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(Left to Right): Director General Willie Walsh and American Airlines CEO Robert Isom.
The annual cost for airlines to transition from jet fuel to sustainable alternatives will be $1.4 billion in 2025 and could be as high as $744 billion in 2050, according to a new report.
IATA issued updated versions of its policy and finance net zero roadmaps on Sept. 24 at its World Sustainability Symposium in Miami. The finance roadmap details estimated costs on top of jet fuel for airlines as a result of procuring sustainable aviation fuel (SAF), hydrogen, and other key levers.
“The updated IATA policy and finance net zero roadmaps make it clear that decarbonization by 2050 is possible,” IATA Director General Willie Walsh said. “They also sound a warning bell that, to achieve this, all stakeholders, particularly policymakers, must collaborate more broadly and act with greater urgency.”
The 2050 net zero goal was committed to by IATA member airlines at the association’s AGM in Boston in October 2021.
At the symposium this week, Walsh acknowledged that the decarbonization transition costs were “eye watering” but he believes they will mostly be handed down to the consumer, via ticket price increases, because airlines cannot absorb them.
In an executive summary of the updated IATA financial roadmap, it states that the estimated cost of net zero transitions for the whole period from 2024 to 2050 will be $4.7 trillion. That represents an annual average transition cost of $174 billion, though it rises from $1 billion in 2025 to $744 billion in 2050. To put that into context, the global airline industry as a collective is forecast by IATA to post net profits of $30 billion in 2024, equal to a 3% net profit margin or $6 per passenger.
“Putting the transition cost in perspective in this way should make it blatantly clear that policy support is urgently required to bring the cost of the transition solutions down and to minimize their premium over fossil fuels,” the finance roadmap report says.
“The analysis presented in this finance roadmap shows that air transport’s net zero CO2 emissions goal is attainable, comparable in many ways to the solar and wind energy transitions, and similarly critically dependent upon policy makers’ concerted efforts to make it happen.”
In a speech at the symposium, ICAO Secretary General Juan Carlos Salazar said he had one request: “Full engagement of the entire aviation eco-system is vital. We must move together as a team.”
American Airlines CEO Robert Isom, who earlier at the conference warned the industry might not meet its 2050 goal because it wasn’t moving fast enough, said his company was investing in decarbonization initiatives, but it was “a drop in the bucket.”
He encouraged every airline, manufacturer and fuel supplier to get actively involved.
“I am happy to plant seeds, but we need a lot of watering to come,” Isom said.
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