Causes of Low-Cost Airlines Success
In the context of airlines before deregulation, activities in the airlines industry were an antithesis of competitive markets. Airlines were monopolized by local governments, or big business houses, which actively discouraged competition through a restrictive and regulatory regime, meant essentially to avoid private enterprises entering a prerogatively public domain.
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In the context of deregulation, it is seen that private airlines like RyanAir have been major beneficiaries. “Ryanair as the largest and most successful of Europe’s low fare airlines targets in the first instance leisure travelers and the visiting friends and relatives segment.” (Hoffmann, 2004).
However, with deregulation and privatization, governments, especially in the US and EU countries were forced to share markets with new, private and entrepreneurial airliners in a bid to bring competitive growth and development in beleaguered industry, retarded by oligopolistic players and restrictive trade practices. The state of public airlines was just ready for drastic changes and it did happen in the form of privatization and deregulation, especially in the Americas and Europe. The staid and autocratic airlines policy needed to give way to more dynamic and progressive airlines policies and to free airline operators from the clutches of bureaucratic control. With deregulation came the newly fangled autonomy of airlines, the setting up of small, myriad airlines which offered irresistible prices and also offered major established airlines strong competition and changed the very skyline of air travel for the 21st Century in Europe and the Americas.
This saga continues even today, although the playing fields now have more players and stronger competitiveness, and the ground rules may have also changed over time and changing airliners fortunes.
However, considering deregulation, over the years, as a result of their autocratic policies, in the new deregulated scenario, the central command of airlines business soon shifted to non-governmental hands, not only in dominant countries but even to a large extent in growing and developing countries like India, China and the emerging vibrant Eastern airline markets.
It is necessary to consider the social responsibility profiles of low-cost airlines companies like Ryanair, Easy Jet, etc., in order to determine to what extent they have been able to justify their performance in such crucial areas of business.
It is seen that Ryanair has been a market leader of sorts, in terms of catering to carbon effects that are often implicated on airlines. That Ryanair has been able to match with large airlines like BA, Air France and other major German and Scandinavian airlines like Lufthansa, SAS, etc. is remarkable. The graph below considers the comparative emissions of various airlines companies.
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It is seen that Ryan air is lowest at less than 90 grams per revenue passenger kilometer (RPK) and also in terms of carbon dioxide emissions at less than 0.10 tonnes per 1500 km.
(Social environmental and ethical report, 2008, p.32). Emissions trading: It is seen that the EU is concerned about bringing the airlines industry within the ambit of Emissions Trading Schemes (ETS). This would envisage a levy on emissions on airlines, irrespective of whether they have invested heavily in cleaner and modern fuel-efficient airliners.
Ryan Air, for one, feels that the only thing ETS would serve is to hike the prices of the already price-sensitive airline industry, beleaguered by robust competition and differential pricing and servicing strategies. It would not serve the purpose of controlling demand for airliners and would only limited positive results, which could be in the offing even without the ETS in place.
The next aspect is with regard to emission taxation, depending upon the quantum of emissions sustained by the industry and its players. It is felt that an introduction of fuel tax, or surcharge, could deform competition between airliners operating exclusively in Europe with those operating outside long haul flights.
“There has been a marked increase in short-haul scheduled flights from regional UK airports as a result of the liberalization of the market, and in particular the emergence and development of low-cost carriers. “
(Civil aviation authority response to the department for transport on its consultation on the protection of regional air services to London 2004, p.1).
It is seen that the reception accorded to taxation and levies have been short-changed by LCA’s, since they feel that this would only increase the ultimate cost to the consumer and would also render, at least to a certain degree, reduced competitiveness in the airlines industry vis-à-vis its rivals and other independent operators.
Again it is seen that there is a positive co-relationships between fuel usage and emissions. “Ryanair had initially threatened the program with legal action if it aired the report. Ryanair describes itself as Europe’s greenest, cleanest airline. The airline has now conceded its fuel use has increased eight-fold between 1998 and 2006. “ (Shankleman 2007).
It is now necessary to consider the aspects of how another rival of Ryan air, an easy jet is contemplating the emission issues. It is seen that as far as Easy jet is concerned, unlike Ryan air, they feel that the present Aviation Fuel Duty(AFD) needs more to be in sync with the number and regularly of flights rather than the number of passengers using flights. This is because Ryan Air is having to pay 8% of AFD while it is contributing only 4% of the total emissions.
The writer feels that it would be necessary to evolve a scheme that could possibly cap upper usages of fuel, which sets standards for normal business flights. By enforcing a calibrated and well-designed fuel penalty, or surcharge, it is possible to discourage superfluous and uneconomical use of fuel.
However, as Easy jet argues, the airlines industry has undergone sea changes in the last four decades. The airlines operated nowadays are highly fuel-efficient and silent, and cleaner by nearly 70% fuel, with 75% less noise.
(Corporate and social responsibility continued).
Moreover, with technological advancement, the future of at least, environmental responsibility seems to be safe, in that the next genre of aircraft would be at least exceptionally fuel-efficient and noise-free, thus minimizing noise and fuel debris, pollution and could ensure better environmental aviation management
Deregulation spawns a high growth rate in the airline industry
It is seen that the separation of ownership, control and management, in the private or low-cost airlines, heralded the era of professionalized management, proficient managers began to realize that it would be necessary to increase off-take volumes, increase the number of flights and passenger load, control fuel costs and increase revenues to stay ahead in competitive airlines business.
Spawned by the development of untapped markets which advocated that managers are empowered and are, therefore, at liberty to exercise decision making without always having to consult ownership, managers may need to make economic decisions that may even have traits of ownership, especially in areas of demand determination, pricing, profits, flight destinations, routes and financial performance.
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This has also been the story of low-cost airlines, where a deregulatory climate has brought differential prices, not only for good reasons but to undercut and raise price wars. As a result, many well-established but high-cost airlines had to close shop and many relatively newcomer low-cost airlines began to rule the roost, thanks to customer trends and open skies policies.
In more ways than one, deregulation of the airlines industry has generated the genesis of many small-time airlines, with low costs and flexible flight options, which also needed to maintain excellent servicing and customer care in order to remain in business?
Due to low overheads and operating costs, mainly the use of low fuel consuming aircraft and skeleton staffing, these airliners were able to achieve within a short time, which major airline companies could not accomplish for decades. These were in terms of high revenues, flexible traveling options, efficiencies and customer care at the lowest costs, thereby hiking profits to the maximum extent possible.
Environmental impact of air transport
It is estimated that nearly 25,000 airlines dot Europe every day, and these figures are increasing thanks to the invasion of low-cost airlines (LCA) with high profile advertising and even heavier flight schedulers to almost all parts of the world at a low-costs. What is even more tragic about emissions is that these are carried out at the expense of travel by less environmentally invasive modes of travel like train etc. In real terms, LCA woos travelers away from train and car travels offering comparative cost advantages. (Dietsche 2005).
It is seen that air transport, especially heavy flight no-frill low-cost airlines have been marked for causing an increase in global warming through high carbon emissions.
This could be more in terms of the frequency of flights in fixed terrain and flight courses that could offer heavier emissions of CO2, NOx and a host of other fuel exhaust traces and debris from firing engines. This condition is exasperated when one considers that airlines operate at high altitudes and are capable of even causing detriment of the ozone protection shield, in effect accelerating the gaseous formations unnaturally. While CO2 is available in the atmosphere for centuries, there are escalated CO2 levels caused, possibly by flight trails and release of this into the earth’s atmosphere.
This is not only because of the number of aircrafts but also the regularity and a high number of flights that are taken up by LCA. (Encyclopedia: budget airlines 2005).
The main aspects of environmental hazards, contributing to global warming could stem from the following:
- Kerosene emissions during flights are environmentally inconsistent with the quality of air at high altitudes and need to be kept within normal parameters.
- Emissions of carbon dioxide (CO2), Nitric Oxide, Nitrogen Dioxide, water vapor, traces and sulfate particulates, including sulfur oxides, carbon monoxide, hydrocarbons, hydroxide need to be addressed to, in order to maintain a clean aerial atmosphere as far as is aeronautically possible.
- Sulfur oxides, carbon monoxide, hydrocarbons and radicals such as hydroxyl are other atmosphere contaminants and play secondary roles in polluting environmental
- By far, the aviation industry contributes 2% of the total global carbon emissions, and if unchecked, this could rise in future years. With the boost in air travels this apparently innocuous figure could reach menacing targets, most of it uncontrollable by present strictures and impositions.
- Another significant factor is nitrogen (NOx) emissions that are capable of creating ozone layers in the upper atmosphere. (Encyclopedia: aviation and climate change 2005).
High altitude (8-13km) NOx emissions result in greater concentrations of O3 than surface NOx emissions, and these in turn have a greater global warming effect. The effect of O3 concentrations is regional and local (as opposed to CO2 emissions, which are global). (Encyclopedia: aviation and climate change 2005).
The current debate on whether and to what extent air transport entails global warming and climate changes
The main arguments are with regard to the carbon and nitrogen emissions that account for global warming and climate changes. It is believed that this percentage could go up from the present rate of 2% of CO2 emissions to at least 15% by 2050. However, major private airliners say that the emission is insignificant when compared to contributions made by energy industries at 26% or even road transport at 18%. (Bowes 2006).
This it would be rather unfair to pin the blame on airlines when other industries also have a share in the environmental pie.
However, the concerns for fallouts of fuel emissions are more real than imagined.
For one thing, air travel would well move well into the next level by 2020, registering a double increase from that of recent years, and no matter what curbs are placed, the present trends are, to put it mildly, disturbing. Add to this is the fact that the proliferation of low-cost airlines, vying with each other to woo tourists and businesses into their planes, has a major role in bringing the industry to what it is today.
As rightly put by Mr. Jim Callaghan, Company Secretary and Head of Regulatory Affairs, Ryanair, the budget airline had done everything possible to reduce fuel consumption and to reduce its emissions: “We ensure our planes carry full passenger loads, operate from regional airports with short runway taxiing and above all run a young aircraft fleet.” As a result, he claimed, the company had achieved fuel-efficiency savings of 55% over the last nine years. “Society at large may have to curb its appetite for air travel if Europe is to reach its climate change goals.” (Aviation)
Stern Report on environmental issues
It is believed that the Stern Report published in 2006 deals extensively with global warming and major climatic changes posed by afforestation, pollution, threats caused by increasing levels of CO2 and nitrogen in the earth’s stratosphere and other environmentally detrimental facts. According to this report, it is believed that “Before the industrial revolution level of greenhouse gases in the atmosphere was 280 parts per million (ppm) CO2 equivalent (CO2e); the current level is 430ppm CO2e. The level should be limited to 450-550ppm CO2. “(Osborne 2006).
If these levels rise over the safe limits, it would have substantial effects on the environment and human living. As it stands, the effects of global warming are being experienced by humans in the form of thawing of snow and increased incidences of floods, storms and other natural calamities that could be attributed to dramatic climate changes and global warming, caused mainly through higher emission of green gases into the earth’s stratosphere and erosion of the ozone layer by pollutants. In this the role of airlines cannot be discounted, since increased emission of fossil fuels debris during flights, could upset the delicate ecosystem balance and create environmental problems which are not perceptible thorough studies, but are nevertheless, present.
Air transport environmental impact
It is seen that the role played by the aviation industry, especially global air travel in the growth of environmental pollution cannot be undermined or underemphasized. The fact that cheaper air travel (even economical than rail travel) has stepped up the growth of carbon dioxide emission in the United Kingdom. It is believed that Emissions from UK aviation have increased by nearly 70% since 1990 and rose by 11% in 2004 alone. While the amount to less than 3% of national carbon emissions, expected growth will nearly double this within 25 years.“ (Osborne 2006).
Further, there are other non-redeeming factors in the sense that at high altitudes fuel burnouts create intricate and intractable chemical fallouts that make use of fuels nearly four times more lethal than fuel burned on the ground.
While the government is committed to providing for better aviation technology through fuel-efficient methods, this cannot be possible if airlines are allowed to expand in the way it is being done presently, since any savings in fuel technology would defiantly be negatively offset due to expanded and increased fuel usages.
Dilemma over the choice of action- to arrest growth or contain emissions?
The UK government faces a dilemma as far as aviation pollution is concerned.
On the one hand, it is committed to infusing control over aviation fuel emissions and on the other, it cannot possibly arrest the expansions of low-cost airlines. It is seen that the aviation emission reduction and growth of air passengers are highly skewed, in that while around 2% aviation fuel reductions are possible, passenger growth has touched nearly 7%, almost 3 times. So, eventually, no substantial benefits could be brought about unless passengers are actively discouraged from flying, through taxation or other measures. “If Britons continue to fly as the Department for Transport forecasts, the number of passengers will increase from 228 million today to 465 million by 2030.” (Vidal 2007).
One could well imagine the impact on airlines and the additional pollution that could result from such a high rate of travel in the coming years if anti-pollution measures are not set into place and activated.
Options available to both airliners and International tourism
The options that could be enforced by airliners would be in terms of using more fuel-efficient aircraft and fly in routes that have lesser traffic (absolves descent problems due to aircraft crowding of airports) and have proper planning schedules regarding the use of fuel.
It is also seen that “Modern aircraft are significantly more fuel-efficient (and thus emit less CO2 in particular) than 30 years ago. Moreover, manufacturers have forecast and are committed to achieving reductions in both CO2 and NOx emissions with each new generation of design of aircraft and engines. The accelerated introduction of more modern aircraft, therefore, represents a major opportunity to reduce emissions per passenger kilometer flown.” (Encyclopedia: budget airlines 2005).
Again, it is also necessary that short distances may be covered by surface transport or railways instead of air travel. This would not only lead to a considerable decrease in aerial emissions of CO2 but could also reduce traffic and congestion in airports.
It is necessary that high-quality aircraft fuel be used that could have lower emissions, are eco-friendly and contribute less to global warming and climatic changes in the earth’s stratosphere. Although CO2 contribution at this stage may be low at 2%, there are indications that this may rise significantly in the years to come, given the tremendous growth in passenger and cargo traffic in the years to come.
Challenges of global warming and climate changes
The Stern report has been a major eye-opener for the world community for the need to focus on ways and means to tackle global warming and significant climate change over time. Stern has issued a warning that in the event immediate action is not taken, the world, especially Third world countries would experience droughts and floods in the coming that would almost bring it to the brink of extinction and virtual annihilation. Strong and powerful nations have the necessary infrastructure to protect their environment from the detriments of the fallout of global warming and major climatic changes, but poorer countries may not. Thus, it is possible that years of development of certain developing countries could be endangered due to lack of care over CO2 and other gaseous emissions, by major global players showing scant respect for emission concerns.
With the current levels of greenhouse gas levels at 430 ppm, and is incremented at 2ppm every year, it would just take 10 years to reach the limits of parameters. If environmental concerns during the year 2050 are to be met, emission rates need to be cut by at least 25% over time, and the airline industry needs to take responsibility for its contribution towards CO2 emissions.
“Ultimately, stabilization – at whatever level – requires that annual emissions be brought down to the level that balances the earth’s natural capacity to remove greenhouse gases from the atmosphere ” if mankind is to be saved from the scrounges brought about by unbridled environmental pollution and carbon emissions. (Stern, Nicholas, Herbert 2007, p.221).
This could only be possible if major economies and fuel efficiencies in aircraft are attained, including the use of low emission, high-performance aircraft fuels.
Intergovernmental Panel of Climate Control Change (IPCC)
If one were to consider the interactive report of the Intergovernmental Panel of Climate Control Change (IPCC), it is seen that current studies have been able to robustly establish that “the impact of subsonic NOx emissions on upper tropospheric and lower stratospheric ozone is smaller than or comparable to the span of confidence limits in the ozone trend analysis for mid-latitude stations. Finally, we note that aircraft NOx emissions should lead to decreased CH4 concentrations; however, any impact should be undetectable in the CH4 record. (Aviation and global atmosphere 2008).
The future scenario of air transport tomorrow – growing concerns about the aviation industry’s alleged environmental pollution and environmental impacts. Although it is believed that booming low-cost airliners could be a major source of CO2 emissions, it needs to be seen in the wider context of the fact that energy companies and automobiles emit much larger proportions. It would be unethical to single out just aircraft, and that to LCA as the main culprits for polluting the ozone layers with generous amounts of chemical wastes. Again it is seen that it is possible to control emissions through the use of high-quality fuel, lowering the number of flights in one region and maintain cruising techniques that make take up a lesser load of emissions of fuel debris. It is necessary that cuts of around 80% of the present consumption would be necessary if the ozone is to be safeguarded in the not too distant future.
Greening of the transport industry
It is seen that it has become necessary for the greening of the air transport industry by reducing greenhouse emissions and seeking the use of cleaner, safer, fuel-efficient and environmentally friendly fuel mixtures. Areas of “alternative fuels, structures and new aircraft designs, airport operations and traffic management.” (Greening of transport).
“Even though there has been significant improvement in aircraft technology and operational efficiency this has not been enough to neutralize the effect of increased traffic, and the growth in emissions is likely to continue in the decades to come.” (Aviation and climate change 2009). Therefore, the airlines administration needs to strike the finest balance between allowing the controlled growth of low-cost airlines since it is a tested and proven area of passenger, cargo and military aerial movements, on the one hand, and the urgent and imperative need to monitor environmental concerns on a regular basis, on the other. The plans that are envisaged are to make air travel more costly by imposing a travel tax on LCA, which effectively would raise the cost of travel and make people think before embarking on a spurge pleasure flight or even indulge in binge flying. The price raise would remove, at least to a reasonable level, the impetuous and Impulsive aspects in traveling, especially short distances flights, and would “force holidaymakers to fly less often (either by introducing green taxes or allocating a ‘carbon allowance’ for each person). (Bowes 2006).
Use of biofuels
It is believed that there are other options, in terms of the use of alternative fuels instead of fossil fuels which have a lower emission record. For instance, Virgin Airlines hopes that biofuel-powered aircraft could be operating commercially within five years, which could help to cut significantly the airline industry’s carbon dioxide emissions. At present air travel contributes 2% to 3% of climate-change gases, but that level is increasing as the activity expands. The industry is investing in lighter aircraft and new engines to improve fuel efficiency, but biofuels could eliminate oil dependence entirely. (Robertson 2007).
Thus it is seen that the airline industry needs to consider the fact that the low-cost airline business is too good to be for a long time. With growing environmental issues, concerns about safety and security in an increasingly tense flying environment and the need for viability and structural balance within the industry itself, it would not be long before low-cost airlines would become as costly as the regular high-cost ones, thanks to a liberal dose of taxes and anti- emission costs imbued into the fares.
It is seen that in the context of growth in the aviation industry, it would not be in the distant future that aviation could overtake automobile emissions in quantitative terms. Thus it is imperative that biofuels need to be developed to control and monitor fuel emissions on a large scale. “One of the main advantages of biofuels is that the plants used to make the fuels need lots of CO2 to grow, potentially making it possible for the aviation industry to achieve true carbon-neutrality.” (Kjelgaard 2008).
Even if biofuels are being used, it would take time for technology to settle down and provide a robust alternative to fossil fuels. Besides the huge R&D costs for producing and using biofuels in commercial terms, the main factor would be whether, in the long run, it could substitute conventional fuel, which apparently it cannot, at least commercially and for entire European travel markets.
“Furthermore, all of the questions surrounding first-generation biofuels that apply to ground transport also apply to aviation: taking land away from food crops, land use changes leading to net increases in carbon emissions, working conditions (especially in parts of the developing world).” (McDermott 2008). Thus it has become vital to seek alternatives for fossil fuels, which have documented evidence of causing increasing trends in emissions and threats to the aerial environment, in order not only to improve the quality of air but also maintain it for long.
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