![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/grounded-aircraft-22Grounded-Aircraft-at-HKG22-by-Samson-Ng-.-D201@EAL-is-licensed-under-CC-BY-NC-SA-2.0.png\")
<\/a><\/p>\n“Grounded Aircraft at HKG”<\/em><\/a>\u00a0by\u00a0Samson Ng . D201@EAL<\/a>\u00a0is licensed under\u00a0CC BY-NC-SA 2.0<\/a><\/em><\/h5>\nThe aviation industry and airlines in particular have had a pretty free-ride on climate change so far but the covid pandemic has created a new reality: it turned out that most air travel for business was not needed. \u00a0The economic case for air travel and thus airport capacity and pubic subsidies to airlines, has been severely weakened and it\u2019s the attitude of corporate customers rather than airlines that will be key deciding any post-covid \u2018new normal\u2019.<\/p>\n
On top of that, a significant side-effect of the near-shut down of passenger aviation, is the revelation that FFPs or Frequent Flier Programmes are critical to the economics of many airlines*.\u00a0 Sometimes they are worth more<\/em> than the transport activity of flying passengers. This was covered in the financial press but seems not to have filtered through to political thinking on transport.<\/p>\nIn other words, aviation Business as Usual is being sustained by a marketing exercise, which extends to hundreds of banks and retailers outside aviation.\u00a0 So far this seems to have escaped any scrutiny in terms of carbon accounting. \u00a0One professional in the business travel industry who is concerned about climate change said to me that allowing FFPs in the context of a Climate Emergency is \u201cequivalent to promoting Frequent Smoker Programmes\u201d.<\/p>\n
Should they chose to use it, this new context provides climate change-makers with a golden opportunity, and not just around the coming COP26 climate summit.<\/p>\n
The Great Grounding Experiment<\/strong><\/p>\nFlying for business was running hot before covid struck in early 2020.\u00a0 Since then it has reduced 70 – 90%, yet business itself has continued.\u00a0 The pandemic created what was otherwise impossible: a vast experiment in interruption of a behaviour so taken for granted and unquestioned that stopping it would have seemed, unthinkable.<\/p>\n
The rapid replacement of air travel with Zoom, MS Teams and dozens of other digital communications tools, coupled with lock-down working from home, has fast-tracked change that otherwise might have taken decades.\u00a0 This has gone on long enough for the new behaviours to spread to all levels in companies and across sectors and countries. Like climate change itself, it\u2019s become a new \u2018social fact\u2019, and video-conferencing may be to aviation what renewables have been to fossil fuels.<\/p>\n
Those in the behaviour change business, from social marketers to market entrants with new products, know only too well that it\u2019s very hard to stop an established behaviour but once a new one becomes a habit, it\u2019s rarely reversed.\u00a0 \u00a0The extended covid great-grounding has revealed the potential for business benefits, such as huge reductions in T&E (Travel and Expenses) budgets and greater productivity.\u00a0 Where these coincide with a desire to \u2018be green\u2019, corporates have unexpected headroom in cutting carbon.<\/p>\n
This is pretty much unassailable evidence of feasibility, far stronger than arguments, modelling scenarios, proof-of-concept pilot studies or campaign demonstrations.\u00a0 \u00a0The only question is how much of this windfall will be retained, and that partly depends on what advocates and politicians do.\u00a0<\/strong><\/p>\n\u2018Way Below Pre-Covid Levels\u2019<\/strong><\/p>\nAt the Brussels-based group Transport and Environment<\/a>, Andrew Murphy, Director of Aviation says:<\/p>\n\u201cNow is the time for responsible companies to commit to keeping their business-travel carbon emissions way below pre-covid levels. \u00a0We will also ask them to rethink any involvement in frequent flier programmes. \u00a0This is climate action that the corporate world can lead on, quickly and easily: it\u2019s already been market-tested\u201d. \u00a0\u00a0<\/em><\/p>\nJump On A Zoom, Not On A Plane<\/strong><\/p>\nThe international business travel world has been awash with discussions about what the \u2018new normal\u2019 for air travel will look like \u2018after Covid\u2019.<\/p>\n
![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/Bill-Gates-50.png\")
<\/a><\/p>\nBill Gates sparked<\/a> a vigorous debate when he opined that 50% of it will never return. \u00a0This matches the long-standing weary acceptance in many organisations that \u2018half of it is un-necessary\u2019.\u00a0 \u00a0See for instance this interesting podcast from Business Travel News<\/a>. Guesstimates vary (eg Ideaworks<\/a> are more bullish about recovery, putting permanent losses at \u2018just\u2019 19 \u2013 36%) and I\u2019m told that executives at London Heathrow are expecting any recovery to take at least two to three years. \u00a0Lufthansa also says<\/a> not until 2024.<\/p>\nSupplier sectors like training have been almost completely substituted by video-conferencing and in some businesses intra-company meetings, presentations and project work have been systematically replaced.\u00a0 Releasing budget (only 17%<\/a> of an \u2018average\u2019 business travel budget is the actual air-ticket cost) and saving staff time spent traveling to, from and recovering from international trips, is increasing productivity.<\/p>\nWhat is certain is that as legacy carriers in particular rely on the higher spend of business travel for much of their profit, their viability and that of the associated sector of business-focused hotels, exhibitions and conference centres are deeply affected. \u00a0Only about a fifth<\/a> of passenger air travel is for business but it makes up around three quarters of the profits.<\/p>\nThe first lockdowns brought a \u2018Spring of Zoom\u2019 (or more often, Teams), giving many senior managers their first taste of self-controlled remote-working.\u00a0 Their \u201cit actually works!\u201d experience happened at the same time as \u00a0many costly city-centre offices were running almost empty and new commercial office developments were being postponed: mutual reinforcement for the idea that \u2018things really will be different\u2019.<\/p>\n
After experiencing a switch to online board meetings, Maurice Gallagher, chairman and CEO of\u00a0Allegiant Travel Company<\/a> \u00a0acknowledged that video is a \u201cviable alternative to business travel\u201d.\u00a0 He told shareholders<\/a>:<\/p>\n\u201cstreaming capabilities from companies such as Zoom,\u00a0<\/em>Google<\/em><\/a>\u00a0<\/em>and Microsoft have come into their own \u2026 <\/em><\/p>\n\u201cJust like all things new, there were problems in the first few tries but when you have to use it, when you have no choice, you figure it out \u2026 I now appreciate the tremendous savings of time and additional productivity\u201d <\/em><\/p>\nHe added that unlike past episodes of reduced air travel, this time senior executives \u201cunderstand the power of this technology and appreciate the ability to reduce travel and entertainment expenses in the coming months and years \u2026 Conferences and trade shows still have merit and there are businesses who believe face-to-face meetings are critical competitive requirements\u201d but financial savings and greater productivity \u201chas to have an impact on the return of business travel\u201d.<\/p>\n
Top Travellers<\/strong><\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/top-100-corp-travellers-btn.png\")
<\/a><\/p>\nThe top 100 business travellers by company \u2013 from <\/em>Business Travel News<\/em><\/a> based on air tickets bought in the US. \u00a0<\/em><\/p>\nThe top 10 biggest corporate fliers listed above are all in the digital and knowledge economy, such as consulting, in which face-to-face contact was assumed to be vital but much of it turns out not to be.\u00a0 The carbon footprints of these companies are largely made up of indirect or \u2018Scope 3\u2019 emissions, such as business travel.<\/p>\n
Many of the companies on this list also have specific carbon-reduction targets.\u00a0 Some have targets that break out or specify business travel reductions.<\/p>\n
Deloitte is among the 43 companies for example, listing \u2018business travel\u2019 as a component in their commitments to meet a \u20181.5C\u2019 climate target submitted under the SBTI<\/a> or Science Based Targets Initiative.\u00a0 271 companies appear on the Carbon Disclosure Project (CDP) \u2018A List\u2019 for climate commitments, for example including Apple, Bayer, Pfizer, Microsoft and Unilever.\u00a0 \u00a0Over 30 companies have joined the Climate Pledge<\/a> to achieve net zero ahead of the Paris requirement, initiated by Amazon and Global Optimism.\u00a0 This includes Atos, Brooks, Canary Wharf Group, Coca-Cola European Partners, ERM, Groupe SEB France, Harbour Air, ITV, Microsoft, Neste, Rubicon, Unilever, and Vaude.<\/p>\nIn short, the corporates leading the charge on climate are now in a good position to consolidate the climate-dividend of the covid grounding and break the trend of rising emissions from business travel.\u00a0\u00a0 And in a bad position not to do so.<\/p>\n
Greta and Sustainability<\/strong><\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/greta-t-creative-commons-22Greve-du-climat-Greta-Thunberg22-by-DeGust-is-licensed-under-CC-BY-NC-ND-2.0.png\")
<\/a><\/p>\n“Gr\u00e8ve du climat – Greta Thunberg”<\/a>\u00a0by\u00a0DeGust<\/a>\u00a0is licensed under\u00a0CC BY-NC-ND 2.0<\/a><\/em><\/h5>\nThe covid grounding effect has landed on top an existing trend to factor in sustainability in corporate Travel Policies. \u00a0Numerous blogs, statements and surveys in the business travel sector note that while, spend on business travel had reached record levels, it was already widely accepted that one of the main future drivers would be sustainability. Before the 2009 Copenhagen climate COP, Paul Tillstone of travel company Festive Road<\/a> which advocates \u2018purposeful travel\u2019, started \u2018Project Icarus\u2019 which tried to get the business travel industry to address climate change. \u00a0Following the 2008 financial crash such initiatives fell off the corporate agenda but the general agreement is this time it\u2019s different.<\/p>\nHe and other travel management experts take part in CACTUS (Climate Action for Corporate Travel Urgent Solutions group), launched by Helen Hodgkinson<\/a>, formerly of Barclaycard, which has engaged<\/a> corporate travel customers on issues such as setting carbon budgets for travel.<\/p>\nGreta Thunberg\u2019s leadership of the climate movement in 2018-19 has been credited as stimulating corporate action.\u00a0 A retrospective<\/a> on 2019 in Harvard Business Review stated:<\/p>\n\u2018another critical protest movement that grew this year came from employees. More than 8,700 Amazon associates signed\u00a0<\/em>an open letter to CEO Jeff Bezos<\/em><\/a>\u00a0demanding the company develop an aggressive climate action plan. Microsoft employees\u00a0<\/em>staged a walk-out<\/em><\/a>\u00a0in September to protest the company\u2019s \u201ccomplicity in the climate crisis.\u201d Companies that want to attract and retain the best talent must have a strong climate strategy\u2019.<\/em><\/p>\nIn an article The Rise Before The Fall<\/a> summarising the 2019\/20 BTN Top 100 Survey, Elizabeth West wrote:<\/p>\nTotal business travel spend for the largest 100 corporate travel programs measured by U.S.-booked travel volume rose again in 2019. U.S.-originating travel as estimated by BTN for these programs hit $11.8 billion, its highest point ever.<\/em><\/p>\n\u2026 Deloitte again captured the top spot in BTN’s annual list with $583.1 million in U.S.-originating air spend …<\/em><\/p>\nShe added that:<\/p>\n
There was just one trend other than managing through the Covid-19 crisis that dominated the psychology of Corporate Travel 100 companies in 2019 and 2020: How to make business travel more environmentally sustainable. Even for companies that significantly expanded their travel spend in 2019\u2014like Deloitte and EY and Microsoft\u2014the drive to reduce emissions was palpable among these large global corporations.\u00a0<\/em><\/p>\n\u00a0<\/em>EY is looking to cut net carbon emissions to zero by the end of 2020; the Covid-19 crisis and travel suspension will likely contribute handily \u2026 Oracle has implemented a stringent policy that limits employee travel to “business-critical” trips. Likewise, Dell’s travel strategy also now puts a much heavier emphasis on meeting the company’s longer-term sustainability goals.<\/em><\/p>\nShe goes on to mention Siemens, \u00a0Novartis, SAP and Citibank, concluding: \u201c The message from global companies is clear on the sustainability issue: Business travel may be largely suspended for now, but when it comes back, it’s going to look different\u201d.<\/p>\n
\u2018But It\u2019s A Perk\u2019<\/strong><\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/Clooney-up-in-the-air.png\")
<\/a><\/p>\nGeorge Clooney in the movie Up in the Air. \u00a0[Photograph: Allstar\/Dreamworks pictures\/Sportsphoto Ltd]<\/em><\/h5>\nIn the 2009 Hollywood movie \u2018Up In The Air\u2019 George Clooney played Ryan Bingham, a specialist in firing people in corporate restructures, who rarely stops flying.\u00a0 He \u2018<\/em>aspires to<\/em><\/a> earn ten million\u00a0<\/em>frequent flyer<\/em><\/a>\u00a0<\/em>miles with\u00a0<\/em>American Airlines<\/em><\/a>\u2019. \u00a0Romance and tragedies are precipitated when Bingham is challenged by younger exec Natalie Keener who advocates cost-cutting through video-conferences.<\/em><\/p>\nUntil recently, air travel was seen as in the \u201ctoo difficult box\u201d: a hard to change \u2018perk\u2019 on the one hand and assumed to be critical for winning new business, project management, auditing and other vital functions.\u00a0\u00a0 Yet companies have survived managed without it.<\/p>\n
True, some corporate executives will rail against any loss of business flying perks. One in a vast multinational told me:<\/p>\n
For senior execs, as a generalization, traveling on business is a defining feature of their life. \u2026 Not being on a plane twice a week is really denting their identity. A senior XXXX guy in Singapore told me half jokingly that as soon as they reopened Australia he would go there to meet customers, even though customers didn’t want to meet in person and he may have to do it over Zoom from a hotel room in Sydney. These guys aren’t used to spending time at home with families, it’s just not who they are [of course some will love it, but I think many don’t].<\/em><\/p>\nYet such changes can be achieved.\u00a0 It\u2019s largely forgotten now but in the UK at least, any suggestion that corporates might change their car fleets for environmental reasons used to be met with the \u2018perk\u2019 argument: a company car formed part of the remuneration package, from top exec\u2019s to \u2018travelling salesmen\u2019.\u00a0 But the tax rules got changed and company car fleets, and remuneration packages changed<\/a>.<\/p>\nPivotal to flying for business as a perk, is membership of a \u2018Frequent Flier Programme\u2019. \u00a0Anyone can join one and you may not even need to do any flying these days but it tends to be people flying for business who are the most \u2018frequent fliers\u2019.<\/p>\n
FFPs: Keeping the Airline Model Aloft<\/strong><\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/forbes-ffps.png\")
<\/a><\/p>\nFrom <\/em>Forbes Magazine<\/em><\/a><\/h5>\nAt present most companies (German ones possible excepted?) allow staff flying on tickets paid for by the company, to keep the \u2018points\u2019 or \u2018miles\u2019 generated by individual membership in FFPs or Frequent Flying Programmes, which all airlines seem to have. (Technically, the points are probably the property of the company paying for them). \u00a0The top 100 airline loyalty programs are together worth<\/a> around $200 billion.<\/p>\nFFPs are a fascinating case study in brand extension and clever marketing incentives which play on social reflexes established in the \u2018jet set\u2019 age of the 1960s and 1970s as mass air travel took off: creating a feeling of exclusivity.<\/p>\n
To begin with (1970s) FFPs were simple loyalty programmes \u2013 you could redeem points<\/a> and generate a new air ticket.\u00a0 Over time, airlines changed the value of miles so you had to fly more<\/a> to \u2018earn\u2019 a ticket and also over time, they became ways of generating cash more than loyalty.\u00a0 \u2018Partners\u2019 such as banks (which issue airline-branded credit cards commanding a premium<\/a>) and a host of other companies from fashion to electronics, provided deals and discounts to FFP members in which they can \u2018redeem\u2019 points against almost anything, from food and drink, to luxury goods, petrol or hotel rooms.<\/p>\nFFPs enable members to access a host of small esteem-generating advantages in the stressful and annoying airport environment hosted by airlines: priority boarding, access to lounges, upgrades, easier changes to tickets etc., even in an extreme case, a limousine to ferry you to the aircraft. Today it\u2019s said the \u2018real value\u2019 lies in acquiring personal data<\/a>, and the most valuable data is from people who fly a lot, as they are generally the wealthiest. \u00a0Apparently people are more willing in the air travel environment to share data in order to get \u2018free perks\u2019 than they would be in the normal world.<\/p>\nThe remarkable thing about FFPs (which are usually owned not by an airline but within an airline group, such as Avios which is part of the IAG group which also owns British Airways) is that they can now have a higher market value<\/a> than the flying business of the airline.\u00a0 This only emerged<\/a> because airlines facing bankruptcy once flights were grounded by covid, had to use the value of their FFPs as collateral, in order to raise loans from governments and the markets.\u00a0 Papers filed with the US Securities and Exchange Commission by Delta<\/a> and United<\/a> laid out the \u2018licence-to-print-money\u2019 financial model of the FFPs, which are akin to a private currency whose value and exchange rate is set by the airlines, in great detail.<\/p>\n\u201cThe profitability and the size of these loyalty programmes, it\u2019s the only reason American Airlines isn\u2019t in bankruptcy right now,\u201d Stifel analyst Joseph DeNardi told the FT<\/a> in 2020. The FT noted<\/a> that MileagePlus, the United FFP, \u2018was valued at just under $22bn in bond documents, while United\u2019s stock market capitalisation is just $10.6bn\u2019, and:<\/p>\n\u2018Valuations recently put on the loyalty schemes have exceeded the market capitalisations for the airlines themselves \u2014 implying that investors value the business of flying passengers at less than zero\u2019.<\/em><\/p>\nIn October 2020 Bloomberg reported<\/a> that JP Morgan announced it was working with Affinity Capital Exchange to enable investments in FFPs be traded as an asset class.<\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/ff-bank-cards.png\")
<\/a><\/p>\nMany corporates act as \u2018Partners\u2019, buying and then giving away \u2018miles\u2019 or \u2018points\u2019 (and seats) as incentives. These include many banks and hundreds of other companies.\u00a0 The British Airways<\/a> online points shop for instance includes 158 brands such as Dell, GAP, Gucci, Harvey Nichols, John Lewis, Microsoft, Oakley, Tommy Hilfiger and Vodafone. The Quantas<\/a> points store features over 500 brands including Apple, Bang and Olufsen, Bosch, Calvin Klein, Google, Lego, National Geographic, Penguin, Sony, Swarovski and XBOX. \u00a0And so it goes on.\u00a0 All these companies are not only profiting from frequent flying but lend the soft-power of their brands to the aviation industry.\u00a0 Many of course have their own carbon reduction policies, yet are complicit in promotion of frequent flying.<\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/Screenshot-2021-03-16-at-00.54.06-e1616000658783.png\")
<\/a><\/p>\nSome of the brands supporting frequent flying with the IAG Avios currency (issued by \u00a0British Airways, Iberia and Are Lingus but usable on 27 airlines) <\/em><\/h5>\nWhat does this mean?\u00a0 Perhaps that without FFPs, a large part of the passenger aviation business would evaporate.<\/p>\n
Which for the climate and thus the great majority of people on the planet who are not \u2018frequent fliers\u2019, could be a very good thing. \u00a0The airlines don\u2019t want that, and nor do the participating banks who make a \u2018staggering\u2019 profit on cards glossed with a flying-brand [see a scathing recent analysis of airlines skirting bankruptcy by industry analyst Hubert Horan in the journal American Affairs<\/em><\/a>].<\/p>\nConclusion<\/strong><\/p>\nGlobal air travel is not a huge contributor to climate change (about 3.5%<\/a>) but as other sectors decarbonize, it is becoming one.\u00a0 Business travel is a small part of recent air travel but it is pivotal to the profitability<\/a> of the current model.\u00a0 And the freedom to jump-on-a-plane and go without a care, is a legacy of petrol-head days.<\/p>\nFaced with the climate crisis, the strategy of the aviation industry has been to re-assert old assumptions about the value-add of air travel for businesses to maintain political commitment, while framing possible solutions in technical terms: wait for new engines, new aircraft, new fuels.<\/p>\n
At a global level the sector has committed itself to a strategy of PR promises that multiple analysts have recognized it cannot keep [eg Evan Davis<\/a>, BBC] . That worked, until the great covid grounding but the new reality has now shifted who gets to decide.<\/p>\nThe airline industry is starting to look a bit \u2018stranded\u2019, rather like fossil fuel assets.\u00a0 Carbon is now on the agenda of Chief Financial Officers through initiatives like the TFCD<\/a> (Task Force on Climate-Related Financial Disclosures), itself a creature of the G20\u2019s Financial Stability Board<\/a>.\u00a0 \u00a0In February 2020 it had the support of over 1,000 organisations from financial management companies to governments and central banks.\u00a0 A year later that had grown to 1,700<\/a>.\u00a0 It would be interesting to listen in to what the TCFD makes of businesses like FFPs.\u00a0 Politicians may have yet to grasp the scale and depth of what has happened but it\u2019s the airline\u2019s corporate customers who may decide what happens next.<\/p>\n![\"\"](\"https:\/\/threeworlds.campaignstrategy.org\/wp-content\/uploads\/2021\/03\/single-aircraft-over-n-norfolk.png\")
<\/a><\/p>\nsingle aircraft during the first UK lockdown in March 2020<\/em><\/p>\n*This surprised me. In the interests of disclosure, I started looking into flying-for-business late last year because the Brussels-based group Transport and Environment asked me to, as it had spotted the potential to realise significant reductions in emissions from business travel.\u00a0 (This \u2018T & E\u2019 is Europe\u2019s expert network on environment and transport matters, and were the first to spot \u2018dieselgate\u2019, the emissions-test cheating by companies such as VW).\u00a0 You can contact Andrew Murphy of T & E here<\/a>.<\/p>\nends<\/p>\n","protected":false},"excerpt":{"rendered":"
Chris Rose, March 17 2021. \u00a0chris@campaignstrategy.co.uk “Grounded Aircraft at HKG”\u00a0by\u00a0Samson Ng . D201@EAL\u00a0is licensed under\u00a0CC BY-NC-SA 2.0 The aviation industry and airlines in particular have had a pretty free-ride on climate change so far but the covid pandemic has created … Continue reading
In other words, aviation Business as Usual is being sustained by a marketing exercise, which extends to hundreds of banks and retailers outside aviation.\u00a0 So far this seems to have escaped any scrutiny in terms of carbon accounting. \u00a0One professional in the business travel industry who is concerned about climate change said to me that allowing FFPs in the context of a Climate Emergency is \u201cequivalent to promoting Frequent Smoker Programmes\u201d.<\/p>\n
Should they chose to use it, this new context provides climate change-makers with a golden opportunity, and not just around the coming COP26 climate summit.<\/p>\n
The Great Grounding Experiment<\/strong><\/p>\n Flying for business was running hot before covid struck in early 2020.\u00a0 Since then it has reduced 70 – 90%, yet business itself has continued.\u00a0 The pandemic created what was otherwise impossible: a vast experiment in interruption of a behaviour so taken for granted and unquestioned that stopping it would have seemed, unthinkable.<\/p>\n The rapid replacement of air travel with Zoom, MS Teams and dozens of other digital communications tools, coupled with lock-down working from home, has fast-tracked change that otherwise might have taken decades.\u00a0 This has gone on long enough for the new behaviours to spread to all levels in companies and across sectors and countries. Like climate change itself, it\u2019s become a new \u2018social fact\u2019, and video-conferencing may be to aviation what renewables have been to fossil fuels.<\/p>\n Those in the behaviour change business, from social marketers to market entrants with new products, know only too well that it\u2019s very hard to stop an established behaviour but once a new one becomes a habit, it\u2019s rarely reversed.\u00a0 \u00a0The extended covid great-grounding has revealed the potential for business benefits, such as huge reductions in T&E (Travel and Expenses) budgets and greater productivity.\u00a0 Where these coincide with a desire to \u2018be green\u2019, corporates have unexpected headroom in cutting carbon.<\/p>\n This is pretty much unassailable evidence of feasibility, far stronger than arguments, modelling scenarios, proof-of-concept pilot studies or campaign demonstrations.\u00a0 \u00a0The only question is how much of this windfall will be retained, and that partly depends on what advocates and politicians do.\u00a0<\/strong><\/p>\n \u2018Way Below Pre-Covid Levels\u2019<\/strong><\/p>\n At the Brussels-based group Transport and Environment<\/a>, Andrew Murphy, Director of Aviation says:<\/p>\n \u201cNow is the time for responsible companies to commit to keeping their business-travel carbon emissions way below pre-covid levels. \u00a0We will also ask them to rethink any involvement in frequent flier programmes. \u00a0This is climate action that the corporate world can lead on, quickly and easily: it\u2019s already been market-tested\u201d. \u00a0\u00a0<\/em><\/p>\n Jump On A Zoom, Not On A Plane<\/strong><\/p>\n The international business travel world has been awash with discussions about what the \u2018new normal\u2019 for air travel will look like \u2018after Covid\u2019.<\/p>\n Bill Gates sparked<\/a> a vigorous debate when he opined that 50% of it will never return. \u00a0This matches the long-standing weary acceptance in many organisations that \u2018half of it is un-necessary\u2019.\u00a0 \u00a0See for instance this interesting podcast from Business Travel News<\/a>. Guesstimates vary (eg Ideaworks<\/a> are more bullish about recovery, putting permanent losses at \u2018just\u2019 19 \u2013 36%) and I\u2019m told that executives at London Heathrow are expecting any recovery to take at least two to three years. \u00a0Lufthansa also says<\/a> not until 2024.<\/p>\n Supplier sectors like training have been almost completely substituted by video-conferencing and in some businesses intra-company meetings, presentations and project work have been systematically replaced.\u00a0 Releasing budget (only 17%<\/a> of an \u2018average\u2019 business travel budget is the actual air-ticket cost) and saving staff time spent traveling to, from and recovering from international trips, is increasing productivity.<\/p>\n What is certain is that as legacy carriers in particular rely on the higher spend of business travel for much of their profit, their viability and that of the associated sector of business-focused hotels, exhibitions and conference centres are deeply affected. \u00a0Only about a fifth<\/a> of passenger air travel is for business but it makes up around three quarters of the profits.<\/p>\n The first lockdowns brought a \u2018Spring of Zoom\u2019 (or more often, Teams), giving many senior managers their first taste of self-controlled remote-working.\u00a0 Their \u201cit actually works!\u201d experience happened at the same time as \u00a0many costly city-centre offices were running almost empty and new commercial office developments were being postponed: mutual reinforcement for the idea that \u2018things really will be different\u2019.<\/p>\n After experiencing a switch to online board meetings, Maurice Gallagher, chairman and CEO of\u00a0Allegiant Travel Company<\/a> \u00a0acknowledged that video is a \u201cviable alternative to business travel\u201d.\u00a0 He told shareholders<\/a>:<\/p>\n \u201cstreaming capabilities from companies such as Zoom,\u00a0<\/em>Google<\/em><\/a>\u00a0<\/em>and Microsoft have come into their own \u2026 <\/em><\/p>\n \u201cJust like all things new, there were problems in the first few tries but when you have to use it, when you have no choice, you figure it out \u2026 I now appreciate the tremendous savings of time and additional productivity\u201d <\/em><\/p>\n He added that unlike past episodes of reduced air travel, this time senior executives \u201cunderstand the power of this technology and appreciate the ability to reduce travel and entertainment expenses in the coming months and years \u2026 Conferences and trade shows still have merit and there are businesses who believe face-to-face meetings are critical competitive requirements\u201d but financial savings and greater productivity \u201chas to have an impact on the return of business travel\u201d.<\/p>\n Top Travellers<\/strong><\/p>\n The top 100 business travellers by company \u2013 from <\/em>Business Travel News<\/em><\/a> based on air tickets bought in the US. \u00a0<\/em><\/p>\n The top 10 biggest corporate fliers listed above are all in the digital and knowledge economy, such as consulting, in which face-to-face contact was assumed to be vital but much of it turns out not to be.\u00a0 The carbon footprints of these companies are largely made up of indirect or \u2018Scope 3\u2019 emissions, such as business travel.<\/p>\n Many of the companies on this list also have specific carbon-reduction targets.\u00a0 Some have targets that break out or specify business travel reductions.<\/p>\n Deloitte is among the 43 companies for example, listing \u2018business travel\u2019 as a component in their commitments to meet a \u20181.5C\u2019 climate target submitted under the SBTI<\/a> or Science Based Targets Initiative.\u00a0 271 companies appear on the Carbon Disclosure Project (CDP) \u2018A List\u2019 for climate commitments, for example including Apple, Bayer, Pfizer, Microsoft and Unilever.\u00a0 \u00a0Over 30 companies have joined the Climate Pledge<\/a> to achieve net zero ahead of the Paris requirement, initiated by Amazon and Global Optimism.\u00a0 This includes Atos, Brooks, Canary Wharf Group, Coca-Cola European Partners, ERM, Groupe SEB France, Harbour Air, ITV, Microsoft, Neste, Rubicon, Unilever, and Vaude.<\/p>\n In short, the corporates leading the charge on climate are now in a good position to consolidate the climate-dividend of the covid grounding and break the trend of rising emissions from business travel.\u00a0\u00a0 And in a bad position not to do so.<\/p>\n Greta and Sustainability<\/strong><\/p>\n The covid grounding effect has landed on top an existing trend to factor in sustainability in corporate Travel Policies. \u00a0Numerous blogs, statements and surveys in the business travel sector note that while, spend on business travel had reached record levels, it was already widely accepted that one of the main future drivers would be sustainability. Before the 2009 Copenhagen climate COP, Paul Tillstone of travel company Festive Road<\/a> which advocates \u2018purposeful travel\u2019, started \u2018Project Icarus\u2019 which tried to get the business travel industry to address climate change. \u00a0Following the 2008 financial crash such initiatives fell off the corporate agenda but the general agreement is this time it\u2019s different.<\/p>\n He and other travel management experts take part in CACTUS (Climate Action for Corporate Travel Urgent Solutions group), launched by Helen Hodgkinson<\/a>, formerly of Barclaycard, which has engaged<\/a> corporate travel customers on issues such as setting carbon budgets for travel.<\/p>\n Greta Thunberg\u2019s leadership of the climate movement in 2018-19 has been credited as stimulating corporate action.\u00a0 A retrospective<\/a> on 2019 in Harvard Business Review stated:<\/p>\n \u2018another critical protest movement that grew this year came from employees. More than 8,700 Amazon associates signed\u00a0<\/em>an open letter to CEO Jeff Bezos<\/em><\/a>\u00a0demanding the company develop an aggressive climate action plan. Microsoft employees\u00a0<\/em>staged a walk-out<\/em><\/a>\u00a0in September to protest the company\u2019s \u201ccomplicity in the climate crisis.\u201d Companies that want to attract and retain the best talent must have a strong climate strategy\u2019.<\/em><\/p>\n In an article The Rise Before The Fall<\/a> summarising the 2019\/20 BTN Top 100 Survey, Elizabeth West wrote:<\/p>\n Total business travel spend for the largest 100 corporate travel programs measured by U.S.-booked travel volume rose again in 2019. U.S.-originating travel as estimated by BTN for these programs hit $11.8 billion, its highest point ever.<\/em><\/p>\n \u2026 Deloitte again captured the top spot in BTN’s annual list with $583.1 million in U.S.-originating air spend …<\/em><\/p>\n She added that:<\/p>\n There was just one trend other than managing through the Covid-19 crisis that dominated the psychology of Corporate Travel 100 companies in 2019 and 2020: How to make business travel more environmentally sustainable. Even for companies that significantly expanded their travel spend in 2019\u2014like Deloitte and EY and Microsoft\u2014the drive to reduce emissions was palpable among these large global corporations.\u00a0<\/em><\/p>\n \u00a0<\/em>EY is looking to cut net carbon emissions to zero by the end of 2020; the Covid-19 crisis and travel suspension will likely contribute handily \u2026 Oracle has implemented a stringent policy that limits employee travel to “business-critical” trips. Likewise, Dell’s travel strategy also now puts a much heavier emphasis on meeting the company’s longer-term sustainability goals.<\/em><\/p>\n She goes on to mention Siemens, \u00a0Novartis, SAP and Citibank, concluding: \u201c The message from global companies is clear on the sustainability issue: Business travel may be largely suspended for now, but when it comes back, it’s going to look different\u201d.<\/p>\n \u2018But It\u2019s A Perk\u2019<\/strong><\/p>\n In the 2009 Hollywood movie \u2018Up In The Air\u2019 George Clooney played Ryan Bingham, a specialist in firing people in corporate restructures, who rarely stops flying.\u00a0 He \u2018<\/em>aspires to<\/em><\/a> earn ten million\u00a0<\/em>frequent flyer<\/em><\/a>\u00a0<\/em>miles with\u00a0<\/em>American Airlines<\/em><\/a>\u2019. \u00a0Romance and tragedies are precipitated when Bingham is challenged by younger exec Natalie Keener who advocates cost-cutting through video-conferences.<\/em><\/p>\n Until recently, air travel was seen as in the \u201ctoo difficult box\u201d: a hard to change \u2018perk\u2019 on the one hand and assumed to be critical for winning new business, project management, auditing and other vital functions.\u00a0\u00a0 Yet companies have survived managed without it.<\/p>\n True, some corporate executives will rail against any loss of business flying perks. One in a vast multinational told me:<\/p>\n For senior execs, as a generalization, traveling on business is a defining feature of their life. \u2026 Not being on a plane twice a week is really denting their identity. A senior XXXX guy in Singapore told me half jokingly that as soon as they reopened Australia he would go there to meet customers, even though customers didn’t want to meet in person and he may have to do it over Zoom from a hotel room in Sydney. These guys aren’t used to spending time at home with families, it’s just not who they are [of course some will love it, but I think many don’t].<\/em><\/p>\n Yet such changes can be achieved.\u00a0 It\u2019s largely forgotten now but in the UK at least, any suggestion that corporates might change their car fleets for environmental reasons used to be met with the \u2018perk\u2019 argument: a company car formed part of the remuneration package, from top exec\u2019s to \u2018travelling salesmen\u2019.\u00a0 But the tax rules got changed and company car fleets, and remuneration packages changed<\/a>.<\/p>\n Pivotal to flying for business as a perk, is membership of a \u2018Frequent Flier Programme\u2019. \u00a0Anyone can join one and you may not even need to do any flying these days but it tends to be people flying for business who are the most \u2018frequent fliers\u2019.<\/p>\n FFPs: Keeping the Airline Model Aloft<\/strong><\/p>\n At present most companies (German ones possible excepted?) allow staff flying on tickets paid for by the company, to keep the \u2018points\u2019 or \u2018miles\u2019 generated by individual membership in FFPs or Frequent Flying Programmes, which all airlines seem to have. (Technically, the points are probably the property of the company paying for them). \u00a0The top 100 airline loyalty programs are together worth<\/a> around $200 billion.<\/p>\n FFPs are a fascinating case study in brand extension and clever marketing incentives which play on social reflexes established in the \u2018jet set\u2019 age of the 1960s and 1970s as mass air travel took off: creating a feeling of exclusivity.<\/p>\n To begin with (1970s) FFPs were simple loyalty programmes \u2013 you could redeem points<\/a> and generate a new air ticket.\u00a0 Over time, airlines changed the value of miles so you had to fly more<\/a> to \u2018earn\u2019 a ticket and also over time, they became ways of generating cash more than loyalty.\u00a0 \u2018Partners\u2019 such as banks (which issue airline-branded credit cards commanding a premium<\/a>) and a host of other companies from fashion to electronics, provided deals and discounts to FFP members in which they can \u2018redeem\u2019 points against almost anything, from food and drink, to luxury goods, petrol or hotel rooms.<\/p>\n FFPs enable members to access a host of small esteem-generating advantages in the stressful and annoying airport environment hosted by airlines: priority boarding, access to lounges, upgrades, easier changes to tickets etc., even in an extreme case, a limousine to ferry you to the aircraft. Today it\u2019s said the \u2018real value\u2019 lies in acquiring personal data<\/a>, and the most valuable data is from people who fly a lot, as they are generally the wealthiest. \u00a0Apparently people are more willing in the air travel environment to share data in order to get \u2018free perks\u2019 than they would be in the normal world.<\/p>\n The remarkable thing about FFPs (which are usually owned not by an airline but within an airline group, such as Avios which is part of the IAG group which also owns British Airways) is that they can now have a higher market value<\/a> than the flying business of the airline.\u00a0 This only emerged<\/a> because airlines facing bankruptcy once flights were grounded by covid, had to use the value of their FFPs as collateral, in order to raise loans from governments and the markets.\u00a0 Papers filed with the US Securities and Exchange Commission by Delta<\/a> and United<\/a> laid out the \u2018licence-to-print-money\u2019 financial model of the FFPs, which are akin to a private currency whose value and exchange rate is set by the airlines, in great detail.<\/p>\n \u201cThe profitability and the size of these loyalty programmes, it\u2019s the only reason American Airlines isn\u2019t in bankruptcy right now,\u201d Stifel analyst Joseph DeNardi told the FT<\/a> in 2020. The FT noted<\/a> that MileagePlus, the United FFP, \u2018was valued at just under $22bn in bond documents, while United\u2019s stock market capitalisation is just $10.6bn\u2019, and:<\/p>\n \u2018Valuations recently put on the loyalty schemes have exceeded the market capitalisations for the airlines themselves \u2014 implying that investors value the business of flying passengers at less than zero\u2019.<\/em><\/p>\n In October 2020 Bloomberg reported<\/a> that JP Morgan announced it was working with Affinity Capital Exchange to enable investments in FFPs be traded as an asset class.<\/p>\n Many corporates act as \u2018Partners\u2019, buying and then giving away \u2018miles\u2019 or \u2018points\u2019 (and seats) as incentives. These include many banks and hundreds of other companies.\u00a0 The British Airways<\/a> online points shop for instance includes 158 brands such as Dell, GAP, Gucci, Harvey Nichols, John Lewis, Microsoft, Oakley, Tommy Hilfiger and Vodafone. The Quantas<\/a> points store features over 500 brands including Apple, Bang and Olufsen, Bosch, Calvin Klein, Google, Lego, National Geographic, Penguin, Sony, Swarovski and XBOX. \u00a0And so it goes on.\u00a0 All these companies are not only profiting from frequent flying but lend the soft-power of their brands to the aviation industry.\u00a0 Many of course have their own carbon reduction policies, yet are complicit in promotion of frequent flying.<\/p>\n What does this mean?\u00a0 Perhaps that without FFPs, a large part of the passenger aviation business would evaporate.<\/p>\n Which for the climate and thus the great majority of people on the planet who are not \u2018frequent fliers\u2019, could be a very good thing. \u00a0The airlines don\u2019t want that, and nor do the participating banks who make a \u2018staggering\u2019 profit on cards glossed with a flying-brand [see a scathing recent analysis of airlines skirting bankruptcy by industry analyst Hubert Horan in the journal American Affairs<\/em><\/a>].<\/p>\n Conclusion<\/strong><\/p>\n Global air travel is not a huge contributor to climate change (about 3.5%<\/a>) but as other sectors decarbonize, it is becoming one.\u00a0 Business travel is a small part of recent air travel but it is pivotal to the profitability<\/a> of the current model.\u00a0 And the freedom to jump-on-a-plane and go without a care, is a legacy of petrol-head days.<\/p>\n Faced with the climate crisis, the strategy of the aviation industry has been to re-assert old assumptions about the value-add of air travel for businesses to maintain political commitment, while framing possible solutions in technical terms: wait for new engines, new aircraft, new fuels.<\/p>\n At a global level the sector has committed itself to a strategy of PR promises that multiple analysts have recognized it cannot keep [eg Evan Davis<\/a>, BBC] . That worked, until the great covid grounding but the new reality has now shifted who gets to decide.<\/p>\n The airline industry is starting to look a bit \u2018stranded\u2019, rather like fossil fuel assets.\u00a0 Carbon is now on the agenda of Chief Financial Officers through initiatives like the TFCD<\/a> (Task Force on Climate-Related Financial Disclosures), itself a creature of the G20\u2019s Financial Stability Board<\/a>.\u00a0 \u00a0In February 2020 it had the support of over 1,000 organisations from financial management companies to governments and central banks.\u00a0 A year later that had grown to 1,700<\/a>.\u00a0 It would be interesting to listen in to what the TCFD makes of businesses like FFPs.\u00a0 Politicians may have yet to grasp the scale and depth of what has happened but it\u2019s the airline\u2019s corporate customers who may decide what happens next.<\/p>\n single aircraft during the first UK lockdown in March 2020<\/em><\/p>\n *This surprised me. In the interests of disclosure, I started looking into flying-for-business late last year because the Brussels-based group Transport and Environment asked me to, as it had spotted the potential to realise significant reductions in emissions from business travel.\u00a0 (This \u2018T & E\u2019 is Europe\u2019s expert network on environment and transport matters, and were the first to spot \u2018dieselgate\u2019, the emissions-test cheating by companies such as VW).\u00a0 You can contact Andrew Murphy of T & E here<\/a>.<\/p>\n ends<\/p>\n","protected":false},"excerpt":{"rendered":" Chris Rose, March 17 2021. \u00a0chris@campaignstrategy.co.uk “Grounded Aircraft at HKG”\u00a0by\u00a0Samson Ng . D201@EAL\u00a0is licensed under\u00a0CC BY-NC-SA 2.0 The aviation industry and airlines in particular have had a pretty free-ride on climate change so far but the covid pandemic has created … Continue reading <\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n“Gr\u00e8ve du climat – Greta Thunberg”<\/a>\u00a0by\u00a0DeGust<\/a>\u00a0is licensed under\u00a0CC BY-NC-ND 2.0<\/a><\/em><\/h5>\n
<\/a><\/p>\nGeorge Clooney in the movie Up in the Air. \u00a0[Photograph: Allstar\/Dreamworks pictures\/Sportsphoto Ltd]<\/em><\/h5>\n
<\/a><\/p>\nFrom <\/em>Forbes Magazine<\/em><\/a><\/h5>\n
<\/a><\/p>\n<\/a><\/p>\nSome of the brands supporting frequent flying with the IAG Avios currency (issued by \u00a0British Airways, Iberia and Are Lingus but usable on 27 airlines) <\/em><\/h5>\n
<\/a><\/p>\n