Emirates' $1 billion green advantage

Emirates has been a leader in the aviation sector with its green strategy and it's finding out that not only is it better for the environment, but it can also give the bottom line a massive boost.

Crikey

The second annual environmental report by the Emirates Group is evidence of the massive cost advantages airlines can get from a young fleet and an enterprise wide green action plan.

It shows that in the year to March 31, the 163 wide body jets in the Emirates fleet burned 22.5 per cent less fuel measured in terms of litres per passenger kilometres flown than the IATA global average as well as emitting more than 18 per cent less fossil sourced carbon by the same metrics.

That is a stunning saving, which Emirates credits above all to its most fuel efficient airliner, the Boeing 777-300ER – of which it had 67 in service and 84 on order by the end of the year under review.

In the same period Emirates had 21 Airbus A380s in service, with a further 69 on order. With another order for 70 high composite Airbus A350s on its books, a strong interest in a potential 777-X family, and a desire for an even larger version of the A380 also on the public record, this report is an astonishing way of looking at a global carrier that is more famous, or infamous, in the industry for leveraging the location of its Dubai hub, and the tax free policies of rulers determined to achieve economic ambitions to secure the future.

For an airline group like Qantas, which is itself highly engaged in carbon reduction initiatives, the savings Emirates posts in this financial style audited report would have been around $1 billion (although how this might be adjusted for hedging costs is unknown) over a 12 month period, which would be a phenomenal advantage to an airline under severe pressure.

But the key to the savings Emirates details, and the benefits to the environment, are inextricably linked to something Qantas, and many other carriers, cannot currently fund, which is the latest airliner technology on a large and rapidly renewed basis.

The Emirates fleet overview and its average jet age compared to the rest of the world is graphically summarised below.

When measured in terms of litres/100 passenger kilometres flown, Emirates' fuel efficiency is measured at 4.11, compared to Lufthansa on 4.2, United Continental 4.25, Finnair 4.62, and Cathay Pacific Dragonair 4.75. The IATA calculated global fleet fuel efficiency metric in the same was 5.3 litres/100 passenger kilometres flown, making Emirates 22.5 per cent more efficient than the rest of the world, on average, when it came to fuel burn.

That’s an advantage that on its own would deliver an extraordinary dividend, even if hypothetically, it was based at the end of the line, in Sydney, as Qantas often reminds us, or in Johannesburg, or Santiago.

The report reinforces the critical importance to airline finances, as well as the environment, of fuel efficient fleets. It would also add to the case that the Australian carriers could always press for a depreciation reform to assist our flag carriers to compete on a more equal footing in the world market.

This article was originally published by Crikey on June 6. Republished with permission.