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11/01/2022

Carbon Index Spotlight on Aircraft, Airlines and Lessors - December 2021

IBA has published it's updated aviation Carbon Emissions Index, ranking the best performing aircraft, airlines and lessors by CO2 emissions.

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Summary analysis

Aviation carbon emissions in the commercial aviation industry averaged 143.7 grams of CO2 per-seat-per mile in December 2021, with overall carbon intensity per seat reducing by -0.4% in December 2021 and a total reduction in carbon intensity of -2.1% YoY. 2021 proved to be a tumultuous and challenging year for an aviation sector reeling from the pandemic, with localised lockdowns and travel restrictions cropping up throughout the year. However, the industry is following a positive trend, with improving overall efficiency. Many current generation aircraft remain in storage as new generation aircraft continue to be delivered and utilised. The Boeing 737 MAX 8 and Airbus A321-200NX saw month-on-month utilisation increases of 17% and 11.5% respectively in December 2021.

 

Whilst deliveries of new generation aircraft continue, the pandemic has hampered the pace at which they can enter service in airline fleets. As the recovery begins to ramp up through 2022 and beyond, IBA expects operators will continue to reactivate dormant airline fleets as the requirement for capacity increases. This is likely to result in the global emissions figure creeping up slightly, before plateauing in the next 2-3 years as demand returns and stabilises.

 

CO2 emissions in the commercial aviation industry averaged 143.7 grams of CO2 per-seat-per mile in December 2021

*Data referenced covers 01-31 December 2021.

 

Kieran O'Brien, Partner in Management Consulting and Lead Advisory Partner in the Aviation Finance & Leasing Practice at KPMG Ireland, affirms the importance of this month's index and what it means for the future of the industry:

 

"With 2% expected annual reduction with incremental engine improvements and their gradual roll-out through the global fleet, as opposed to the 5%+ type CAGRs needed to achieve the 2050 net neutral targets. This points to the need for SAF in short to mid-term and then wider portfolio definitions long-term.

In terms of ESG and industry, we expect 2022 to bring increased scrutiny over 'greenwashing'. SEC has not released any mandatory climate risk disclosure rules, but we expect to anticipate further developments in early 2022. It is crucial any ESG strategy is underpinned by data and analytics, which is why we expect external data sources to develop significantly with ESG scoring tools and international standardisation leading the way - similar to the IBA's platform."

Aircraft efficiency spotlight

The global share of aircraft emissions remains relatively unchanged for December with a broad increase of flights growing linearly for most types, except for some newer generation narrowbodies such as the Boeing 737 MAX 200 that shows a sharp uptick in month on month utilisation in December 2021 of 27%. However, the type's overall contribution towards global emissions stands at less than 0.5%. Looking ahead, there will likely be significant evolution of the fleet emissions share, with some of the biggest losers being the Airbus A319 (in favour of the Airbus A220-300) and the Boeing 777-200ER, which is likely to be phased out faster than expected.

 

The share in emissions for the Boeing 787 family is likely to stall for at least the next six months as Boeing indicates deliveries are unlikely to resume until deep into Q1 2022. This picture will change significantly over the coming years, with the Boeing order book for the type standing at over 500 aircraft. Similarly, the Airbus A350-900 will continue to increase its emissions share, and likely surpass the Airbus A330-300 in the not too distant future. Airbus has not been hampered with the same production woes as the 787, with a total of 5 aircraft being delivered per month. This is expected to increase to 6 aircraft per month in 2023.

 

The global share of emissions remains relatively unchanged for December with a broad increase of flights growing linearly for most aircraft types

 

Lessor efficiency spotlight

Jackson Square Aviation ranked at the top of the lessor efficiency index at the close of 2021, with an average of 125 g CO2 per-seat per-mile in December 2021. This has been helped by a large portion of their portfolio consisting of Airbus A320-200neo and Boeing 737 MAX 8 aircraft at an average fleet age of just 5.7 years. However, with a relatively slim order book of just over 24 aircraft, Jackson Square Aviation may gradually slip down the ranking as more orders are fulfilled for the likes of Avolon Aerospace. Avolon have an order book exceeding 220 aircraft, consisting of a blend of new generation Boeing and Airbus narrowbodies (90.6% of orders) and widebodies (9.4%). Air Lease Corporation will experience a similar shift on an already positive efficiency figure, with over 300 aircraft currently on order, consisting of predominantly Boeing MAX jets and Airbus A220-300s.

 

Jackson Square Aviation ranked at the top of the lessor efficiency index at the close of 2021

 

Airline efficiency spotlight

December 2021 sees the exit of Air Transat and the addition of TUI Airways to our airline efficiency ranking. TUI joins the ranking largely due to an uptick in 737 MAX 8 utilisation, contributing largely towards their improvement in emissions intensity. As per our previous index release, Scoot remains high in the ranking due to a large portion of its Airbus A320-200ceo fleet remaining stored throughout 2020 and 2021. IBA expects to see Wizz Air UK and its parent company remain at the top of the rankings in the coming years as Wizz Air gradually takes delivery of more Airbus A320neo family aircraft. The table below highlights airline CO2 efficiency in the month of December 2021.

 

December 2021 sees the exit of Air Transat and the addition of TUI Airways to our airline efficiency ranking.

 

IBA Forecasts Major US Carriers' CO2 Emissions for 2025

We used the unique scenario modelling capabilities of our Carbon Emissions Calculator to forecast the future CO2 emissions of these major US carriers. This exclusive feature allows users to compare the performance of portfolios, lessors and operators to provide actionable insights on current and future fleet composition and route improvements.

 

We used the unique scenario modelling capabilities of our Carbon Emissions Calculator to forecast the future CO2 emissions of these major US carriers.

Delta Air Lines

Delta has earmarked their Boeing 717-200 and Boeing 767-300ER fleets for retirement by 2025. They've already made progress with this commitment by reducing their fleets of these types by 40% and 53% respectively. Many Delta aircraft are of older vintage and approaching the end of their useful economic life. Prime examples include the Boeing 757 fleet with an average age of 24.5 years, and the Airbus A319-100ceo fleet with an average age of 19.9 years. Whilst IBA has modelled a strong downward trend in CO2 emissions at Delta, their performance over the next decade is likely to improve even further thanks to their fleet renewal strategy. Delta's commitment to introducing the Airbus A220 and A320neo family to replace Boeing 717 and Boeing 757 types is likely to make a significant contribution.

 

American Airlines

American Airlines is also going through a fleet renewal cycle. Driven largely by the Covid-19 pandemic, numerous Airbus A330-200 & -300 aircraft have been retired from active service alongside almost 40 Boeing 737-800 aircraft. The retirement of McDonnell Douglas
MD-80, Embraer E190 and Boeing 767 types continues, and a blend of Airbus A321-200 and Boeing 757-200 aircraft are being placed into long term storage. American Airlines has a sizeable orderbook of Boeing 737 MAX 8, Boeing 787-9, and Airbus A321neo variants. Thanks to this, American Airlines can expect to see a considerable reduction in carbon intensity going forward.

 

United Airlines

United Airlines is well-placed to reduce its overall carbon intensity in the future, but has made no firm public commitments to retire older portions of its mainline fleet. As such, IBA has modelled two scenarios; one showing fleet expansion without retirements, the other showing the exit of United's stored Boeing 777-200 / ER, Boeing 757-200, Airbus
A319-100ceo and Airbus A320-200ceo types. These aircraft have a combined average age of 21.4 years. United Airlines has however committed to over 200 retirements of its United Express regional fleet by 2026, but these figures are not included within this analysis, whose purpose is to compare against other mainline carriers.

 

Southwest Airlines

Southwest Airlines has recently accelerated the retirement of its Boeing 737-700 aircraft as it prepares to take delivery of the new Boeing 737 MAX 7 jets from 2022. Southwest is making the most of being a single type operator, utilising Boeing 737 NG and Boeing 737 MAX family aircraft. IBA expects more Boeing 737-700 aircraft to gradually exit the fleet in the coming years as they are replaced by the MAX. The average age of Southwest's 429 Boeing 737-700 aircraft is 17.2 years old. Comparatively, Southwest's 200 plus Boeing 737-800 aircraft average 6.5 years-old, and are expected to remain in the fleet long-term. Many of these are aircraft fitted with the CFM56-7B27E engine, offering efficient performance when compared to early delivery 737 NG's.

 

We used the unique scenario modelling capabilities of our Carbon Emissions Calculator to forecast the future CO2 emissions of these major US carriers. This exclusive feature allows users to compare the performance of portfolios, lessors and operators to provide actionable insights on current and future fleet composition and route improvements.

 

IBA's aviation Carbon Emissions Index is powered by our Carbon Emissions Calculator, part of InsightIQ.

 

IBA's InsightIQ analysis platform flexibly illustrates multiple asset, fleet and market positions, actual and potential, to inform client choices and identify acquisition opportunities. Immediate access to crucial aircraft, engine, lease rate and fleet data eases appreciation of historic and future aircraft concentrations and operator profiles.

Sign up for a system demo

 

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