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Aviation – COVID Recovery: The aviation industry’s emergence from COVID: An environmental turning point?

  • Market Insight 17 February 2022 17 February 2022
  • Asia Pacific

Aviation – COVID Recovery: The aviation industry’s emergence from COVID: An environmental turning point?

The Australian aviation industry commences 2022 with a sense of guarded optimism. Two years of public restrictions and border closures through the COVID-19 pandemic have taken an obviously heavy social and economic toll. While there have been no certainties through the pandemic, there is hope that this year will be one of steady recovery, boosted by the seeming shift away from widespread lockdowns and the full reopening of Australia’s international border scheduled for late February 2022.

In our “Aviation – COVID Recovery” article series, Clyde & Co’s Australian Aviation team outlines some of the key issues and trends in the local market as the industry embarks on this recovery path. The first article looks at the increasing pressure on the aviation industry to reduce environmental impacts and how that is currently playing out in Australia from a policy perspective.

The next three articles look at the recovery path for the domestic airline industry, aviation claim trends, and the continued development of Australia’s space capabilities.

COVID has had an enormous impact on the aviation industry. ICAO reports that, relative to 2019, passenger numbers were down by 60% in 2020 and 49% in 2021, and are expected to be down again by 26-31% in 2022.

With the unprecedented disruption to global aviation has come increased scrutiny of the industry’s contribution to CO2 emissions. The environmental footprint of aviation is well-recognised and as the industry recovers, there is pressure for policy to direct a return to more sustainable operations. This pressure has been heightened by governments’ willingness to invest heavily in financial aid for airlines during the pandemic. There have been calls, for example, for the grant of bailouts to be conditional upon airlines meeting net-zero emissions by 2050.

Some states and regions have recently adopted national/regional plans to reduce the environmental impact of aviation.

In November 2021, the US released its Aviation Climate Action Plan, setting out its plan to achieve net zero emissions from the US aviation sector by 2050. It involves increased production of sustainable aviation fuel (SAF), improving aircraft and engine design to reduce fuel consumption, and increasing operations efficiency during flight and on the ground. 

This was preceded in June 2021 by the EU’s announcement of a raft of climate change proposals to facilitate its aim of carbon neutrality by 2050, which, for aviation, involve lifting tax exemptions on fossil fuels for intra-EU flights and an obligation on airlines to use part SAF.

In Australia, the disruption to the aviation industry from COVID has been longer lasting and more pronounced than the global average, with international passenger numbers down from 2019 by 61% in 2020 and by a huge 97.5% in 2021. The consistent closure of national borders served a particularly hard blow to aviation.

Despite, or perhaps because of, COVID bringing aviation almost to a standstill in the country, there has been little national discussion on the industry’s environmental impact. Whereas globally, discussion centred on how many million tonnes of emissions were saved from being released as a result of aircraft being grounded, domestically in Australia, the focus has been more on getting aircraft back in the sky.

In contrast to the US and Europe, no national Australian plan has been released to reduce aviation’s carbon contributions. Australia is participating in ICAO’s carbon-offsetting scheme, CORSIA, but overall, its approach to mitigating aviation emissions is conservative.

With its new international commitment to achieving net zero emissions by 2050, Australia will hopefully follow other states in providing a clear pathway for aviation to meet its responsibilities in fulfilling this greater objective. Notwithstanding the absence of a national response plan, airlines will be expected to step up independently to meet their responsibilities. There is external pressure on the aviation industry to evolve to reduce its carbon footprint as well as recognition from within of the benefits, both reputationally and financially. While the industry might be developing at different rates across the globe, there is no doubt that airlines will be required to adapt significantly to meet environmental obligations and expectations in the near and mid-term future.

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