Fri 27 July 2012 – Integrating environmental thinking into the business strategy has been adopted as a key company-wide project by Cathay Pacific’s new Chief Executive, John Slosar, who took over last year from Tony Tyler, now Director-General of IATA. The airline group’s latest Sustainable Development Report just published says the company faces challenges on its sustainability journey and projected increases in its emissions cannot be left unchecked. In 2011, CO2 emissions by Cathay Pacific and Dragonair increased by 4.5 per cent to around 15.85 million tonnes, which the airline says is in line with its operational growth. Fuel and CO2 efficiency performance across the fleet improved on the previous year on an available tonne kilometre (ATK) basis but declined when measured by revenue tonne kilometres (RTKs) due to lower load factors in a difficult year for the group. Cathay is in the process of renewing its long-range passenger fleet with 50 new Boeing 777-300ERs and 32 Airbus A350s expected by 2019.
“Sustainability is indeed a journey, and we are committed to the long haul,” says a joint introduction by Slosar and Cathay Pacific Chairman Christopher Pratt to the 154-page report. “We may not have found the most effective solutions to all of our challenges today, but we are striving to find them. In the meantime, we will continue to plan for the future and do the things we need to do to be successful in the long term. We realise that this path is not an easy one, but we believe it is the right one.”
The Cathay Pacific and Dragonair fleet achieved a fuel efficiency of 191 grammes of fuel per ATK in 2011, compared to 197 in 2010, which under the report’s benchmarking is a 11.6% improvement since 1998. Measured in grammes per RTK, the 2011 figure was 261 compared to 249 in 2010, a 19.8% improvement since 1998 but less than the 23.4% improvement achieved in 2010. As the volume of passengers and cargo carried in 2011 (RTKs) grew less than the capacity added by Cathay (ATKs), explains the report, there was an improvement in ATK CO2 efficiency but not per RTK.
“We face significant sustainability challenges and we are open and transparent about these in the latest Sustainable Development Report,” said Mark Watson, Cathay Pacific’s Head of Environmental Affairs. “We are now firmly on the journey towards achieving real and tangible improvements in our environmental, social and economic performance and we will continue to put sustainability at the forefront of our business decision-making.”
The Cathay fleet, which currently averages just over 10 years old per aircraft, is undergoing an extensive fleet modernisation programme and from now to the end of the decade the airline will be taking delivery of over 90 aircraft, which are expected to show fuel efficiency improvements of 17-28% to the aircraft these will replace. As well as new 777-300ERs and A350-900s and -1000s joining the passenger fleet, 747-8Fs and 777-200Fs will be added to cargo operations.
Cathay is looking to outside authorities to provide added operational route efficiency improvements such as flexible entry/exit points implementation in China for European flights and Reduced Vertical Separation Minimum (RVSM) implementation in Russia, Afghanistan, Mongolia and the CIS.
Sustainable aviation biofuels are also seen as a promising route to reduced emissions over the longer term and last year Cathay hired a dedicated biofuels manager as part of efforts to develop and drive a biofuels strategy over the next five years. The airline is a member of the industry coalition Sustainable Aviation Fuel Users Group (SAFUG) and has also been involved with the formation of SAFUG Asia to support the development of lower carbon renewable fuels for commercial use in the region. It assisted Air China, in which Cathay has a stake, in China’s first biofuel flight in October 2011.
In the report, Cathay says that while it supports emissions trading as one of the interim solutions to reduce aviation’s emissions, it does not support the imposition of the EU ETS to carriers based outside of Europe as the scheme distorts the market, creates additional bureaucracy and cost, and more significantly, does not guarantee revenues will be directed into funding climate change initiatives. The airline adds that it remains in full compliance with the regulation and says it is inevitable the scheme’s costs will be passed on to passengers. “To an extent, this depends on carbon prices, and it is under assessment,” says the report.
In 2007, Cathay became the first Asian airline to launch a carbon offset programme and reports that there was a 10% increase in the amount of CO2 offset by passengers in 2011 through the ‘FLY greener’ scheme. However, just 3,392 tonnes of CO2 were offset by passengers out of the near 16 million tonnes of CO2 emitted by Cathay Pacific and Dragonair. Through staff travel, a further 14,575 tonnes were offset.
Cathay is stepping up efforts to improve take-up by making the FLY greener website available on mobile phones and improving the FLY greener online booking touch point for customers. In June 2011, it launched a FLY greener partnership with Swire Hotels and added a new benefit for members of the airline’s Marco Polo.
The airline says it is working with the Hong Kong Civil Aviation Department on mitigating noise impacts around Hong Kong’s airport and its noise footprint should be reduced still further as new aircraft on order are expected to be 15% quieter than those they replace.
The report reveals that noise infringement warnings received were up slightly at Frankfurt and Manchester airports during 2011 but down at Brussels. This, it says, was due to operational delays leading to later departures at night and exceeding a more stringent threshold. Fines relating to infringements at London Heathrow came down substantially as a consequence of arranging quieter aircraft such as the 777-300ERs instead of 747-400s.
The airline also reports that as part of an overall risk assessment process, it has specifically identified issues and events related to climate change that could affect the company’s business. These ranged from severe disruptions brought about by a changing climate, pandemics, resource scarcity and impacts to supply chains.
“While this work is still ongoing, our initial findings show that we have some of the contingency plans in place as part of dealing with weather-related disruptions; but also that more work needs to be done to understand the full impact of climate change to our business,” it says. “We are exploring the use of scenario planning tools and methodologies to assist us in developing our understanding of climate change.”
Cathay says that it is using a number of different channels to communicate sustainable development issues to its customers and the challenges the airline industry faces in addressing its environmental impacts, especially climate change. This is commonly done through articles and news items in its inflight magazines but the airline has also produced a video for inflight viewing on Cathay’s sustainability programmes, covering, for example, fuel efficiency performance, fleet modernisation, and waste and resource use.
For the fourth consecutive year, the 2011 report has been prepared according to the Global Report Initiative (GRI) Guidelines, at Application Level A+. This level reflects the highest possible amount of economic, environmental and social indicators and management information has been addressed in the report, and that the internationally accepted benchmark has been externally verified. The report has also been pre-scrutinised by an independent Stakeholder Review Committee comprised of sustainability experts.
“Our commitment to sustainability remains a vital part of our vision to be the world’s best airline,” said Cathay’s Mark Watson.
Cathay Pacific’s Sustainable Development Report 2011
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