ISTAT Jetrader - Autumn 2021 - 25

investing in ancillary private jet businesses. With comments
like these coming from our industry, who needs Extinction
Rebellion or other climate activists? On the other hand,
perhaps such comments show the critical importance
of aviation.
Let's focus on a consistent and constructive joint
message on behalf of this technologically advanced industry
that is responsible for around 4% of global GDP, employs
about 100 million people, and that has reduced CO2
emissions
by approximately 40% in the last 50 years and continues
to do so all while providing a wealth of benefits to people
and economies.
So, what are the risks, solutions and sustainability measures
for aviation that still require stringent safety measures?
Let's take them in turn, keeping in mind that there is no
immediate solution to reduce emissions to targeted 2050
levels. As a base, aviation used approximately 95 billion
gallons (around 646 billion pounds) of jet fuel per year in
2019, which equates to around 1 billion tons of CO2
.
There are three potential fundamental risks to owners and
LESS CO2
EMISSIONS
users of these assets:
1. Lack of access to capital
2. Government intervention
3. Consumer sentiment
The biggest risk, from an ESG perspective, is that equity
providers (e.g., operating lessors, funds, airlines) and debt
financiers (e.g., banks, non-banks, funds) may be limited
in, or even prohibited from, investing in the sector. These
capital providers may seek to have deals rated by " green "
rating agencies (similar to using credit rating agencies for
investments) based on sustainability or green principles but,
fundamentally, unless there is a regional or global taxonomy,
it will be up to investors' investment/ESG committees to
determine whether an investment is ESG-compliant.
Recently, Schroders, a global investment manager with
$785 billion in assets under management, stated that it uses
third-party scores but only as " one part of their in-house
analysis process " due to " significant discrepancies in ratings
between [agencies]. "
We might be seeing some pushback, however. In the last
The aviation sector - an industry that provides the safest
form of transportation - needs to present a unified argument
on the good aviation provides and the clear and tangible steps
this hard-to-abate sector is taking to address climate change.
The virtue signalling from within our own tent needs to
stop. The " circular firing squad " approach isn't effective:
full-service carriers (FSC) complaining about low-cost
carriers' (LCC) " stack 'em high and sell it cheap " strategy
being " ecologically irresponsible " ; LCCs complaining about
FSCs' first and business class footprints; airlines calling
offsets " greenwashing " or writing articles or promoting
advertisements in which arguments against air travel are
invoked. Billionaires complaining about aviation and then
several months, we have witnessed a) one American asset
manager and one German bank commenting along the lines
that companies shouldn't necessarily go green by divesting
their dirty businesses; b) U.K. ministers are likely to approve a
new oil and gas project off the Scottish coast (not too far from
where the 26th UN Climate Change Conference will be held);
and c) Swiss voters recently voted to reject their government's
plans for a car fuel levy and a tax on air tickets.
The second risk - should the rate of change be viewed
as insufficient by activists or voters - is government
intervention. While the vast majority of pandemic-related
government aid to airlines did not have ESG requirements
attached, some did, and future aid could see an increase.
Jetrader * AUTUMN 2021 * 2 5
ISTAT Jetrader - Autumn 2021

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