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SUSTAINABILITY IN AVIATION
AUTHORED BY:
MR. NATTAPOL WATTANA ID 5531210128
MR. TANADE SIRINUMAS ID 5531210150
AVIATION BUSINESS MANAGEMENT
SCHOOL OF MANAGEMENT
A FINAL REPORT
SUBMITTED IN PARTIAL FULFILLEMNT OF THE REQUIREMENTS OF
1210327 THAI AVIATION BUSINESS IN GLOBAL AVIATION INDUSTRY
COURSE
MAE FAH LUANG UNIVERSITY
FIRST SEMESTER, 2014
SUSTAINABILITY IN AVIATION
AUTHORED BY:
MR. NATTAPOL WATTANA ID 5531210128
MR. TANADE SIRINUMAS ID 5531210150
AVIATION BUSINESS MANAGEMENT
SCHOOL OF MANAGEMENT
A FINAL REPORT
SUBMITTED IN PARTIAL FULFILLEMNT OF THE REQUIREMENTS OF
1210327 THAI AVIATION BUSINESS IN GLOBAL AVIATION INDUSTRY
COURSE
MAE FAH LUANG UNIVERSITY
FIRST SEMESTER, 2014
Contents
List of Figures ………………………………………………………………………… ii
Acknowledgements ……………………………………………………………………. iii
Declaration …………………………………………………………………………… iv
Executive Summary …………………………………………………………………… v
Part 1: Introduction to Sustainability in Business ………………………………… 1
Triple Bottom Line: Key to Success Sustainability ………………………….. 1
Triple Bottom Line Measurement ……………………………………………. 2
Seven Drivers to Impact Sustainability Revolution ………………………….. 3
Part 2: The Importance of Sustainability to Aviation Business …………………... 5
Environmental Aspect ………………………………………………………... 5
Social Aspect ………………………………………………………………… 6
Economic Aspect …………………………………………………………….. 7
Part 3: Aviation Business Development and Improvement to Achieve
the Sustainable Concept …………………………………………………….. 8
Applying Corporate Sustainability Management to Develop Aviation Business 8
Step 1: Strategy: Internal Modification, External Alignment, and
Communication Measures …………………………………………… 8
Step 2: Organization ………………………………………………………….
9
Step 3: Integration / Implementation ………………………………………… 10
Step 4: Communication ……………………………………………………… 11
Overall Framework ………………………………………………………….. 12
Part 4: Implementation that Lead to the Sustainable Aviation Used at Present
13
Environmental Aspect ……………………………………………………….. 13
Social Aspect ………………………………………………………………… 14
Economic Aspect …………………………………………………………….. 14
References …………………………………………………………………………….. 15
i
List of Figures
Figures
1.1 Triple Bottom Line ……………………………………………………………... 1
1.2 Seven Sustainability Revolutions ………………………………………………. 3
2.1 Environmental and noise sustainability issues for airlines along flight operations 5
3.1 Selecting and assessing corporate strategic options ……………………………. 8
3.2 Examples of contradictory goals ………………………………………………... 9
3.3 Responsibility for sustainability management ………………………………….. 9
3.4 Corporate sustainability management framework …………………………….... 12
ii
Acknowledgements
We would like to thank our lecturer, Dr. Suthep Nimsai, for his beneficial lecture document
"Sustainable Demand Chain Management" and suggestion. His document and suggestion
gave the directions to plan the outline of this report. For everything you have done for us, Dr.
Nimsai, we thank you.
We would also like to acknowledge the very significant contribution to this report of the
following person and organizations for pleasant and hospitable giving us permission to use
their information:
Achim Gebel
Airbus
Air Transport Action Group (ATAG)
Ayse Kucuk Yilmaz
International Civil Aviation Organization (ICAO)
International Symposium on Sustainable Aviation
John Elkington
John Whitelegg
McKinsey & Company
Sustainable Aviation
The Gold Standard Foundation
Timothy F. Slaper
Transportation Research Board of the National Academies
Triant G. Flouris
United Nations (UN)
iii
Declaration
We, Mr.Nattapol Wattana and Mr.Tanade Sirinumas being members of this project group,
hereby declare that this project report entitled "Sustainability in Aviation" is written by us,
and is our own effort, and has not been submitted before for any degree to any other
University. All data and information from these other sources presented in this report are
correct and have been duly referenced and acknowledged.
Mr.Nattapol Wattana
Mr.Tanade Sirinumas
iv
Executive Summary
Sustainability is becoming worldwide concern of every business especially of aviation
business. Sustainability is how the company can manage all of 3 aspects (economic, social
and environmental aspects) to encourage its corporate sustainability management.
In the present, air transport is the major cause of CO2 emission problem or greenhouse which
can lead the airline to lose its reputation and to collapse. Thus it has to improve the problems
which are made by air transport to reduce the negative impact to its stakeholders in order to
achieve the sustainability.
To develop aviation business to achieve the sustainable concept, aviation business applies the
corporate sustainability management which is stated about strategy, organization, integration/
implementation and communication.
Nowadays, the aviation business implement some action plan to achieve the sustainability in
3 aspects include: environmental, social and economic, for example, designs new effective
aircraft that uses less fuel and decreases emission, uses biofuel, invests in research and
development, and provides employee welfare.
v
Part 1: Introduction to Sustainability in Business
Many companies are manipulating sustainability in order to not only focus on their fame but
also improve processes, strive for growth, and add value to their companies.
Plenty of companies are actively combining sustainability principles and their businesses
model together, and they are doing so by setting the goal that concern for reputation
management— for instance, reducing energy used, progressing green products, and treating
and stimulating employees, all of these help companies catch value through return on capital
and outgrowth. From the survey of executive related to sustainability, the results show that a
positive impact to their companies in short- and long-term value is led by sustainability
programs (McKinsey & Company, 2011).
In the past decade, it was difficult to measure the companies’ sustainable growth (Slaper,
2011, p. 4), however, currently; the way to achieve the sustainability in Business is to manage
3 perspectives or “Triple Bottom Line” that are shown in the following topics.
Triple Bottom Line: Key to Success Sustainability
The Triple Bottom Line is a performance that mixes three dimensions for measuring
sustainable business: financial, social and environmental. It differs from the old form that
there are only social and ecological - or environmental - which can be difficult to measure.
The Triple Bottom Line dimensions are also known as the three Ps: profits, people and planet
(Slaper, 2011, p. 4). It is represented in the figure 1.1.
From the figure 1.1, The Triple Bottom Line is not just focusing on the economic value that
they enlarge, but also on the social and environmental value that they enlarge or waste
(Elkington, 2004, p. 3).
1
Triple Bottom Line Measurement
There is no standard to calculate or measure each of the three Triple Bottom Line categories.
This can be the strength of this method because they can adapt to the needs of dissimilar
entities (nonprofits or profits), dissimilar projects or policies (educational programs or
infrastructure investment) or dissimilar geographical scope (a city, region or country). So the
factors, which drive many of the decisions about what measures are appropriate to be used,
are level of the entity, type of policy and the geographic boundary. Many of traditional
sustainability measure are shown below.
Economic Measures
Economic variables are linked with the bottom line and the flow of money (revenue or
expense, taxes, business diversity factors, employment and business climate factors). The
examples in the list below are specific examples:
Personal revenue
Career growth
Employment distribution by sector
Percentage of firms in each sector
Environmental Measures
Environmental variables should show gauges of natural resources and reflect capability to
survive of the organization. It could cover air and water quality, energy use, land cover, solid
and toxic refuse, and natural resources. Ideally, organizations realize the effects a project or
policy would have on the area by reason of having long-range trends available for each of the
environmental variables. These are some specific examples:
Electricity use
Fossil fuel use
Solid waste management
Hazardous waste management
Social Measures
Social variables should relate to the society including the measurements of education, welfare
and health, life quality, and social capital. Some small examples are shown in the list below:
Unemployment rate
Female labor force participation rate
Median household income
Poverty
Percentage of population with a certificate
Violent crimes per capita
2
However, the group of suitable measures can vary as the geographic scope and the nature of
the project (Slaper, 2011, p. 5). Moreover, trends that affect sustainability could be changed
by Seven Drivers that are represented in the following section.
Seven Drivers to Impact Sustainability Revolution
This section can show you how business can be sustainable in the present, in the other word,
which ones are the factor can make business survive in long-term.
With its dependence on seven revolutions, the sustainable business can change to be more
complex. Recently, it starts on a global cultural revolution.
1. Markets
Competition, which mostly through the market, can drive this revolution. In the future,
business may compete in markets that are more open to competition in both domestic and
international. Moreover, Customers and the financial markets are factors that challenge many
companies about aspects of their overall Triple Bottom Line obligations and result.
2. Values
The global change in values of human and society drives revolution 2. In the present, most
people take an attention to value that they are served. Thus, when customers change, the
businesses have to adapt themselves to survive.
3. Transparency
Increasing of international disclosure is the main motivation of this revolution. When the
stakeholders need more information for what the company is going to do or planning to do,
the many traditional form (conceal information) is collapse. Since they want the information
to compare or rank the performance of each company. So the sustainable business has to be
clearer to receive the sustainability.
3
4. Life-cycle Technology
This revolution is driven by the shift of the companies from focusing on the attraction of their
product at the point of sale to emphasize on their performance of recycling when it cannot
work. This method focuses on the life cycle of technologies or products such as battery,
jumbo jet or technology in the aviation industry.
5. Partners
This revolution was accelerated by the relationship among companies that change from
seeing themselves as the enemy to be the partners instead. They present new form of
relationship to the competitor when they found out that the competitor has some new key to
create the value to the customers. Furthermore, this factor is important for the sustainable
business because only one company cannot survive in the long term.
6. Time
Time is very important factor in the business. As the time-base business, there are many
techniques to compete with the opponent such as ‘Just In Time’ method. Recently, the
companies need to build stronger ‘long time’ dimension to business planning in order to be
sustainable.
7. Corporate Governance
The better systems of corporate governance, the more chance business can success in
sustainable operating. It is clear that increasing proportion of corporate sustainability issues
develop not only around procedure and product design, but also around the value chains they
serve to customers (Elkington, 2004, pp. 3-6).
In the aviation business, how it is important to concern about sustainability. It is represented
in the following section.
4
Part 2: The Importance of Sustainability to Aviation Business
The idea of sustainability intends to contemplate the environmental and social aspects along
with economic aspect, and improve these aspects to accomplish (Gebel, 2003).
Flouris and Yilmaz (2011) suggested that in order to get ahead, the businesses should realize
the threat that they face. The best practices in the future may be not as same as today's best
practices. Nowadays, the investors do not make investment decisions by consider only the
company's financial efficiency, but they also examine the environmental and social issues of
that company. So the aviation business must concern the sustainable issue.
To achieve the sustainability goals, the companies should not concern only economic, but
they should participate in solving the social and environmental problems that they created.
International Symposium on Sustainable Aviation (2014) claimed that aviation is regarded as
the main cause of environmental problems and regarded as the key cause of sustainability;
however, the sustainable aviation, which is the long run tactics, provides the creative
solutions to deal with the problem of aviation industry.
2.1 Environmental Aspect
A report by Gebel (2003), many airlines have an obvious picture of the environment aspects
of their company. The environmental aspects are related to the core of business, and the
aviation operation: fuel burning, emissions and noise. (Figure 2.1)
5
According to International Civil Aviation Organization (2001), aviation cause many kinds of
environmental problems, that are aircraft engine emissions on ground, aircraft noise, and
other local problems at airport, including the problem from expansion and construction the
airport and the related infrastructure, soil and water pollution, and wastes management.
Approximately two percents of carbon dioxide (CO2) emissions which human produced are
form the global aviation industry (Air Transport Action Group, 2014). Therefore, the aviation
industry and government take on responsibility to solve this worst pollution problem. Gebel
(2003) reported that some checklists were established, for example, environmental
management systems (EMAS, ISO). The most efficient solution at this time is the emissions
trading. There is also other measure that plays a pivotal role to solve this problem
(Sustainable Aviation, 2005).
2.1.1 Ground Level Air Emission
The emissions from the aircraft engines fuel burning are like the emissions from fossil fuel
burning. They lead to increasing environmental concerns in the matter of global impact and
the influence on the quality of local air (International Civil Aviation Organization, 2001).
Moreover, airports are the important air pollution producer and increase the level of
environmental pollutant which harms the people health. In addition, the pollutions are also
from the bus station, taxi destination, distribution centers in the airport, so airport should be
accountable for pollution emission of ground level (Whitelegg, 2000).
2.1.2 Aircraft Noise
Whitelegg (2000) said that not only annoy, noise also damages people's health and wildlife, it
leads to high cost to abate and mitigate noise. Even if there is the quieter aircraft and engine
innovation, the aircraft noise is remained as the serious concern in many areas. The problems
will be worse because of the rapidly growth of aviation. The problems will be worse because
of the rapidly growth of aviation. Neither industry response nor governmental response can
warrant diminution of noise to safe WHO levels.
2.2 Social Aspect
Transportation Research Board of the National Academies (2008) claimed that Social
sustainability is dominant factor of airports' relationship with their surrounding community. It
purposes to enhance interactions between airports and their stakeholders consist of
employees, citizen in surrounding area, airlines and passengers. Furthermore, it includes the
welfare of passengers and employees, employee procedures and practices, public awareness
and education, sustainable transportation, accessibility, and stakeholder relationships.
Nevertheless, most interviewed airlines of Gebel's research considered the sustainability
management in environmental issue mainly and debated only social aspect that related to
environmental aspect, for instance, noise (Gebel, 2003).
6
2.2.1 Passenger Welfare
The satisfaction of passenger with the company plays a key role in increasing of passenger
(Transportation Research Board of The National Academies, 2008).
2.2.2 Employee Welfare
The companies which succeed to maintain the best employees will benefit from the
employees’ various creativity and innovation. To maintain the employees, they have to
provide welfare, for example, safe workplace, attractive wage, and training (Transportation
Research Board of The National Academies, 2008).
2.2.3 Stakeholder Relationships
The airports can perform better while retaining nice relationship with their stakeholders
because they will understand their impact, solve the problems, and avoid the potential trouble
(Transportation Research Board of The National Academies, 2008).
2.3 Economic Aspect
Transportation Research Board of The National Academies (2008) claimed that the aviation
industry requires huge amount of capital investment to operate own business. So the policy
makers have to set the long term policy. However reliable and successful economic efficiency
is not the main factor of the business performance but long rang sustainability of the
company.
Samples of the economic sustainability consist of local and responsible economic practices,
valuing sustainability.
2.3.1 Local and Responsible Economic Practices
There are many benefits of local and eco-responsible procurement with related to social and
environmental benefits, such as decreasing unemployment rate, using recycled materials
(Transportation Research Board of The National Academies, 2008).
2.3.2 Valuing Sustainability
Economic appraisement guarantees that company chose the best choice to meet the aim,
consider the benefits and costs, unpredictability and risks, and other limitation
(Transportation Research Board of The National Academies, 2008).
7
Part 3: Aviation Business Development and Improvement to
Achieve the Sustainable Concept
Applying Corporate Sustainability Management to Develop Aviation Business
The value creation in the aviation industry was impacted by sustainability aspects which may
fundamentally define the progress of airlines, based on business model, the size of company
and the organizational culture. In the following, corporate sustainability management which
is used in the aviation business is stated about strategy, organization, integration/
implementation and communication.
Step 1: Strategy
: Internal Modification, External Alignment, and Communication Measures
The major question: Which factual or touchable improvements in environmental and social
sustainability can be depended on a strong economic reason?
The main objective of corporate sustainability management is can achieve social and
environmental improvement by concerning the economic profit. A requirement of this should
be possible improvement options, for example, investment in noise control or reduce fuel
consumption by changing procedures. Moreover, the economic assessment has to be
appropriate for the overall strategy of the organization. This is represented in the figure 3.1.
Improvement Options
The first step is to scan the compliance issue and existing initiative. It is important
requirement for overall picture and can discover any mistake. The improvement options can
be classified into internal improvement (Factors about social and environmental issue
which occur within the company e.g. fleet management or taxing procedure), external
alignment (Factors which occur in the whole aviation industry e.g. doing a research about
noise pollution or supporting the new technology aircraft) and communication.
8
Decision Making About Management of
Contradictory Goal
Sometime, the airline company has to
manage the contradictory goal which it is
hard to manage. For example, The faster
aircraft start and climb, the lower effect
from noise pollution to local resident, but it
is higher the fuel consumption.
Some airline decides by, during the night,
taking off with full power engine in order to
be as quiet as possible, but, during the day,
slower climbing to reduce the fuel
consumption.
Step 2: Organization
The major question: Who is responsible for the manipulation of sustainability issues in
airlines business?
Only some airline has the explicit position that linked to ‘sustainability’, for example, British
Airways: Sustainable business unit. On the other hand, most airlines do not have the overall
structure that covers both social and environmental sustainability issues. Nonetheless, many
airline companies can conclude responsibility for corporate sustainability management as
follows: They divided into two groups; firstly, direct responsibility is the department that
has responsibility for, internally, promoting the social and environmental improvement which
based on economic rationale of the company, ethic and value. Externally, they present the
company’s performance and success of their social and environmental improvement into
public to gain reputation. Secondly, indirect support is every decision is made by the other
department managers by concerning about environmental and social aspects.
9
The Key Feature of Manager to Be Successful in Corporate Sustainability Management
A motivation of manager is to ensure what the stakeholders understanding and early
awareness about the external factors which can affect the organization. Furthermore, the
lateral thinking (think out-of-box) can be driven by the outside perspective in order to realize
the business risks and opportunities. Nonetheless, the hardest part of the managers is to adapt
or apply to the management or organizational culture.
Step 3: Integration / Implementation
The major question: How can sustainability improvements be implemented and sent out the
company?
Sustainability managers are concerned in the decision making process rather than the
integration management and they always focus on sustainability management specific
between hard aspects (visible changes), soft aspects (mental and behavioral change) and the
controlling and evaluating of completion.
Hard aspects
Hard aspects are the implementation process of the strategy. The managers should
incorporate everything they planned into the general business plan to make sure that they
implement in the standard management procedures. Moreover, they realize that in the
operative level, there are a few people concern about the environmental standard. They have
an attention only for their clear, brief and integrated guidelines.
Soft aspects
The process to change the attitude and perception of managers is the prerequisite for
implementation of hard aspects. They have to give some motivation such as giving the
employees award to stimulate them or information which is the key to drive motivation
through training, or road show.
Control and Monitoring
It is important to monitor the result of environmental and social performances although the
overall sustainability assessment is closely impossible. However, the easier ways to observe
are the internal management processes that assure analysis of social and environmental
aspects (which called Proactive Monitoring) and complying and performance according to
social and environmental effect parameters (which called Reactive Monitoring). Moreover, it
is better if their performance indicators are used to compare between different airlines and
external auditing is the important factor.
10
Step 4: Communication
The major question: Why does communication be a significant role in sustainability
management?
Communication is the important part of sustainability managers’ job. Even the managers who
do not concern about communication admit that they spend the time 50% for one day for
internal and external communication.
Sustainability is driven by value and perception of stakeholders and how to respond their
demand. By communication, the company can inform to the public about real environmental
effect is a social improvement. Moreover, the power of communication can affect the
company’s reputation and image.
Communication Channel
Another major question: In sustainability management, which communication tools can be
used?
1. Publications and Reporting
In the last decade, most airlines started issuing the environmental report, but currently
there are few airlines issue “sustainability reports” (i.e. British Airways and Air
France). However, most managers suggested how important the report is. On the other
hand, the major problems are cost of publishing report i.e. content, printing and
distribution and the content of report that the extensive information does not change
fast enough to publish annually. The reports are used for both internal (employees
motivation and progression) and external (reputation and information)
2. Internet and Intranet
Airline internet pages about sustainability are different. The analysis of characteristics
and quality of the various site are shown in the following four criteria.
Firstly, Accessibility is the ability to access the information such as a URL link from
the main menu of the official homepage.
Secondly, Style is the style to communicate by using graphic or text.
Thirdly, quality of Content can contain the information that report cannot do.
Fourthly, Interactivity/Possibility for communication is the period of time usage for
communicate and the up-to-date of information.
Moreover, the internet is easier and more inexpensive than reporting and it can upload
online immediately for broader community.
11
Overall Framework
From this Figure, it shows that all elements are linked and supported together to create the
value in order to make the company get sustainability (Gebel, 2003, pp.13-20).
12
Part 4: Implementation that Lead to the Sustainable Aviation
Used at Present
There are many way to accomplish the sustainable aviation. Aviation business aims for
achievement the three pillars of sustainability by being the large source of employment,
developing local air quality and decreasing greenhouse gas emissions mainly (International
Civil Aviation Organization, 2012). The following ways are some directions which used in
the aviation business presently.
4.1. Environmental Aspect
4.1.1 Decreasing Emission Goals
The Air Transport Action Group (ATAG), the representative of aviation industry, set the
goals which agreed by the aircraft manufacturers, air navigation service providers, airlines
and airport, include:
a) Developing fleet fuel capability by 1.5 percent yearly through until 2020.
b) Maintain net emissions to carbon-neutral growth since 2020 together.
c) Decreasing net aviation carbon emissions 50 percent compare with 2005 level within 2050.
International Civil Aviation Organization (ICAO) and the aviation industry have cooperated
with each other in order to accomplish these goals (United Nations, 2014).
4.1.2 Set up the Standards
ICAO minimized the adverse effect of global civil aviation on the environment by set up
standards that is Annex 16 - Environmental Protection which include Volume I – Aircraft
Noise and Volume II – Aircraft Engine Emissions (United Nations, 2009).
4.1.3 Carbon Offsetting
There is using carbon offsetting, which is the paying the money by the same amount as the
emission that business produced to offset what the business did, in the business to realize
about global warming (The Gold Standard Foundation, 2012).
4.1.4 Implementing the Global Air Navigation Plan
The Global Air Navigation Plan, which is a strategic direction for improve the air navigation
service and help to reduce the emissions, was implemented by ICAO with the member states
and the industry (United Nations, 2009).
1.6 New Aircraft Designs
According to Airbus (2013), the new generation of aircraft is designed to be cleaner, produce
less air emissions, have more fuel efficient, able to burn less fuel and be quieter, decrease
annoying noise. Furthermore, the aircraft is increased its lifecycle up to 40 years.
13
1.5 Alternative Fuel for Aviation
According to International Civil Aviation Organization (2012), aircrafts usually consume
liquid fuels; on the contrary ground vehicles have numerous alternative energy sources. Even
hydrogen or the renewable solar and wind power is not the foreseeable future alternative
energy for aviation. However, aviation more and more attempts to turn to use alternative
energy source to accomplish the environmental sustainable goal.
Biofuel is the possible aviation alternative energy source at the present time. It is able to
blend with the original jet fuel without having to modify the airport fuelling systems or the
aircraft design. Some airlines use the biofuels in their commercial flights already.
2. Social Aspect
2.1 Empower the Women
Aviation business succeeds in empowerment of women by rise the number of female pilots to
4,000 all over the world (International Civil Aviation Organization, 2012).
2.2 Provide the Employee’s Wellbeing
Transportation Research Board of The National Academies (2008) told that some airport
planed to establish the fitness community in its terminal for the employees.
3. Economic Aspect
3.1 Decrease Unemployment
About 8.4 million people are employed in the aviation business, moreover, there is indirect
employment around many tens of millions people 4,000 all over the world (International
Civil Aviation Organization, 2012).
3.2 Recycle the Waste Materials
Some aviation business separate and recycles the waste materials as much as possible, the
cost or expense of the business will become lower according to separation and recycles the
waste materials the business do (Transportation Research Board of The National Academies,
2008).
3.3 Investing in Research and Development
Sustainable Aviation (2013) reported that Aviation business in UK made investment decision
in research and development to find out the high technology which will develop the aviation
performance.
14
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