Magoosh GRE

Your role is to evaluate the significant progress and barriers to achieving one of these pillars. Based on iata’s four pillar strategy

| February 2, 2017

Abstract

The International Air Transport Association (IATA) has the difficult task of creating a sustainable and long term agenda that enables the aviation authority to develop a set or rules and regulations that not only supports the global aviation authority, but also deals with the growing concerns in relation to the environmental impact. As part of this, the governments of the United Nations came together to agree on the course of action as part of the 38th Assembly of the United Nations International Civil Aviation Organisation, where a cohesive agreement was put in place to tackle climate changes by the aviation industry. This commitment has had a dramatic impact on the airline industry and has targeted a variety of different aspects of the industry, in order to put in place targets and requirements to conform with and guidelines to assist in this process (International Civil Aviation Organisation, 2006).

Pillars and Economic Measures Overview

The IATA accounts for 240 member airlines and is therefore relatively widespread and can at least be seen as a means of creating a co-ordinated effort, without one country being at a disadvantage (. As part of this initiative, there were several widespread industry goals to achieve, in the medium to long term. One of these is to improve fuel efficiency by approximately 1.5%, every year up to 2020. Secondly, there was the aim o f capping CO2 emissions from 2020 and to cut the CO2 emissions in half by the year 2050 (International Climate Change Taskforce 2005).

As background to the four pillars which make up the areas of proposed improvement is the recognition that air transport accounts for around 2% of the manmade emissions of CO2, across the globe; this therefore shows the importance of the aviation industry. Emissions in fact grew in 2012 by 1.4%, but this could be largely attributed to the 2.7% capacity increase, when combined with efficiency savings. The purpose of this paper is to look at the pillars very briefly, before focusing on one of these pillars and considering the impact that this has had on the aviation industry. Consideration will be given to the pillar under analysis and, through the use of a PESTLE analysis, the impact on the industry will then be looked at with a view to identifying how this can be improved for all parties, in the future.

As part of the agenda for change, four pillars were identified that needed to be targeted in the long run. These were technology, operations, infrastructure and economic measures. For the purposes of the analysis here, the economic measures will be looked at in conjunction with understanding the challenges faced by the aviation industry, in order to meet with these economic measures, but also to retain a commercially viable offering, in keeping with the pressures on the economy, as a whole.

The other measures such as infrastructure, technology and operations will all have a direct impact on the industry, for example, the governments are required to consider the better approach to structuring the aviation industry, so that it is easier to create efficiencies. This could include the relocation of airports, or the storage associated with commercial airlines, so as to reduce the amount of trade required to these sites. For some companies, this presents a real opportunity, as they are able to gain access to new routes and increased efficiencies, but for others, it may be a challenge when it comes to redirecting routes or being able to maintain its budget approach, by virtue of the airport routes (nternational Civil Aviation Organisation 2004).

The issue here, however, is in relation to the economic measures and restrictions that are placed on the industry. This is recognised as being an approach that may be necessary as a result of a failure in one of the three other pillars. The economic measures are therefore seen as measures of last resort, where it is necessary for the industry to put in place restrictions that are operable across the entire industry and create a co-ordinated approach that is cost effective (Hartzell  2006). This would mean that airlines would only be accountable once, but would be required to comply with these central standards.

PESTLE Analysis (Political Economic, Social, Technological, Environmental and Legal)

In order to consider this pillar further, as well as the potential barriers to its implementation, a PESTLE analysis of the industry will be undertaken, with specific reference to the challenges now being presented as a result of the economic measures. This will offer a real understanding of the reasons why the measures might fail. This will ultimately then allow for possible solutions to be ascertained and put forward for the future.

Political

There is a great deal of political pressure on the aviation industry to conform (and be seen to conform) with these international requirements. Individual companies within the aviation industry are required to ensure that they keep records, make efforts to comply and are able to accurately state their position and plans to reduce their environmental impact (T&E/CAN-Europe 2006). Governments, as they have signed up to the agreement, are now also putting in place their own requirements for those within the aviation industry, such as the need to report on CO2 emissions and their carbon footprints, as part of their annual report, again placing political pressures on the company itself. Furthermore, the political pressure on the government in question is reflected in the need for the overall structure to change. As part of this, however, there are incentives being offered including grants to purchase new more efficient aircrafts and the ability to gain rewards for those organisations that are particularly efficient environmentally. Despite this, there is no one overall coherent situation which presents a real challenge for the airline industry, in terms of planning for the future (Jowett,2005).

Economic

The airline industry is facing a substantial economic challenge, aside from that attached to the four pillars of climate change. With more families facing financial pressures, there is a likely reduction in the amount of travel for leisure purposes and an increasing desire for families to consider cheaper alternatives, or at least to look for cheaper options, such as budget airlines or less popular routes. Alongside this, there have been challenges to the bottom line, due to increasing fuel costs and the threat of fines from the Environment Agency, if they are unable to comply with carbon emission limits. Furthermore, other governmental requirements have been placed on the industry in relation to the need to have additional security and whilst this is not directly limited to the environmental measures, it is another indication of the way in which the government is impacting and restricting the economic freedom of the industry (The Observer 2005).

Social

Families are becoming considerably more widespread, with regular foreign holidays becoming increasingly popular. This and an increasing global approach to the sale of goods and products also increase the demand for cost effective transport. This is potentially in direct conflict with the demands being placed on organisations to ensure that they comply with environmental standards. On the whole, however, it is suggested that the public in general will support the agenda of increasing the interest in environmental impact, thus providing an opportunity for companies to use this as a selling point to the public, particularly if they exceed the standards being set (Lee 2004) .

Technological

This is a pillar in itself, showing a recognition that technology provides real opportunities within the airline industry, both to create overall efficiencies, but also to deal with the environmental concerns that arise currently. The technology force is seen to be two fold. Technology can be used to create efficiencies, for example, to plan routes and to determine the most appropriate way of providing the end service (The Guardian 2006). Automation and factors such as checking in passengers all offer efficiency saving options, but the main issue here is that technology allows for issues such as carbon emissions to be monitored more actively and this can then be used to manage the progress of a company and as a means of looking for improvements for the future (Graham 2000).

Environmental

The very essence of the issues being considered here is the increasing demands being placed on all industries to consider the environmental impact that they are having, both locally and globally. The airline industry is a particularly vast, due to the heavy environmental impact that it has, on a global level, and as such it is then necessary to comply with the standards agreed by the various different governments, during the recent IATA conference (Owen and Lee 2006).

Having an enforced standard is therefore going to place a burden on the airline industries, although also potentially offers opportunities, as the governments look at ways of creating incentives to match the targets being placed on the industry to improve its position and also to use this as a means of gaining a good PR story and being seen to be environmentally conscious.

Legal

Legal requirements relating to environmental performance are becoming increasingly stringent, in the UK, with the government now looking to enforce certain behaviours on the industry. Other areas of legal scrutiny are also increasing the pressure on the industry; however, for the purposes of this analysis, it is noted that the main concern is the legal requirement on companies to report their status on their environmental capability and also to ensure that they remain aware of the future demands, so that investment can be made, as and when, rather than being a substantial financial burden, at a point in the future (Green Skies Alliances 2006).

Any failures in this area could result in costly and time consuming legal battles and may ultimately result in the fining of the company by agencies such as the Environment Agency. 

Barriers and Possible Solutions

By looking at the issues above and the focus that is now being shown by the IATA on economic measures, as well as the impact that this is having on the airline industry, as a whole, there are some obvious barriers to these measures being successful. Firstly, there is the need to identify that, whilst there has been a co-operative approach to the climate change agenda, there is no one coherent system in place. This creates difficulties for both individual governments when it comes to creating a set of rules and regulations that are compliant with the overall standards, but are also relevant to the individual country. A potential solution to this barrier would be the need to offer greater flexibility to the individual jurisdictions to aim towards the overall goals, but without being too prescriptive in their approach (Trucost  2004).

Secondly, a real barrier that is being faced is the fact that the airline industry is facing a variety of challenges, as it currently stands and therefore adding pressures to this is not going to work well with the industry, in terms of gaining acceptance. It is suggested, therefore, that although there need to be fines and restrictions put in place, a greater emphasis also needs to be put on the incentives and encouragement of the airline industry to behave in a certain way; for example, by allowing those companies which exceed their standards to gain a financial benefit, or by offering grants when the companies are considering making environmentally friendly improvements (Sewill 2003).

Finally, it is suggested that one of the man barriers is that companies simply do not see a benefit being derived and therefore environmental restrictions are seen as being very negative to their current bottom line. A way of combating this would therefore be to assist companies in deriving a benefit from these restrictions; for example, by offering a grading that the company can then publicise and use as part of its marketing. The consumer public, as a whole, supports the idea of becoming more environmentally friendly and, as such, a method whereby the airline industry can gain a positive branding from complying with standards will be a way of offering an incentive and gaining more positive support, rather than being viewed as something that simply must be complied with.

References

Graham A (2000) Demand for leisure travel and limits to growth. Journal of Air Transport Management 6, pp109–118.

Green Skies Alliance (10/7/06) Leaked Government report sets out alarming growth in air travel emissions. Pressrelease.

Hartzell J (Aug 2006) Carbon offsets. Internal Paper, Ethical Property Company, Oxford.

International Civil Aviation Organisation (Feb 2004) Operational opportunities to minimise fuel use and reduce emissions. ICAO Circular 303-AN/176.

International Civil Aviation Organisation (Mar 2006) ATM-related environmental activities.Working paper ALLPIRG/5-WP/21.

International Climate Change Taskforce (Jan 2005) Meeting the climate challenge: Recommendations of the International Climate Change Taskforce. IPPR, London.

Jowett, K. (Nov 2005) Flights of fancy over aircraft pollution. Article in Transport Times.

Lee D (2004) The science of aviation induced climate change. Proceedings of the UK Energy Research Centre, ‘Workable metrics for the EU emissions trading scheme’.Lee D (2006

Owen B and Lee D (Mar 2006) Allocation of international aviation emissions from scheduled air traffic – future cases, 20052050 (Report 3). Manchester Metropolitan University Centre for Air Transport and the Environment, Final report to DEFRA Global Atmosphere Division,

Sewill B (Feb 2003) The Hidden Cost of Flying, Aviation Environment Federation, London.

T&E/CAN-Europe (2006) Clearing the air: the myth and reality of aviation and climate change. T&E 06/2, Brussels.

The Guardian (27/1/06) Passengers abandon northern flights for Virgin’s high-speed west coast tilting Pendolinos.

The Guardian (22/2/06) Most Britons willing to pay green taxes to save the environment. Report based on a poll 17–19 Feb 2006.

The Observer (26/6/05) Britain backs curb on cheap flights. Report based on a poll 10–12 June 2005.

Trucost (Mar 2004) Emissions trading and European Aviation – the effects of incorporating aviation into the EU Emissions Trading Scheme, London

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