Airlines & airports on alert as corporate travel seeks greenest providers for sustainability drive

Summary

• Business travel recovery will not return to pre-pandemic heights in short term.
• Corporate travel managers are seeking greenest providers to support sustainability drives.
• Recovery of business travel will be diluted as businesses push to meet green targets.
• New CAPA-Envest Global report is giving travel managers intelligence on airline sustainability practices.
• Even consumers are now increasingly looking for sustainable options when booking travel.

Business travel recovery will not return to pre-pandemic heights in the short term

Higher yielding business travel (not just business class travel, but including economy class road warriors) is recovering, but it remains a slow process. It will recover, that much is undisputed; the quantum and recovery period, though, are far less clear.

For corporate travel accounts, the reduction will be provoked by cost savings, new connectivity alternatives and increasingly the impetus for decarbonisation.

First of all, chief financial officers have discovered how much cost can be saved by cutting out “unnecessary” travel. Travel expenditure will not bounce back to previous heights, notably where online meetings have become adequate substitutes.

Listed companies’ travel budgets will also be subjected to increased ESG scrutiny by investors, placing firms under great pressure to demonstrate reductions in their carbon footprint.

Long haul flying accounts for 40% of all airline emissions, so that becomes a particularly soft target for any company wishing to display its decarbonisation credentials.

Businesses are taking sustainability requirements seriously

It all means that many businesses no longer actually support a return of business travel to pre-pandemic levels.

Take, for example, the giant multinational professional services network Ernst & Young Global, which is now better known simply as EY.

Speaking at the recent CAPA Airline Leader Summit - 'Airlines in Transition 2022’, the company’s global head of travel, meetings & events, Karen Hutchings, noted that EY is working to build back a greener business travel sector with sustainability at the heart.

In conversation with CAPA at the event she explained that EY had set some hard carbon reduction targets for business travel – given that 85% of emissions come from that sector. This, she said, plays into the volumes of business travel that will return.

“We have set a target to reduce business travel emissions by 35% by 2025. Whilst we are seeing our people travel now, we don’t anticipate it sustaining for a long time because we ultimately do have these targets that we have to achieve”, she said.

You can view the full interview with Karen Hutchings below:

New report is giving travel managers intelligence on airline sustainability practices

Cutting emissions from business travel is increasingly important, and corporations globally are transitioning to net zero carbon operations. They are also focusing on the sustainability performance of their suppliers and that has driven CAPA – together with carbon reduction strategist Envest Global – to produce a detailed guide to help travel managers assess and choose the most sustainable airlines.

As corporations intensify efforts to cut their carbon emissions, they are focusing not only on their own activities, but also on those of their suppliers. A key target is to reduce the carbon emissions generated by business travel by choosing airlines and other providers with strong sustainability credentials.

Envest Global is an international carbon reduction strategy and investment management company that specialises in supporting major carbon-emitting industries to achieve competitive advantage and market leadership through the design and delivery of technically innovative and commercially savvy net-zero carbon emission strategies.

The comprehensive report helps corporations identify and assess airlines based on their demonstrated emission reductions.

“Corporate travel procurement is increasingly being decided not just on the traditional measures of price, network, schedule, and loyalty rewards, but also on the sustainability strategies and performance of airlines”, explains Marco Navarria, CAPA’s global content & marketing director.

The report includes research and the sustainability performance of 52 airlines and 100 global corporations with major travel requirements, and affords findings to guide corporate procurement divisions in choosing the most sustainable airlines.

Corporations are increasingly coming under environmental performance pressure

Corporations are increasingly coming under pressure to ensure that their environmental performance aligns with the expectations of their customers and investors.

“The airline industry is facing a real challenge as those pressures increase”, acknowledges David Wills, executive director, advisory at Envest Global.

After considering over 100 corporations that are among the biggest corporate travellers globally, Mr Wills identifies a very consistent emerging pattern.

“About three quarters of companies have made some net zero emissions commitment, and those commitments are typically in the timeframe of 2025-2030”, he says.

As such, airlines and aircraft that can demonstrate lower carbon options and outcomes compared to their competitors for a particular trip, or portfolio of trips, are likely to become increasingly common as part of the travel procurement process.

Nine in ten consumers now look for sustainable options when booking travel

A recent insight from CTC – Corporate Travel Community highlighted that a majority of travellers are willing to sacrifice some element of convenience to travel more sustainably.

It reports on new research from Expedia Group Media Solutions, which found that a high majority of travellers are now looking for sustainable options when booking, with a majority also willing to sacrifice some element of convenience to travel more sustainably.

However, it also notes that a similar level still feel overwhelmed with navigating options and making the best choices to be a more sustainable traveller, highlighting that the travel and tourism industries are still failing to deliver on their promises.

The findings are based on a study conducted in partnership with Wakefield Research, which included an online survey of 11,000 representative, general population adults ages 18+ in 11 global markets – Australia, Brazil, Canada, China, France, Germany, India, Japan, Mexico, the UK, and US – during Feb-2022 and Mar-2022.

The survey revealed that 90% of consumers look for sustainable options when booking, albeit 70% feel overwhelmed with navigating options and making the best choices to be a more sustainable traveller.

Notably, nearly 70% of consumers are willing to sacrifice some element of convenience in order to travel more sustainably, while nearly three in four travellers would also choose a destination, lodging, or transportation option that supports the local community and culture, even if it was more expensive.

Reliable data to inform and support strategies essential for sustainability moves

As global concerns increase about the damaging impacts of climate change, pressure is mounting for all industries to decarbonise their operations.

Developments in sustainable aviation, and in corporate sustainability trends have been, and will continue to be, rapid.

Further, the urgency of action needed to avoid the worst potential impacts from climate change action is increasing pressure on the airline industry and its customers, investors, and financiers to increase the scale of their commitments and accelerate the timeframe to achieve net-zero emissions.

Underpinning this journey is the need for objective, reliable data to inform and support sustainability strategies and buying decisions.

The CAPA-Envest Airline Sustainability Benchmarking Report 2021 – Business Travel Edition provides some important insights into global corporations’ decarbonisation strategies and implications for corporate travel reduction. It is available for purchase for USD349. To learn more and download the report visit the website here.