Achieving Zero Emission Rate in Aviation Industry: Challenges and Recommendations

This article discusses the challenges faced by the aviation industry in achieving zero emission rate and the recommendations to overcome them. The article covers the Four Pillar strategy adopted by IATA, the technology pillar, barriers to success, and recommendations. The subject is Aviation Management and the course code is not mentioned. The article is relevant for students pursuing aviation management courses in any college or university.

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I. INTRODUCTION
In 2007, IATA came up with a compiled strategy on how to reduce green house gas emissions
produced by aviation. The strategy’s main goal was to achieve a zero emission rate from
commercial aircraft manufacturing within a period of 50 years.However, the process of
achieving such a goal required the adoption of a Four Pillar strategy. The pillars were technology
improvement, operational efficiency, infrastructural efficiency, and positive economic efficiency.
By June 2009, the airline industry decided to take a collective responsibility to have targets
towards achieving IATA strategic objectives set. The targets include capping carbon emissions
by 2020, improving fuel efficiency by 1.5% come 2020, and reducing carbon emissions by 50%
come 2050. In the same year (2009), the aviation industry collectively endorsed the goals
through an ICAO submission (Krishnan, 2011, pg. 3).
How to achieve the goals
All the nations in the world are required to regulate local aviation industry through their
governments. The governments are also required to take a number of measurements including:
i) Addition of international aviation regulations in the local regulations
ii) Local coordination via ICAO to reduce distortion of competition between airlines by
working on international sectoral approach
iii) Treating aviation as a global and not local industry
iv) Creating a global mindset to achieve the aviation goals
v) Ensuring that the approach is applicable on both domestic and international aviation
vi) Giving full access to the measures created beyond the aviation industry

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vii) Ensuring that measures that are punitive and do not conserve the environment are not
adopted but rather, go for economic and cost effective measures as they actually help
the environment.
viii) Setting fiscal and legal frameworks for promoting investment in alternative jet fuel
that ensure low carbon emission.
ix) Perform more research activities to achieve greater fuel efficiency
x) Going for the appropriate investments that will help in the modernization of air traffic
management
xi) Ensuring that airlines are equally treated
xii) Every part of airline’s supply chain need to be addressed in regulatory effortsto create
participation of all sectors in a manner that is homogenized (Franklin, 2012)
The Challenges
Apart from security and safety, there are new challenges such as climate change that affects the
airline industry. Generally, the outlined vision would ensure a growth in zero carbon emission –
a factor to reduce climatic change. Currently, the industry produces about 2% of carbon emission
that is projected to reach 3% come 2050. As mentioned before, the onset of IATA ensures that
all the stakeholders win the industry come to terms to reduce challenges that would hinder the
achievement of the highlighted goals. Key players include Airports, manufacturers, governments,
Airlines, infrastructure providers,economy, and technology (Rouse, 2017).With the growing
carbon footprint, the whole world is at risk. Achieving a carbon neutral growth for the airline
industry requires the input of every stakeholder. With such, far much more records will be
attained. For instance, achieving a fuel efficiency of 70% within a span of 40 years ensured the
growth of a carbon neutral environment. Such was achieved through improving airframes, air

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traffic management,finding alternative fuel sources, and improving airport operations.In
addition, creating a framework that would ensure increased coordination and cooperation of all
stakeholders would lead to a carbon neutral growth (CWMIFG, 2012).
II. TECHNOLOGY PILLAR
The growth of any kind of industry always depends on technological development. With
technology, the industry is able to develop alternative measures for getting cleaner jet fuel,
modernconcepts and advanced technologyfor the management of air traffic and Airframe
engines. As a result, there is need for Aerospace Manufacturers and Fuel Suppliers to coordinate
to find short and long-term action plans. For plans that are short, reduction of carbon and
modernization of air fleet should be the priority. The plans can be achieved through the
application of modern fuel technologies.The aviation industry is required to invest about USD
1.7 Trillion in the purchase of new fleet by 2020. Consequently, the same will lead to the
replacement of about 5300 aircrafts come 2020; a number that would represent 25% of the total
fleet in the industry. The process is known as drastic fleet modernizationand is purposed to
reduce the rate of carbon emission by about 20% (Krishnan, 2011, pg. 9).
Technological Roadmap
According to IATA’s scheme, the roadmap to technology is a task scheduled to help in the
reduction of carbon emission by about 15% per aircraft. The roadmap identifies that by
overhauling the technology of systems and engines will introduce aircrafts that produce less
carbon yet burn a lot of carbon. Such would include some of the modern forms of technology
that are currently being practiced including retrofitting of winglets. Such will also include further
technological advancements in the form of laminator flow, application of other composite

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material, and new engine architecture. Such new advancements have been identified to reduce
the emission of carbon by an extra 1.1% come 2020.However, achieving such great strides
would cost the industry a total of USD 200 Billion (Nikki, 2017).

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The introduction of Bio fuels
Regarding a full carbon life cycle,the employment of sustainable bio fuels leads to the reduction
of carbon emission up to 80%. From new and second-generation biomasses, IATA intends to
extract bio fuelswithout affecting the food crops. The bio fuels are technologically advantageous
in the form that aircraftswill not need to have major adaptations to use them (Soriano-Meier,
Garza-Reyes and Rocha-Lona, 2012). However, if the stakeholders do not have the technological
will power, it will not be possible to achieve a state of carbon neutral growth within the industry.
On the contrary, the airline industry has a reputation of achieving the impossible. Regarding the
current scenario, the annual carbon emission growth lies at 4% while passenger growth is 5%.
The presented 2% carbon emission reduction would not be possible in case the taken initiatives
did not exist. There are airlines that have already undertaken test flight using bio fuels. Figure 1
in the appendix gives some of those airlines (Porter and Pearce, 2011, pg. 20).
III. BARRIERS TO SUCCESS

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there are several forces that influenceprofitability as well as goals that are set by IATA. Such
forces include availability of substitutes and the role of governments among others. The
highlighted challenges are also associated with hindering the airline industry from making
attractive returns for growth. The current state of low profitability is because of price-dominated,
fierce rivalry brought about by new as well as alreadyestablishedcompetitors. Growth is hindered
because there are consumers that are price sensitive as well as powerful groups of suppliers that
capturethe value created by the aviation industry. In addition, substitutes to air travel make it
hard for the industry to realize fast growth. Both frequent entry and intense rivalry in the industry
are driven by the underlyingeconomics such as product features, demand profile, and the nature
of the adjustment capacity (VMOSA, 2017). Aspects of product features include perishable
product, low marginal cost per passenger cost structure, core transportation service provided by
the commodity ‘factory’, and fixed costs peravailable seat mile – that decreases with reduction in
airplane size. Demand profile aspects include demand’s high volatility and increase of individual
customer’s value concerning the frequency of connection. Finally yet importantly, the aspects of
capacity adjustmentsnature include the capacity of infrastructure, time lags,andstepwise
capacitychanges (Outsource, 2017).
Aviation’s unique challenge
In as much as the economic factors that driving the aviation industry are unique, the factors’
individual elements are not. The reason as to why other industries are performing better than the
airline industry is because of difference in strategic choices, existence of government policies,
and the behavior of suppliers (Kader, 2017).
a) Strategic choices made by the Airline industry exacerbates the problem

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Several research activities have identified the fact that the challenge is unique because of the
behavioral pattern within the industry. The existing airlines are focused on yield and volume
instead off margin. Competition is also based on network breadth and size instead of
differentiation. In addition, the industry takes a myopic view regarding capacity expansion’s
consequences. The reasons why such made choices are individually rational include the fact that
the industry leaves capacity unused, creates first move advantage, and increase cash flow’s short-
term profitability.Never the less, such choices create a market environment that suites no one. In
this case, we shall consider two examples that are the growth of activity outsourcing and the
drive towards yield management improvement (Soriano-Meier, Garza-Reyes and Rocha-Lona,
2012).
Yield Management – refers to the short-term prices management for maximizing revenue in line
with the price discrimination and the available seatmile. In simple terms, it refers to the pricing
of transportation service in terms of purchase time,bundle,and conditions of rebooking among
others. The named factors are vital in ensuring that the profitability of the airline is improved.
However, the extensive use of such factors – which is influenced by the availability of
sophisticated technology, has led to reduced profits. The truth is that such practices have
negatively affected the structure of the airline industry. Customers have often been left uncertain
if there are fair prices in the industry because of the current rate, at which prices change which
alternatively reduces transparency. Customers have thus, sorted alternative aggregator websites
in pursuit of ‘better deals’ thereby letting price to be their keyproduct feature. In addition, by
discriminating prices for similar services via bundling has made airlines to create rivalry between
themselves (MSG, 2017).

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Activity outsourcing–this is the main mechanism used in the reduction of costs in the short run.
However, the mechanism leads to negative longer-term effects on the structure of the industry. It
does so by ensuring that airlines are given less control over the value chainleading to reduced
differentiation potential in the process. Outsourcing also harmonizes the structures of cost and
service levels in the aviation industry consequently leading to reduced price competition. Last
but not least, it reduces entry barriers into the industry (Pirtea, Nicolescu and Botoc, 2009).
Registered Improvements
Circumstances within the airline industry have changed within the last four decades. Such
changes include the deregulation of major markets, the use of more efficient technology, and the
achievement of millions of new consumers who are able to afford airline prices. On top of that,
the industry has also registered a change in the role of local governments. Most governments are
in a tight fiscal position thereby constraining them to avoid helping airlines that are failing. There
are countries where the government imposes new taxes on the available airlines while others are
willing to let the market get consolidated even if the flag carrier would be lost or number of
rivals would reduce. The assumption in this case is that making the exit easier would lead to the
creation of more efficient and successful business models that would gain the market share. The
same action would also reduce aggressive capacity expansion’s incentives that rely on risk
mitigation performed by government bailouts (Price, 2011).
Another realized change is demand growth’s outlook. Currently, the costs of fuel are rising
because of temporary moderation that happened during the global economic crisis. What is likely
to follow is the increase of emission charges. In case technological improvements do not
compensate the higher underlying costs, prices will be forced to rise thereby resulting to negative

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demand consequences. Another factor that influences demand growth is infrastructural
bottlenecks. The truth is that the extension of infrastructure is not easy to finance and politically
achieve. Mature market’s slower demand growth leads to reduced incentives for capacity
expansion’s aggressiveness forcing airlines to sort other dimensionof competition. Never the
less, as the market continues to grow, a continuation of capacity expansion will still be realized
making it uncertain for the market structures likely to emerge (Ethics, 2017).
As a final note, a change in the behavior and profile of airlines has also been realized.
Fragmentation might reduce for airlines that alliance globally.In most countries, mergers among
airlines are also beginning to occur even though cross-border mergers are limited by
international agreements. There are small network airlines that are slowly becoming feeder
networks for those that are already established. In addition, domestic and international long haul
isslowly being served by different entities. In as much as it is not yet clear which models will
surviveultimately, a trend towards business models that are more differentiated already creep in
the industry. To add on that, there are some airlines that arebecoming more explicit in pursuit of
more profitability instead of unbridled growth (Grissemann and Stokburger-Sauer, 2012).
IV. RECOMMENDATION
As the stakeholders think on which necessary steps to take to achieve the set goals, there are a
few enabling factor that need to be considered. First, the industry needs to document the benefits
provided in the global economy. By doing so, local government and politicians will not take the
industry for a ride based on the primary performance to their countries’ economic development.
Apart from that, many economically successful metropolitans and cities depend on a productive
airline connection through a competitive airport. In such a case, the regulatoryenvironment is

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liberal. The industry will thus, require proving that it is a tool powerful enough to generate
economical development (Saxena, 2014).
To ensure that change takes place, the industry must be in a position where it is able to frame all
the made efforts as a campaign towards the reduction of societal costs associated with a poor
industrial structure. Everyone is concerned about the root causes and consequences of low
profitability. As a result, the industry is required to document the current industrial structure’s
societal costs (Kaplan, 2017).
Motivation is required to ensure that the goals are achieved. Therefore, documenting the
benefiting act of every stakeholder geared towards the achievement of the outlined goals would
be important. Focus should be put on service improvement, reducing congestion, increasing
economic development, and reducing environmental impact among others. Introducing new
industrial structures will ensure that some opportunities are created in the industry leading to the
improvement of profitability. Governments will also see the new industrial structure as a leeway
to economic growth(Ethical Standards, 2017).
Another recommendation is to ensure that the action agenda builds on the already created
positive trends. Such trends, as mentioned before include demand shifts and policyevolution. In
as much as such trends are strong enough to change the industrial structure, presence of an action
agenda needs to strengthen and leverage them.The industry needs to communicate the same
action agenda in one voice.The only way that the industry will mobilize action is when it has its
position and agendas clearly stated (Management, 2017).
Lastly, the industry needs to coax local governments to take the aforementioned measurements
like:

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i) Ensuring that the approach is applicable on both domestic and international aviation
ii) Giving full access to the measures created beyond the aviation industry
iii) Ensuring that measures that are punitive and do not conserve the environment are not
adopted but rather, go for economic and cost effective measures as they actually help
the environment.
iv) Setting fiscal and legal frameworks for promoting investment in alternative jet fuel
that ensure low carbon emission.
v) Going for the appropriate investments that will help in the modernization of air traffic
management
vi) Every part of airline’s supply chain need to be addressed in regulatory efforts to
create participation of all sectors in a manner that is homogenized (Competences,
2017)

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Appendix
a) Figure 1: Airlines that have undertaken flight test for the use of bio fuels

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