What was the professional path that led you to join the International Air Transport Association?
After three decades of having occupied various economist positions, I felt the drive to shift my career to something that could help improve the state of the world. Aviation has the unique capability of doing that, so in January 2022 I took the chance. In January 2023, I took the helm of the newly merged Sustainability & Economics division, set up to better position the industry to address its biggest challenge ever. Besides having the opportunity to bring a positive contribution to the world, I am also very happy to be able to incarnate an example that speaks towards women's inclusion in the aviation space and against workplace ageism.
What is the core mission of IATA?
IATA’s mission is to represent, lead, and serve the airline industry. We work together with our airline members to shape the future growth of a safe, secure, and sustainable air transport industry that connects and enriches our world. Part of this work is to represent our airline members in their interactions with policymakers around the world. In addition, in the sustainability & economics division, we analyze every aspect of air transportation to help our industry reach our Net Zero by 2050 goal, but we also work on standards and creating a more sustainable industry for the future.
There seem to be significant ticket price increases presently, as well as overall instability in the industry. When or how can these issues be solved?
Looking at price developments from the COVID-19 crisis, prices appear to have climbed steeply. Yet, compared to the 2019 levels, the differences are not so dire.
In 2023, airlines are expected to return to some degree of net profitability, with a 1.2% net profit margin, which is a major achievement. First, it was achieved at a time of significant economic uncertainties. And second, it follows the deepest losses in aviation’s history ($183.3 billion of net losses for 2020-2022 (inclusive) for an average net profit margin of -11.3% over that period). However, it should be noted that a 1.2% net profit means an average of $2.2 per passenger, which is less than a cup of coffee in many places across the world.
Covering our costs, after the 2022 timeframe when they grew astronomically, is no easy feat. The weight of the energy component for airlines is now almost 30%. Compared to crude oil, there has been a much greater price increase for jet fuel over the same period of time.
Where are we today, in terms of production and adoption, when it comes to sustainable aviation fuel (SAF)?
SAF is a drop-in fuel, that can be blended with traditional jet fuel in proportion of 50%for now, and 100% in the coming years. Today, the HEFA process that uses vegetable oil is the main pathway to produce SAF, but other pathways are coming to the market, taking advantage of a diversity of feedstock.
In 2022, the volume of SAF produced was 0,1% of what we consume. Differently put, this whole market is simply non-existent at scale. In order to create it, we need to incentivize building more production facilities and help airlines access SAF and claim the environmental benefits of their purchases. At the moment, SAF is two to four times more expensive than jet fuel In addition, given that we have no palpable price information to be able to analyze costs, prices vary based on the feedstocks used to manufacture SAF.
However, every drop of SAF ever produced was purchased and used by the airline industry value chain. And in 2022, SAF production tripled to 300 million liters from 100 million liters in 2021. To date, IATA counts over 130 relevant renewable fuel projects announced by more than 85 producers across 30 countries, and the industry could achieve 30 billion liters of SAF production by 2030.
To reach our net zero goal, in our highest-end calculations, our annual investment needs to amount to a third of the money that goes into oil and gas exploration and production, so what remains to be done is to convince the policy side to help steer those funds into our direction.
Besides SAF, what other solutions can be implemented in the near term to decarbonize the industry?
The airspace available for civil aviation is about a third of the entire airspace that exists in the world. This usually leads to traffic jams, which have gotten worse due to increased military activity linked to the war in Ukraine. Most countries are extremely protective of their airspace, which in turn translates into airplanes not being able to fly the straightest and shortest route, thus using more fuel and being more inefficient overall. A better use of airspace could go a long way in terms of using resources more sustainably. Together with smoother air traffic control operations, we could go as far as to reduce our emissions by 10% without any additional technological innovations.
What does the aviation industry need from policymakers today?
Primarily, we would need policymakers to make investment propositions look more attractive to the players willing to dive in the delicate startup environment of SAF production. The support that we are expecting does not necessarily need to be in the form of subsidies: guarantees for loans and research and development opportunities for early investors would be perfectly viable options. In terms of the money distribution that we might require, we would need one-third of the money coming from public sources and two-thirds from private sources, with most of the public funds needing to come as soon as possible.
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