 200 kg of CO2 per passenger, is better than a larger number. If that’s true (it isn’t) then we should support anything that helps bring down this relative key performance indicator. Let’s think carefully about this.
Look at the consequences
How can an airline reduce CO2 per passenger or mile flown metric? One way is to put more economy seats in the plane. The more seats, the bigger the shovel and the smaller the metric value. How will the airline fill these extra seats? By lowering the price which increases the demand for travel. The higher the demand, the more fuel people fly.
This airline does not need to improve fuel efficiency or reduce carbon dioxide emissions. This airline scores well on the passenger KPI only because of its low fare and dense seat business model. Worse, low fares leave little room for airlines to invest in sustainable aviation technology.
Using the current CO2 per passenger or mile KPI, corporate travel programs run the risk of directing their travelers to airlines with a lower cost business model. Travelers who look at the CO2 measurement per passenger in a purchasing device will think that the low-fare, high-density carrier is the best choice, climate-wise.
But low-priced tickets mean more trips taken from the company’s travel budget. Low travel costs make it easy to approve travel for low-cost meetings. The result is lower cost travel, not less, and less profit margin for airlines.
Are they the results we want from a climate perspective?
What is the goal?
Achieving any critical climate goal will require concerted action by airlines, companies and their passengers. The main question is which goal are we aligned with?
Reducing the airline’s CO2 footprint is a very different goal than improving the CO2 efficiency of the airline industry. The reduction goal is to reduce the impact of the airline industry on the climate, full stop. The CO2 efficiency goal can be achieved by increasing the absolute emissions of the airline.
These are very different goals. One would reduce airline emissions. Another allows them to grow more slowly than passengers or miles flown. These goals are incompatible. Which shall we choose?
Reducing emissions is better.
The only way airlines can significantly reduce CO2 in the short term is to travel less. This should be the North Star for every environmentally responsible travel program. The questions are how to achieve this goal and how to determine one’s progress.
One option is to reduce the travel budget. This will reduce travel but also undermine the airline industry’s ability to invest in sustainable aviation.
Another option is to make flights more expensive by adding a higher carbon tax to each flight. This reduces demand for low-cost travel (good) and helps airlines fund sustainable aviation efforts (good). But it doesn’t do anything to make the trip better, nor does it provide a better KPI for making climate-friendly travel decisions.
Carbonize the cost
The key is to carve out our spending on air travel. The KPI to track this is air transport cost per dollar of CO2. For example, a ticket with 500 kg of CO2 and a price of 500 dollars has 1.00 kg of CO2 per dollar of air ticket. This “CO2 per $” KPI creates powerful measures and results for all parties working to reduce airline emissions.
Airlines can reduce KPI by decarbonizing their flight operations and this is important – by increasing prices. Higher air fares reduce travel demand and lower KPI prices. Higher airfares make it difficult to secure low-cost trips and chew through travel budgets quickly, so low-cost trips are taken. Airlines will have more profit margins to invest in sustainable aviation technology.
How do travelers benefit from making this KPI smaller? By displaying this parameter in the booking tool, the traveler may be led to purchase a more expensive but non-carbon ticket. Higher fares qualify the traveler for better service at the airline. These higher fares earn frequent flyers faster upgrades and better privileges.
Companies with a “less travel, better results” travel strategy can offer first and business class seats to their travelers to get low-carbon and fair-value fares. Think of it as Plank’s new travel policy, “The Low Carbon Airplane.”
What’s the point?
This new KPI shows each airline’s progress in decarbonizing their flight revenue, which is important for today’s procurement teams. A recent Flight BI analysis of US airline data showed that Delta had the lowest CO2 emissions per dollar of flight revenue. However, Delta ranks with the worst when using CO2 per passenger and per mile flown metrics. Procurement teams must choose their metrics wisely.
The idea of paying higher prices for airfares won’t sit well with managers stuck in a price-first travel strategy. If lower prices are still a priority over reducing travel emissions, they should ask senior management. For many companies, the answer is no, their priorities are lower but more successful driven by healthy, productive and willing travelers. See tClara’s white paper “How We Connect” for evidence to support this claim.
Low fares and lots of low-cost travel are incompatible with sustainable corporate travel. Now is the time to embrace the strategic benefits of taking fewer trips at a lower carbon cost. This new KPI shows how committed we are to these actions. Accept it now.
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