The Coronavirus Impact on Aviation’s Climate Action

Grounded Boeing 737 MAX aircraft at Boeing Field in Seattle, Washington (credit: SounderBruce)

The COVID-19 crisis is plunging commercial aviation into the deepest contraction of its history. On April 22, 2019, 2,254,209 passengers passed through TSA security at U.S. airports. On April 22, 2020, that number was 98,968, a 95.6 percent decline. Worldwide, more than 16,000 commercial jets are parked, 62 percent of the global fleet. In the United States, airlines had grounded 3,003 planes, 49 percent of the nation’s fleet as of April 27th. Combining domestic and international travel from April 20–26, U.S. airlines had a load factor (percentage of seats occupied) of 17 percent compared to 80 percent during the same period last year.¹

Congress included substantial assistance for the airline industry in the CARES Act. The legislation contains $32 billion in grants to support payrolls, with the following requirements: no involuntary layoffs or furloughs before October 1, 2020; collective bargaining agreements must be unchanged; no corporate stock purchases or dividend payments through the end of September 2021; executive compensation will be limited for company officers making more than $425,000 per year; and minimum service requirements for destinations and frequency are included in the bill based on each carrier’s pre-COVID-19 schedule. Essential Air Service Requirements are maintained. In addition to the payroll support provisions, the CARES Act provides $29 billion in loans and loan guarantees for air carriers and supporting businesses engaged in services such as inspection, maintenance and overhaul for the airlines. The requirements for these loans are the same as those for the payroll protection provisions, with the addition that the Treasury acquires non-voting warrants or equity interests in the company in exchange for the loans or loan guarantees.²

Although not as severe as the current contraction, 9-11 was another shock to the industry and provides a historical perspective for the recovery. Following the terrorist attacks, passenger air travel required three years to reach pre-9-11 levels, and capacity (seats) did not reach August 2001 numbers until July 2005. While long-term prospects for growth of the industry are strong, a full recovery to pre-corona crisis volume and growth rates will likely require widespread availability and distribution of a COVID-19 vaccine, and an economic recovery as well.

The coronavirus crisis also has implications for commercial aviation’s impact on climate change that goes beyond the near-term emission reductions of cancelled flights and grounded aircraft. Efficiency upgrades to the fleet and significant expansion in the use of sustainable aviation fuels could be delayed. Technology advances in propulsion and airframe design have accounted for most of the improvements in fuel conservation and reduction in emissions since the 1950s. NASA programs in basic and applied research, and Federal Aviation Administration technology development partnerships with academia and businesses engaged in aircraft production, are in progress and have the potential to significantly lower CO2 and NOx emissions in new generation aircraft. Many older, less efficient airplanes that are parked as part of the contraction will not be returned to service. However, much of the industry will likely defer acquiring new aircraft containing technology improvements until demand is stronger, solvency of the carriers is assured, and the price of jet fuel exerts pressure to add fuel-saving evolutionary technologies to the fleet.

It may take years for robust demand for new aircraft to recover. This year’s aircraft orders for Boeing are not encouraging: 196 orders cancelled—four times the number of planes ordered—and 160 aircraft orders deferred.³ Aviation analyst Richard Aboulafia expects a net total of 1,000 cancellations this year for Boeing and Airbus combined, compared to 681 net orders last year.

Revolutionary propulsion advancements, including variations of electrification and more efficient airframe designs, have a longer time horizon for deployment—2035 and beyond. Assuming the industry is restored to pre-coronavirus size and growth, these revolutionary technologies will mature and contribute to a lower carbon footprint for the industry as older aircraft are removed from service.

Broader use of sustainable aviation fuels (SAF) is another important component of the industry’s strategy to lower its climate impact. Unfortunately, initiatives to develop and begin using biofuels with life cycle CO2 emissions that can be up to 80 percent less carbon intensive than fossil-based jet fuel will likely be delayed. Before the coronavirus pandemic, a major barrier to the rapid establishment of a SAF industry was the significantly higher costs of SAF compared to conventional jet fuel. With oil prices recently falling below zero and still very low, and jet fuel demand in the first quarter 47 percent below last year’s first quarter, jet fuel prices fell more than 65 percent by the April 20^th close. The investments required to transition aviation to a biofueled industry are unlikely to materialize until commercial aviation recovers and conventional jet fuel prices increase.

Author: Jeff Overton