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Airlines struggle to get carbon offsetters onboard but one carrier may have the answer

Airlines struggle to get carbon offsetters onboard but one carrier may have the answer | Thomson Airways,carbon offsetting

Thomson Airways is the UK launch customer for the Boeing 787 Dreamliner (graphic: Boeing)

Tue 12 July 2011 - A survey by the ENDS Report, the UK website and journal for environment business and policy, of leading UK and European airlines has revealed low numbers of commercial passengers offsetting their flights’ carbon emissions. Most airlines achieve commercial passenger offsetting rates of below one per cent and others refuse to disclose take-up rates. Others, including BMI and Ryanair, still do not offer passengers the option. However, major holiday package company TUI Travel, which operates Thomson Airways, believes it has the answer by charging a small flat fee on booking that is matched by the firm and requires customers to opt out if they do not wish to contribute. This article by Clem Perry is reproduced with the kind permission of ENDS.

 

Among the conventional airlines, British Airways (BA) engaged the highest percentage of commercial passengers, with 3-4% choosing to offset emissions. A BA spokesperson said that in 2009, this represented 126,474 passengers and 45,941 tonnes of CO2 emissions. The airline would not disclose newer figures.

 

EasyJet, the second best performer, said the percentage of offsetting passengers was “in the low single digits”. Along with most of the other airlines, it refused to disclose precise figures.

 

Take-up rates appear to be most determined by whether airlines offer carbon offsets at the point of ticket purchase.

 

Katherine Dellantonio, Head of Sales at MyClimate, the offsetting provider for Virgin, Lufthansa and SAS, explained that when companies fail to do this, buy-in is typically “well below 1%”.

 

In July 2007, a House of Commons Environmental Audit Select Committee report urged the UK government to make ‘point of purchase’ provision compulsory. However, the government did not comply and four years on just two of the ten airlines surveyed have this provision: BA and easyJet.

 

In an early adoption of ‘nudge’ thinking, the MPs on the committee also recommended that to increase offsetting among flyers, the default offsetting option when buying a ticket should be ‘yes’. To avoid paying the offset, passengers must actively select an opt-out.

 

The only firm to have done this is the world’s leading leisure travel company TUI Travel, which is by far the best performer in terms of passenger engagement. TUI owns Thomson Airways, the UK’s largest charter carrier, and is the only UK FTSE 100-listed travel firm. Its customers pay a flat £1 ($1.60) fee towards a “world care fund” and the firm matches it. About 70% of customers opt not to pay, but the 30% who do outweigh the percentage achieved by other airlines.

 

James Whittingham, TUI Travel’s Group Environment Manager, said: “The fund is positioned as a contribution to renewable and clean energy projects that are designed to mitigate the impacts of the whole holiday. We don’t market it strictly as an offset.

 

“Customers are told about specific projects… when they buy their holidays from us.” Carbon offsetting can be “esoteric”, he added, but TUI’s approach made it “a bit more meaningful and accessible”.

 

Since 2007, £7 million ($11m) has gone into the fund, with a further £7 million pledged by 2014. Eighty per cent is invested directly into carbon offsets, with JPMorgan Climate Care as the provider. The rest goes to the Travel Foundation, set up by the travel industry in 2004 to address broader sustainability concerns.

 

 

Conflicting interests

 

MyClimate’s Dellantonio suggested airlines have conflicting interests when it comes to encouraging offsetting. It meant getting passengers “to engage with the harmful effects of flying,” she said, which they were bound to find difficult.

 

But a spokeswoman for Lufthansa denied this, citing “technical booking system challenges” as the reason for not offering offsetting alongside tickets. 

 

Martin Porsgaard, Director of Environment and Sustainability at SAS, made the same claim, adding that by this autumn, the airline will have “overcome these difficulties”.

 

In January 2012, the aviation sector will come under the EU Emissions Trading Scheme (EU ETS). Airlines with flights landing or taking off from EU airports will have to surrender carbon allowances equal to the CO2 emissions of each flight.

 

There are big differences in how airlines expect the EU ETS to affect their voluntary offsetting programmes. While some anticipate little impact, BA, easyJet, Virgin and SAS are reviewing their plans.

 

A BA spokeswoman said that UK passengers could be paying for the environmental impact of their flight three times: through voluntary offsets, the EU ETS and the UK’s air passenger duty (APD), which the UK Treasury is consulting on.

 

A spokesman for the International Air Transport Association (IATA), which manages an offsetting programme for numerous airlines, echoed this: “There is evidence passengers may be more reluctant to voluntarily offset where they feel they are already being hit with an environmental tax... The [UK] government has in the past presented APD in this way.”

 

The 2007 Select Committee Report concluded “the industry must do more to mitigate emissions from its planes and to encourage uptake of offsets among its customers as a matter of priority.” For commercial passengers, this has clearly not happened in the case of offset uptake.

 

 

Growing appetite

 

Jonathan Shopley, Managing Director of offset provider the CarbonNeutral Company, said most offsetting was done by corporations covering employee business travel. Here, “appetite not only remains unabated, but is growing”.

 

For non-business passengers, who mostly buy online, there is “a fierce focus on price,” he added. “This means effective engagement on any other level requires a lot of effort and commitment. Accordingly, take-up figures among the public will rarely exceed 1-3% – the environmentally committed ‘deep greens’.”

 

But corporations are far bigger and more sophisticated offset buyers, he says. “We work with 500 corporates across 32 countries... more than 50% use offsets to cover their [business travel] emissions.”  

 

As for the EU ETS’s impact, Shopley said that because most emissions would not be addressed initially (82% of airline emission allowances will be free in 2012), many corporations would continue to voluntarily offset their ‘scope three’ impacts.

 

Robert Stevens, Vice President of JPMorgan’s Climate Care, suggested the TUI model may be the way to boost take-up among commercial flyers. “By making it a relatively small ask, marketed in a meaningful way that people can easily understand, this might be the post-EU ETS model for other airlines,” he said.

 

 

*Commercial passengers  **Air France and KLM merged in 2004 but continue to fly under their

distinct brand names

 

 

This article appeared in the May 2011 edition of the ENDS Report. © Haymarket Business Media Ltd.



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