The Economic Impact of Sustainable Practice in the Airline Industry: A Comprehensive Analysis

Abstract

Sustainability is our society's ability to exist and develop without depleting all of the natural resources needed to live in the future. The airline industry accounts for 12% of all CO2 emissions produced per year. There is limited research addressing how certain airline companies can implement sustainable airline practices under economically profitable conditions. We investigated the implementation of sustainable airline practices including the implementation of sustainable aviation fuels, electric ground power systems, and research towards the demographics of sustainable conscious customers. For the implementation of sustainable aviation fuels, a DCF model was created to project the ten year value of investing in said fuels. A cost benefit analysis was created to explore the potential profitability of implementing electric ground support equipment. Finally we conducted market research to determine the demographics of sustainable conscious consumers, and reviewed the sustainable practice participation of the ten largest airlines. We found that within five years sustainable aviation fuels cross the threshold into profitability and continue to increase by around 10 million dollars per year. Our cost benefit analysis showed an upfront implementation cost of 55 million dollars, with a decreasing cost in further years to under 10 million dollars per year. Market research showed that out of the 10 airliners, the largest contributors to sustainability were Delta Air Lines, FEDEX Freight, and SAS Airlines. Looking at the demographics of sustainable conscious consumers, our research found that the majority of consumers included females over the age of 40 years old with a household income of 40,000-60,000. These findings create an economic view on how airliners could potentially implement sustainable practices into their everyday functions. Further research is needed to determine how these practices will affect the short and long term functioning of airliners.