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White Paper: Sustaining aviation after recovery Part 1
Author: Gesine Varfis, Marketing Manager APSYS and Gabriel Godfrey, Product Owner – Sustainable Aircraft, APSYSSubscribe
Gesine Varfis, Marketing Manager APSYS and Gabriel Godfrey, Product Owner – Sustainable Aircraft, APSYS explain why the aviation recovery will be digital – sustainable and green.
The past year or more has been a difficult time for the global aviation sector with billions of dollars in losses. The crisis we have faced has been unprecedented and, while everybody is now talking about getting vaccinations so that there being some light at the end of the tunnel, there are still some challenging times ahead: we are all considering how we can tackle the future together. One thing is clear, the ways we do business in that future will have to change quite a bit. That is what we want to focus on in this article.
AVIATION AT THE CROSSROADS
Let’s first consider that statement. We are currently facing the COVID-19 crisis from which we’ll most likely be able to easily go back to business if the vaccination program goes to plan. However, this is not the only crisis that we’ll be facing. This crisis has shown us how vulnerable our society as well as our environment is in terms of inter-relations and interactions. That brings us back to the most likely next crisis to face which will become increasingly urgent in the future. The big challenge after we have dealt with COVID will be greenhouse gases: so, this is the main thing we will need address in the near future.
Looking at what the World Economic Forum is projecting in their reports based on ICAO forecasts, we’re looking at up to 300 to 700 times more carbon emissions in the future. That means we need to take this crisis more seriously than ever. So, what will be the next steps going forward? We will have to work together for a sustainable future which, in turn, means more and deeper collaborations than we are used to. There will be steps forward which will give us a guideline but we cannot only rely on governments and institutions to guide us through this: we are all responsible for getting integrated.
The first step is carbon neutrality in 2035 (figure 1) and the next step forward will be in 2050 reducing industrial carbon emissions by 50 percent. And there will be many more steps to follow.
LOOKING TO THE FUTURE
So, where do we stand as an industry? Let’s look at the World Economic Forum Global Risk Report (figure 2), different color coding that has been used to identify different groups of events and risks such as economic, environmental, geopolitical, societal and technical reasons.
What can be seen is that, over time, we’re getting increasingly aware of green issues, which means that everybody needs to take into account the impact of environment matters for the future. More importantly, it will not go away. One interesting thing is that addressing climate concerns is moving on from Greenpeace, where people were climbing industrial buildings to hang flags and draw attention to climate change and the need for behavioral change. It is not only Greenpeace now calling for change but McKinsey saying that it’s now a must to seek ways of making sustainability a competitive advantage (figure 3).
If we look at the report from the World Economic Forum it notes that, “The Bank of England has warned that corporations in incumbent ‘dirty’ industries can expect to go bankrupt if they fail to understand the risk of their business models becoming
obsolete as investment flees to net zero emission alternatives.” For the aviation sector, this means that we need a green recovery and a sustainable recovery. In future, financing for what we need will only be forthcoming if we can prove we have sustainable aviation and aerospace industries being involved.
The answer will be in a holistic approach which means we need to look at design, production, operations, maintenance and decommissioning. We will not only have zero emission aircraft: we will need to design and produce something that can be flown, something we’ll need to develop together. We’ll need to consider how to integrate this new approach with future mobility; how will the air travel product of the future look as well as how will the factory of the future and the hangar of the future look? It will be a huge effort but the formula, like much else in life, is quite simple. It is safety and security (this is what our industry stands for) times sustainability to create trust, what we currently need and something this crisis has shown us; we need trust to bring people back to flying. We need stakeholders and customers trusting us that we’ll move forward in a green way; that we’ll transform to a green industry. Markets expect sustainability in all industries and aviation can lead in that because we are very much a part of making these changes and it is our focus. We have done quite a lot and there is more going on: but it still requires this holistic approach.
We can talk, for instance, about what an aircraft producer (OEM) has to have done and has to be looking at such as batteries, electric propulsion, different and new materials. The production of the aircraft is definitely an OEM matter and they’re taking care of that. However, if you look at the factory of the future, this is not all; if technologies change, that has to go into operations and be taken into account. A lot has already been done on the flight operations side: saving fuel, eTowing, eTaxi, weight reductions. At Lufthansa, for instance, trollies have been built using more and different plastics. A lot has been done to make real savings; we have emissions trading as well as the Open Skies in Europe. In maintenance there have also been quite a few developments along with decommissioning, storage and recycling. We all need to work towards a whole life-cycle, end-to-end approach.
IDEAS AND APPROACHES
It isn’t possible to focus on everything in this article, that would need a lot more space, but let’s take out a few ideas (figure 4).
The important thing about figure 4 is that this is a huge challenge at which we have to look, but every change in the design and the production of the aircraft needs technically to make sure that it is a sustainable aircraft, a safe aircraft and a maintainable aircraft. This is a huge effort and we’ll all need to go through the changes, which is why we encourage readers to make sure they are part of it.
What I’ve taken out to discuss and to show readers why we really need to change a lot, is safe aviation fuels (figure 5).
The worldwide aviation industry consumes about 278bn liters of jet fuel annually. Safe Aviation Fuels (SAF) first test flight was in 2008 with the first commercial flight in 2011. There have been fuel reductions, there have been IT systems developed to manage fuel, there are IATA guidelines all of which have brought about big reduction but still SAF in 2020 represented just 0.015 percent of total fuel consumed by the industry. Also, ICAO has predicted 8bn liters of fuel per year being produced in a bio-environmental manner. There are now a lot of modern aircraft and, looking from 1950 to today, there have been huge fuel efficiency gains which amount to aircraft being 80 percent more fuel efficient now than in 1950. There is also Carbon offsetting with CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) plus individual airlines are planning their own programs for offsetting carbon generated by their customers’ journeys such as easyJet on all fuel and British Airways on domestic journeys.
Worth highlighting is a Lufthansa example that has generated interest; if we look at how they ask customers to voluntarily offset their carbon emissions – there is no imposition on customers. All this gives a good picture of what is going on. If we look at a trip from Frankfurt to Istanbul for €300 the customer can choose between planting trees and offsetting their carbon emissions over twenty years for about €5 or over ten years for about €70 and if it is done now and the customer goes for bio-fuels to offset the trip that means 44 percent off the ticket price.
What this means is that all these good initiatives are not good enough. There needs to be a technical change and we will all need to be engaged with this. We’ll also need to get the public onboard. It can’t be the public saying, ‘Oh. It’s the airline industry; they’ll need to take care of it.’ The public needs to be on board for the industry to be able to change how we travel, to make a seamless and green travel chain possible and investors need to invest into future mobility together. McKinsey has done quite an interesting survey in 2019 (figure 6).
The survey result shows that the younger generations look at climate change in a different way. A lot of them are really worried about what it happening and that would be likely to have increased if the survey were done today in 2021. A lot of people also believe that aviation needs to go forward to deal with climate change and expect it to do so. However, what is really striking in the figure is, and bearing in mind the previous example of Frankfurt Istanbul, people in the survey were asked if they’d be happy to pay some US$20 more for their trip to offset their carbon emissions for a US$1,000 flight which is a bit longer than Frankfurt Istanbul. We’re not talking about just US$20; we’re talking about a lot of money to offset with bio-fuels which means, again, we need to look into the possibility of using technology here (figure 7).
As we’ve already mentioned, there have been a lot of fuel saving initiatives. IATA started with their fuel efficiency program in 2004, which readers will remember very well, and there have been quite a few steps forward: however, this was more driven by the fact that fuel prices were very high so it was about cost savings. If we talk about sustainability, quite a bit has already been done in terms of fuel saving but we will need more than that. We’ll need the commitment, we’ll need the sustainability reports which airlines are currently doing, we’ll need projects which airlines are also doing: digitalization is an enabler and, again, biofuels. This is defining sustainable excellence as it is today.
New capabilities and technologies
As also mentioned before, this is not good enough. So, what will the future look like: if we look at 2035 and beyond, what do we need? We need new green technology and that needs to engage us all. It needs to engage IATA, ICAO, as well as other industries and OEMs. We need to learn from and to help each other; we need research and development industries and we all need to work together, plus we need to engage with the regulators from the beginning to make sure that aircraft are certified and safe. Of course, we need to look at the cost side as well; sustainability will have a cost both for the customer and for us as an industry. People might not fly so often anymore because of the prices. We need to look at green activity-based costing, how much will it cost, and we need to do analytics and simulations of where we’ll end up and how much it will cost.
The new normal in aviation will be a lot different from what we know (figure 8). The path to this future will not be predictable; we will not be able to predict exactly what will be the outcome in ten or twenty years. We do not even know how successful we’ll be in developing and producing a zero-emission aircraft – it’s a technology with which we have not yet engaged.
In the future, we’ll need to be very much more agile and to look at sustainability as a risk and impact situation; we need to simulate those risks, see the outcome and be careful not to invest too heavily into something that does not make sense for the industry. And we need to take people with us: a very important thing, technology will be the key. COVID and Climate Change will be moving us forward. The industry will stay with its current fleet of modern aircraft (old modern aircraft) for a while and they will become more fuel efficient – OEMs are working hard on programs to ensure that we achieve further reductions in fuel consumption in the future. However, there will ultimately be a need to phase out these aircraft and find new ways through new products, zero-emission aircraft.
New ways of doing business
At the same time, we will need to change our ways of doing business and this is where digitalization comes in: it will change the way we work. Many readers will currently be experiencing a lot of home-working in a wholly different way we have been working. This is a good example of how we will be changing the ways we will do business in the future. There will be a revolution and transition to a low-carbon economy by 2030, and companies need to get engaged. If we look at investment reports and risk management, we need also to take sustainability into account.
In figure 9 we can see what is currently in place with a lot of companies but let’s look at the things in which we will need to be further engaged.
What we currently have is that many companies position themselves, their strategies and decisions in terms of the UN Sustainable Development Goals. This is transferred in their strategy and their organization; they take it into account for operations, commercial, HR, finance, and management. What is really striking is how many companies empower sustainability at C-level. At Lufthansa, for example, at the C-level, there are Customer, IT and Corporate Responsibility positions; easyJet has a Sustainability Director; Air France and KLM have VPs for Sustainability and Compliance; Delta Airlines has a Chief Sustainability Officer. That these are at C-level shows the importance and leverage that sustainability needs in the future.
So, incorporating it into management, there are environmental management systems in place: it’s comparable to what we know from IOSA (IATA Operational Safety Audit) where there are safety management systems in place as well. So, it’s very much alive; it’s just focusing on the environment.
The next step is the Airline Sustainability Reporting Handbook by IATA with guidelines, which is where IATA is really good; they offer a lot of guidelines for IOSA and suchlike as well as guidelines on how to do airline reporting for sustainability, which will be audited. That means that airlines need to engage a third party who will look at how sustainable and trustworthy their implementation really is. Also, IATA offers support in this as well as using a company.
What is pretty new compared to what has been done before is that we need to take sustainability as well as climate change and crises into account for global risk management. It’s not only something that is nice to have in terms of fuel management, we need to look at sustainability excellence which, if we look at other industries, they are already taking that into account. ???? for example , they have a sustainability task force team taking care of all of the changes they need to take into account, checking what research and development is currently in place which is what the aviation industry also needs: we need to engage in IATA sustainability innovation forums, the Environmental Advice Council and through other forums and institutions. We need to really exchange, to find ways together and help each other to get ahead with the future.
Importantly, we need innovations and they need to be integrated; we need IT suggestion systems; we need to look at market developments and to establish benchmarking plus, most important, we need the awareness within companies, an awareness that knows ‘we want to be green so what can we all do within the company to make us greener in the future.’
One of the other things that we need to talk about in the sector is transparency. It is one thing to do an annual report about sustainability; to get all the data together, to get it stamped and audited and then you’re off the hook again but this is not how it works. As with safety management systems, it’s an ongoing process (figure 10).
You can only manage what you can measure which means that we need to look at sustainability and the impact we have from the climate side, how much waste we produce, what do we recycle, what kind of hazard resources we use… we need to follow this up and one of the things we have been looking into is business process management.
When we look at performance management indicators at a certain core process, we think that security and safety need to be taken into account, what drives these key performance indicators of that process, and to take key crisis management indicators into account as well as warning indicators. Also, as part of the definition of sustainability, what are the sources as well as what is the causal fact and what is the impact of sustainability. For an example of a key sustainability indicator, businesses need to ask where and in which process are greenhouse gases produced, what is the impact, what is the cost on this indicator and how can we change this?
Performance follow-up can not only be on an audit level once a year, it needs to be a continuous process. We need to change, we need to change the processes, we need to determine which process is doing the most harm because that is where action has to be taken.
OTHER GREEN INITIATIVES
Coming back to the idea that technology is the driving force of change: one thing that companies and employees can do in terms of savings and to save the climate in terms of recycling and going paperless – there is still not a paperless aircraft. There are still airlines working with nice print-outs of the passenger list taken on to the aircraft when that should be digital by now. This is not good enough: we need to look at new technologies (figure 11). So, what are we facing? These are the things that readers will need to discuss.
We will need to consider jet fuel as a no-go propellant in the future which means that we need to consider what are the alternatives. There are green fuels, there is Hydrogen (H2) but we’ll need green hydrogen which is different from hydrogen produced based on fossil fuels, we need renewable energy, we need batteries: these are the options. Whether to go for Hydrogen, Hybrid, Electric? Will it be possible to continue with current turbine and piston engines? What will be the solutions? Importantly, none of us knows the answers today? We’ll need to have open minds, practice open innovation, collaboration and we’ll need to test the right scenarios in combination with recycling, new materials and surface treatments and more.
What will be the outcome if H2 is taken into the system or if the choice is for batteries? We’ll need to all be on board for this to look at what we design, what happens to production, what cost effects it has, what happens in operations ands what it means for operations, and maintenance and decommissioning. This amounts to a big challenge ahead for us all requiring us to engage with these future technologies.
Using Hydrogen to power aircraft introduces a big challenge which is storage, the particular risks associated with Hydrogen, managing refueling and the distribution of the fuel in the aircraft. A lot of these challenges have not yet been addressed and that is what will be happening over the next decade to find out how these challenges can be overcome, how Hydrogen can be used to power aircraft.
This is something that will engage everyone in aviation. Refueling at the gate or at the fueling point: how will that be done? Airports and their capabilities will need to be included in the discussion. It will be necessary to devise how airports can serve both hydrogen and jet fuel aircraft; how can H2 be stored in a way that does not represent a fire risk and, if an incident does happen, what are the procedures for dealing with it? What sort of tank structure and where will it be located; how does all this affect aerostructures and inspections? This takes into account regulators as well as those who are flying the aircraft, who are working on the ground in operations and we’ll need to answer all of these questions in collaboration, working together.
Looking from the point of view of the comfort of traveling, these things are not so important. However, the capacity available might be different in the future. There are a lot of questions that we’d love to discuss and we, at APSYS, look forward to being one of the drivers moving these changes forward.
LIGHT AT THE END OF THE TUNNEL
Returning to whether we have some light at the end of the tunnel and is it a luxury to be green or not: this is something that readers will need to consider for themselves but we’ll be happy to discuss it with you. However, my experience with this industry is that we have always been able to find ways out of crises (figure 13). For instance, when I was located in Berlin Airport, a competitive company was flying in who needed spare parts and so we were helping them which is a different and distinguishing feature of our industry.
Again, in Berlin, Lufthansa and Air France were working together, forming one company flying to West Berlin with Atlas as a joint aircraft maintenance program. One that all readers will know, Amadeus reservation system was a collaboration between different airlines – Air France, Lufthansa, Scandinavian Airlines and Iberia – working together and defining the reservations system, which went to an IPO in 1999.
We have a culture of cooperation and collaboration which is not the case in many other industries. We have alliances, a lot of good international standards, a lot of good regulators: there is nothing to stop us from making all this work in the future. It’s time to unleash our new ways of doing business and, again, we’d be happy to discuss this with readers to drive these changes together. Sustainability is one of the hottest topics we’re looking at currently: it matters and we can drive and shape it together to make a better future for aviation and aerospace.
At APSYS Gesine is responsible for Airline and MRO Marketing including customer relations, ensuring the digital transformation in close cooperation with clients. Gesine worked as CIO and COO advisor for Aeroflot Russian Airlines engaged in the upgrading of Aeroflot’s OPS systems. Prior to Aeroflot she was a Management Consultant for Lufthansa Consulting focusing on cost cutting, operational excellence, performance management, Operations Control and Hub Control Center re-engineering and IT speciation, verification and implementation projects.
APSYS is specialized in value creation through technical, human and operational risks control. It offers innovative consulting and software solutions with a high level scientific and technological integration. Designing even more reliable aircraft, securing autonomous vehicles, anticipating the nuclear installation obsolescence or protecting industrial assets against cyber-attacks are the challenges for which APSYS employees’ expertise contributes on a daily basis.