Recorded at CAPA Live September

Air New Zealand’s Capt. David Morgan talks sustainability efforts

Air New Zealand has been a leader in the airline industry on sustainability. Capt. David Morgan oversees this area for the airline, and will discuss the broader industry perspectives on environmental challenges, as well as Air New Zealand’s approach to the sustainability issue. This session will address topics such as sustainable aviation fuels, electric aircraft, fleet modernisation, government policies and how the COVID-19 crisis has affected the industry’s environmental efforts.  


  • Aviation Week Network, Senior Air Transport Editor, Adrian Schofield
  • Air New Zealand, Chief Operational Integrity and Safety Officer, Captain David Morgan 

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Hello and welcome to this CAPA Live session. One of the main things this month is the growing

environmental challenge facing aviation as

it starts to recover. I'm fortunate to be talking to Captain

David Morgan, who's Air New Zealand's Chief Operational Integrity and Safety Officer. In this role, David

oversees the airline's sustainability programme, and it's generally recognised that Air

New Zealand is an

industry leader in this regard. So welcome Dave, and thanks for joining us.

David Morgan:

Thanks very much, Adrian. It's great to be here again. Thank you.


Just to start off, what do you think about that statement? Do you think Ai

r New Zealand is an industry

leader on the sustainability front?

David Morgan:

I'd say we like to think so, Adrian. We have in the past, certainly put ourselves out there as an

organisation that's thinking very deeply about this, and some of our actions ha

ve actually been in that

way too, with respect to doing the world's first second generation biofuel flight. But the times that we

live in at the moment are certainly very interesting and certainly very challenging, but I'm pleased to say

that with respect

to sustainability, it's still a key platform of our company strategy. A lot of deep thinking

going into how we're going to achieve the outcomes that we need to achieve, both as an airline and as

an industry going forward, and we are biassed towards an acti

on quite shortly. So looking forward to

continuing what I think is an industry leading role in sustainability.


Great. Okay. It's pretty impossible to talk about anything in aviation right now without referencing



19. So to what extent do you t

hink the COVID


19 crisis has set back the industry's sustainability

efforts or focus on that area, given that the top priority for any airline has to be survival right now?

David Morgan:

That's true. I think the industry is probably split not necessarily 5

0/50, but some airlines are thinking

very deeply about sustainability. Certainly I know others in the region are. But there'll be a number of

airlines that are actually struggling and are in survival mode. And of course, this sometimes can get put

to the b

ack of the queue. As I said earlier, as far as Air New Zealand is concerned, we see sustainability

as a clear plank or platform in our strategy. That strategy revolves around some key pillars, customer

centricity, doing the basics, better loyalty, and I'm

pleased to say sustainability is actually right up there

as a body of work that the board and the management team and my colleagues on the management

team are completely focused on.


Great. So it hasn't really slowed down your attitudes towards sust


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David Morgan:

No, it's not. And the reason for that is because the clock is ticking. The industry has got commitments to

live up to and to deliver. As long as we prevaricate and delay, we're not going to, as an industry solve the

problem that w

e have to solve. And fundamentally for us, it's about decarbonization. There's a number

of things that we can do, but the two key parts of an actual platform are decarbonization and waste.

There are other things that we need to think about, but those are t

he two main platforms that we're

really working on.


Right. Yeah. And I must say that that under the previous CEO, Christopher Luxon, it seemed that

sustainability, that drive really took off, and it seems to be continuing with the current CEO, Greg


David Morgan:

Oh, absolutely. Greg's given us the mandate to push and push harder. He recognises the difficulty that

the industry is in. The obligations that we have, both to the communities and to solve this crisis that the

world has with regard

to climate change. The reality is the industry has to face up to it. Many of the

[inaudible 00:04:23] achieve the IATA Safety and Flight Operations Advisory Council, and we're really

challenging the IATA team to actually start thinking about sustainability

in the same way that we think

about safety.

David Morgan:

If we become agnostic to the commercial implications and thought of sustainability in the same way that

we did think about safety, I'm quite sure that we'd recognise that we've got major issues to

solve, and

that we'd be incentivized to create solutions to actually solve those problems. So it's not just that the

industry has to solve that problem, but also individual airlines.


Yeah. Right. And on that note, it's always been interesting to me

that you see it as not just something

that you have to do, but something that actually is going to be good for the airline.

David Morgan:

Oh, absolutely. The reality is airlines are businesses and businesses work with communities. And strong

businesses ne

ed strong communities and strong communities need strong businesses. And it's

particularly important for Air New Zealand because there's meeting many people watching this

broadcast will recognise that New Zealand's brand is inexplicably linked with sustain

ability and it's part

of New Zealand's brand. And so there's that piece as well, but as I say there's a bigger picture here, and

that's actually solving the bigger problem, which is climate change. And the aviation industry's got a role

to play.



ah. Okay. From an industry perspective, a lot of airlines around this region, Asia


Pacific region in

particular, having to restructure their business plans, come up with new strategies. Are you seeing any

change in emphasis on sustainability as they restru

cture their business plans? Is it perhaps playing a

greater role as they're revising them?

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David Morgan:

Well, I've talked with other airlines that as I said, the airline industry is a bit split, certainly not 50/50 as I

said before. There's a cluster of a

irlines that are thinking quite deeply about this science


based targets,

for example, decarbonization, ways of achieving that, supply chain with regard to alternative fuels,

different technologies and what have you. And then there are other airlines that r

eally haven't got the

capacity to be able to do that at the moment. And so the industry's role is to actually help those airlines

to actually see a path and a way forward as well.

David Morgan:

But for the airlines that we're working with and looking at, w

e're on the same wavelength. As I say, let's

not try to boil the ocean, let's work out what's important, and fundamentally what's important to

develop a short to medium term gate is decarbonization. And decarbonization is largely achieved by two

things. On

e is zero emissions aircraft and the other one is a sustainable aviation fuel supply chain and

production. And you solve.


Right. As governments are taking a greater role in the airline industry through these restructuring

efforts, through investmen

t or loans or whatever that may be, is there a greater drive and requirement

from the governments for airlines to place a higher emphasis on sustainability?

David Morgan:

Well, I think there is in some cases, but certainly in Air New Zealand's case it is.

And the reasons I can tell

you that it's quite public that the airline is a major shareholder in the New Zealand government. And the

New Zealand government as part of that shareholding process, does have an expectation of the airline

that's actually been d

efined quite specifically. And the level of expectation that we received recently

from the government does state that it expects us to be part of a sustainable aviation fuel solution. So

decarbonizing aviation and New Zealand, and as we are such a signific

ant part about the action in New

Zealand, we'll have to look to deliver that.


Right. Okay. If we could talk about something that was pretty big before COVID in particular, was the

flight shaming movement. And I guess maybe it wasn't such a big thin

g in New Zealand and Australia,

because maybe the populations here are more comfortable with the idea of long


haul travel, but

certainly a bigger deal in Europe and the US. So is that going to come back to the same degree post

COVID, and does that present

problems for airlines like Air New Zealand that do have quite a lot of

overseas long haul markets?

David Morgan:

I think so, Adrian. There's two sort of aspects to that. There's the concept of the risk to the aviation

industry and climate change. And as

far as Air New Zealand's concerned, climate change is on our risk

ledger as a huge risk, not only with regard to operations, but also the issue of propensity for travel. So

climate change would qualify carbon dioxide or greenhouse gases, I should say. And

greenhouse gases

are a problem for... When we are in the business of imposing the force of gravity, we have to use a

hydrocarbon based fuel to provide us with the energy to be able to do that. And in the process of doing

that, we obviously have an impact o

n the environment.

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David Morgan:

And so the second part of the equation is that many people now are fairly concerned about the effects

of [inaudible 00:10:04] on the environment. So what we have to do is actually come up with solutions

that will enable air

travel as a key enabler of economic activity, and the movement of goods, trade and

services, et cetera, across borders, but also for people who want to obviously travel. And they'll be

concerned about what effect air travel might have on the environment.

And so what we have to do is

create solutions that will immediately right the effect of that activity, and then also continue to allow air

transport to be a key enabler of those economic and recreational outcomes.


Right. Okay. And on that subject,

one of the key tools you have and will have increasingly in the future is

sustainable aviation fuel. So what are Air New Zealand's sustainable fuel usage goals and targets?

David Morgan:

So we expect that by 2050, the use of sustainable aviation fuels will

deliver 50% of a goal of net zero

emissions by that time. So that's fundamentally the proportion of our 2050 goal. 50% of that goal will be

delivered by the use of sustainable aviation fuel.


Right. Okay. On a

similar link, could you talk a little bit about the role of the Sustainable Aviation Fuels

Consortium that Air New Zealand is part of?

David Morgan:

So this is an organisation of like


minded industries based in New Zealand, whose view is that sustainable

aviation fuel system is viable in New Zealand, needs to be set up. And it's basically an advocacy group to

help support business thinking in this area, but also policy thinking with regard to the government. And

so we're part of that group and fundamentall

y, a group of people and organisations who are like



about the viability for sustainable fuels in New Zealand and not


so sustainable aviation fuels. Because

we must think in terms of other fuels that are used in the country as well, not just aviation

fuel, and the

ability of that conversation will be brought together to actually deliver this outcome sometime in the

near future.


Right. Okay. So what are the next steps for Air New Zealand on sustainable fuels, from a technical aspect

or a testin

g aspect?

David Morgan:

So we don't feel there's any further work to be done on the technology, Adrian, quite frankly. The

conversation's moved past that. Technology is well advanced. It was a long time ago now that we did

the world's first second generati

on biofuel flight used to transfer feed stock. And of course, that flight in

itself was not particularly green. I went to Tanzania to get the feed stock. It was subsequently sent to

Houston. It then came down to New Zealand. We put it into one of the tanks

of a 747 and flew one of

the engines, all that aeroplane, all that flight, using that fuel as a drop in fuel.

David Morgan:

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And delivered significant benefit on the day, the holy grail, the value was high, so less fuel per mile. Its

freezing temperature w

as very low and specific gravity was excellent. And so we'd get more payload and

we could fly for longer in colder temperatures and obviously use less fuel. It was noticeable on the flight

itself. And that data, of course the purpose of that flight was not

to prove that biofuels could work in

New Zealand, it was actually to provide data to the worldwide database and eventually the ASTE

committee who certify fuels and subsequently that particular feed stock and use of a synthetic parasene

based on the lipid

vegetable oil actually turned into, in the long run, became an acceptable standard.

David Morgan:

Using that as an example, the technology is now well advanced and that was a number of years ago.

Some market [inaudible 00:14:20] have come through. So the q

uestion now is sitting up the policy

settings that will enable the system to work, and having a viable... Sorry. You've got your dog with you



Sorry, the dog is in the next room. Yeah.

David Morgan:

Well, cut that wee bit out. I can pick up w

here I was. And so where it's at now, Adrian is the concept of

focusing it on the policy settings to make sure that the system from end to end is actually right. So we

have to have not only the technology, which I think is, as I said, very well advanced no

w, but also the

policy settings from government to make it viable to produce this product in New Zealand, and also to

enable it to be consumed and uplifted by the operators.


Yeah. Right. Okay. Another strand of that in a similar line is the electri

c aircraft and hydrogen powered

aircraft concept. I know Air New Zealand's been pretty involved in this, but could you outline for us what

sort of partnerships you've formed so far and what Air New Zealand's level of engagement has been in

the area of elec

tric aircraft in particular?

David Morgan:

Oh, sure. Well, we've got a number of things going on in this particular area, not just with the OEMs.

That's what we call the mainstream OEMs, manufacturers, the most notable of which of course is our


g relationship with ATR that was signed off a couple of years ago into loose pre COVID, and

really challenging ATR to start thinking about new technology for us. In effect, part of that is actually

defining a specification for an aircraft. You'll notice a

lot of new technology manufacturers are certainly

pushing what they intend to be able to bring to the market.

David Morgan:

I think there's another side to that, and that's actually defining what the market needs, and airlines need

to do that. And so we've

certainly done that as far as ATR is concerned. Part of our MOU with them is

actually then focusing on what they could deliver to us to meet our needs. [crosstalk 00:16:51].

David Morgan:

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But we're also very interested in green hydrogen, and we're also ve

ry interested in electric. We're

talking to a couple of manufacturers at the moment. We are of the view that we would like to see a zero

carbon aircraft in our fleet sooner rather than later. I would actually quite like to see it by 2030, the

electric airc

raft operating probably as a pilot, as a trial. May not have passengers on it. We're quite

interested in what could be done in the cargo space as well, especially in the vast area activity, that sort

of thing. And using that as a platform to confirm our th

inking around the viability of that.

David Morgan:

The other piece to this, Adrian, and I think this is important for the wider industry, is also it's all very well

talking hydrogen and electric, but you've got to have the infrastructure to be able to supp

ort that. So a

big part of the conversation as well, particularly in New Zealand here is ensuring that there's a green

hydrogen supply chain here, as well as things like the airports when they're thinking about airport

development, and actually thinking ab

out the infrastructure that they'll need to be able to [inaudible

00:18:05] to be able to support the operation. Largely like in the way the airlines are not really

interested in seeing ground


based navigation hubs being investing in. The future is going t

o be one

that's obviously got the ability to reticulate large amounts of electricity, and hopefully that's electricity

that's been produced with the appropriate carbon footprint in hydrogen as well. So there's two sides to

that particular equation.


Right. And bearing both of those strands in mind, how far off do you think we are seeing a viable

contender that you could use in the regional scheduled passenger network? Are we talking about maybe

the next generation of aircraft replacement, like the Q3

00s and I guess not the ATRs because they're still

pretty new, but could it happen that soon, or are we really talking about a generation after that?

David Morgan:

So for Air New Zealand we've got our Q300, the fleet is going through a very well, but at

sometime after

2030, we will need to start thinking about replacing them. And the aircraft that we'll replace them with

will be an aircraft that will powered by some alternative power. So that's our expectation. That's the

fleet plan at the moment. We did

not invest in a replacement for the ATR or the Q300 aircraft, that's not

alternative planned. And so that's the challenge that we're putting out to the industry.

David Morgan:

So I think we'll see the pilot of the aircraft. It may well be single engine in

the fleet before the end of the

decade. I think that's about 10 years away before we'll see a viable twin engine, 20 to 30 seater, but I'm

happy to be surprised. The reality is from what I'm seeing from some of the vendors or these new OEMs

that are coming

through, they're very focused on delivering the outcome. I have to say, I'm quite

surprised at the rate of some of the changes and the innovations that are coming through. So it's quite

exciting, and we want to be part of that.


Great. And on a sim

ilar note, in terms of fleet efficiency, during the COVID crisis some airlines have

accelerated the retirements of older aircraft and most airlines have pushed back delivery. So we have

these competing forces as to what that's doing to fleet modernization,

not only the early retirement of

probably were aircraft, but also pushing back on some of the newer aircraft. So what do you think, just

in general terms, what's the COVID crisis done to industry fleet modernization efforts?

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David Morgan:

Well, it's proba

bly accelerated in some ways, if you think about it, Adrian, because the reality is the

fleets that have been often grounded are the ones that are the least efficient and effective than the

older fleets. And so in general, the most efficient aircraft are g

enerally the ones that are still in the

system, flying. But I think the other side of the coin is that COVID, of course, will undoubtedly have had a

deleterious effect on investment for airlines while they go through the survival mode. So I think the


thing's probably been taken back a bit. We'll come out of COVID, we've very confident that the

issues that COVID present to the community and the industry will be solved in the short to medium

term. Clearly the world's changed and the way people travel an

d the process of facilitation and crossing

the border and boarding and all that aspect undoubtedly will be different to what it was before.

David Morgan:

But the industry will rebound and will grow and it will grow at pace and as a consequence of that, and

the problem of climate change doesn't go away. So while I think it's probably taken a bit of a breather

and a pause for some airlines, other airlines suc

h as ourselves are still pushing forward with an

expectation that will deliver outcomes that the industry needs sooner rather than later.


And from an Air New Zealand perspective, could you talk a little bit about the reasoning behind the


on of the 777


300 ER retirements and perhaps the quicker move to an all 787 long haul fleet?

David Morgan:

Yes, because I think the market's changed. So fundamentally, for those of your viewers that are not

aware, the airline's got a mixed 777


200 and 777


300 fleet. The 777


200s have been retired, and the

reason for that is that they've fundamentally been replaced by the 787. The 787 for us does everything

that a 777


200 can do. The 777


300s are currently parked up, and they may come back into service in


e future, and that's in the plan. But in the long run, they were going to be replaced by replacement

aircraft. But we're started to see the 787 as being the solution for Air New Zealand, for the markets that

we fly, and certainly the markets we want to ser

vice as the destinations that we want to fly to.

David Morgan:

So it's really simply a response to market demand and having a long


term plan that will ensure the

survival, which is certainly ensured by the growth and the flourishing of Air New Zealand.



Right. And I guess the Dash tends to give you a bit more flexibility in terms of replacing the larger


David Morgan:

That's right [crosstalk 00:23:43].


The Dash 10 sorry.

David Morgan:

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Yeah. The Dash 10, that's right. As we all know,

their range is different to the Dash 9. So the Dash 9 is the

long range aircraft. The Dash 10 will be shorter range, but for more high density routes. And so that's

where we see our future in the longer term. When the 777


300's out of the fleet, they are p

arked up for

the moment because right at the moment, the demand is not there, but definitely will return. And then

at some stage those aircraft will be phased out.


Right, okay. We're fast running out of time, but another very interesting strand of

the sustainability

programme that I've always found fascinating is the reduction of waste to landfill. And I know Air New

Zealand has some incredibly ambitious goals in that. So just real quick, could you just run us through

some of your goals in that rega


David Morgan:

Yeah. So as I say, the other work stream from our sustainability strategy is waste and it is waste to

landfill, reducing the amount of waste that goes to landfill. And to be very, very brief, 60% reduction in

the next five years. And that

's entirely achievable. A lot of it's about in


flight. Huge amount of it though

is also about supply chain. A lot of stuff arrives at the airline patch in such a way that produces a lot of

waste. And so we're going to be working with our supply chain partn

ers to reduce that waste, and also

anything now that goes on the aeroplane has to be packaged in something that's going to be able to

meet that expectation. So quite an exciting and big team there working on our waste minimization

programme. Quite exciting



Great. Okay. And just finally, David, you've been in the industry for a long time. [crosstalk 00:25:29].

Sorry, I should add to that. How have you seen airline industry attitudes towards emission reductions,

climate change, sustainability change

over the years, and do you think that more needs to happen in

terms of an attitude shift?

David Morgan:

I think it does. As I said, I think largely the industry has recognised that there's a problem and they didn't

really know how to deal with it, or didn'

t want to deal with it. But fundamentally, good airlines are ones

that are focused on the needs of their customers. And customer centricity at the moment sees that

people are concerned about the environment. And young people to make ethical sourcing decisi


You talked about flight shaming before, there'll be the customer segment that is very concerned about

the effect of their travel on the environment and what have you. And so therefore, if you think of it

through that lens, it's going to have to be dea

lt with because our role is to deliver what the customer

wants and is prepared to pay for.

David Morgan:

And so therefore, if we look at it through that lens, we must recognise that there's an issue that has to

be dealt with, and we've got obligations do d

eal with, quite apart from the actual commitments that

have been made through the tree. So the upshot of that is that my view is that good airlines are

recognising that this is a real issue for the communities that they serve. And therefore, if they want t


enjoy the trust of those community and therefore their business, they're going to have to come up with

the solutions. And as I said before, if we as an industry, I used IATA as in example, started to have the

conversation more in the same way that we do

about safety and put the competitive commercial

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conversations and left those at the door and started to sift out an agnostic view, the commercial

implications and actually started solving the problem, I think that would go a long way to achieving that



David Morgan:

And then the other thing too I would also add is that we really do need to get together because the

solutions often will require scale, and to get their scale we've got to work collaboratively. And so we're

working with other members of

CAPA now to start thinking about how we can achieve that scale in the

region. And we're quite happy to do that because we both realise that we've got the same problem to

solve, and so two heads are better than one.


Right, exactly. Well, unfortunate

ly our time is up. On several of those strands, I could have gone on for

an hour, but we do have to wrap it up now. So I want just to just say thank you very much, David, for

your time and for giving us such insightful and frank comments about where you're

up to and where you

see the industry going. I'd also like to thank the viewers for tuning in and watching. And I'd encourage

you to try and catch some of the other CAPA Live sessions this month. Thank you very much.

David Morgan:

Thanks very much. Bye.

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