Sat, Apr 22, 2023 page9

• Cheap flights have become a distant reality for air travel

  Airlines are facing an expensive and challenging few decades ahead as climate compliance laws become stricter

  • By Lara Williams / Bloomberg Opinion
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  Jetting off to the Mediterranean this summer? I hope you got a good deal, because cheap flights are becoming increasingly hard to find.

  You probably had an inkling that the era of absurdly cheap short-haul flights in Europe was coming to an end. After all, according to travel search engine Kayak, summer flights between the UK and the continent are currently one-third more expensive than last year.

  Two new reports make it clear that this is not just temporary turbulence.

  It is the new reality for flying as airlines face a huge decarbonization challenge and tightening climate-compliance laws.

  The first headwind stems from two big changes in the EU Emissions Trading System. Airlines must have enough emissions allowances to cover every tonne of carbon dioxide released into the atmosphere on flights starting and ending in the European Economic Area, the UK and Switzerland.

  Right now, they get about half of those allowances for free, but that deal comes to an end in 2026, as the share of allowances they must pay starts to rise from next year. That is effectively going to double their carbon costs over just three years.

  The unit price of carbon emissions has also soared, topping 100 euros (US$109.50) for the first time in late February, and it does not seem to be on its way back down. A report by Bernstein transport analyst Alex Irving puts the resulting cost from these changes for European airlines at about 5 billion euros in 2027.

  That is just the thin end of the wedge. Over the next three decades, aviation must transform itself from a polluting industry — planes are responsible for 2.5 percent of global carbon emissions — to a net zero one. Under Destination 2050, the European sector’s plan to reduce emissions, it plans to achieve that by investing in future aircraft and infrastructure, making operations more efficient, and using alternative fuels and carbon-removal technologies.

  A report by research groups SEO Amsterdam Economics and the Royal Netherlands Aerospace Centre, commissioned by airline industry bodies, has put the cost of reaching net zero by 2050 at a whopping 820 billion euros.

  Both reports conclude that the sector cannot absorb these costs itself. The changes to the EU Emissions Trading System alone will slash the operating profit of the continent’s six largest point-to-point airlines (Ryanair Holdings PLC, EasyJet PLC, Wizz Air Holdings PLC, Vueling, Eurowings and Transavia) by an estimated 77 percent.

  That means ticket prices must rise, which in turn means that demand destruction is inevitable.

  “If it were possible to charge more without spoiling demand, airlines would have already been doing so,” Irving said.

  Demand growth is a touchy subject for airlines, as a recent battle over proposed flight caps between the Dutch government and Amsterdam’s Schiphol Airport illustrated.

  The forecasts are strong: The International Air Transport Association suggested that passenger numbers would nearly double to just under 8 billion by 2040 from 2017 levels. Time will tell if rising ticket prices dampen that, but the question remains whether growth is even compatible with ambitions for carbon-neutrality.

  The answer might be hard to swallow. Decarbonizing flying is hard enough without the extra passengers. A briefing from the Royal Society, for example, outlined that even meeting existing UK aviation demand with biofuels would require about half of the country’s agricultural land.

  Fewer flights is, naturally, the easiest way to slice carbon emissions, and so a demand drop would come with its own climate benefits. The aviation industry’s report calculates that, in 2050, the drop in demand from raising prices to pay for sustainable airplane fuel would reduce emissions by 12 percent, and economic measures — such as emissions-trading obligations and carbon dioxide removal investments — would lead to a further 2 percent reduction, compared with a business-as-usual scenario.

  Still, there is something sad about waving goodbye to the low prices that made globetrotting accessible to millions of people. Especially as those who take the most flights are also most able to swallow the extra costs.

  In the UK, those in the top 10 percent of earners use far more energy flying than the poorest 20 percent overall. The introduction of a frequent flier levy, as has been suggested by climate campaign groups, might help address that inequality and create a new funding stream for decarbonizing the sector — although it would be extremely difficult to implement.

  Perhaps it is worth remembering that there are other ways to get around Europe. The Eurostar rail service on Thursday celebrated the fifth anniversary of its London-Amsterdam route with a claim that it has saved more than 83,000 tonnes of carbon being released into the atmosphere in that period.

  Perhaps as short-haul flights become more expensive, traveling by rail might become more enticing — and accessible.

  There are several unknowns when it comes to decarbonizing aviation. Much of the technology the sector is expecting to use, such as electric or hydrogen-fueled aircraft, is not ready for takeoff yet.

  One thing is for certain, though: It is going to be a very expensive, challenging few decades.

  Lara Williams is a Bloomberg Opinion columnist covering climate change.

  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners
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