Airlines Going Green Major Airlines

¶ … Airlines Going Green

Major Airlines are Going Green

The airline industry has been through many ups and downs. One of the latest concerns for airlines is the protection of the environment (Burleson & Maurice, 2006; Waitz, et al., 2004). Because so many of their patrons are interested in environmental protection today, and because more and more people are responding to companies that are interested in caring for the environment in various ways, airlines are finding more reasons to go green. Doing so is not without difficulty and compromise, of course, but that does not mean there are more cons than pros for a majority of airlines. Each airline must make its own individual decision as to whether going green would be cost effective or whether it would be better to continue operations as they currently are and not make changes that would be better for the environment but that might cut into the bottom line. While caring for the environment is clearly important, airlines are in business to make a profit and that is the main concern on which they are focused (Burleson & Maurice, 2006; Waitz, et al., 2004).

Addressed here will be the airlines that are environmentally friendly and the airlines that are opposed to going green, along with other issues such as advantages, disadvantages, costs, and motivations. Going green is not something that an airline can just do because it wants to please customers or even because it is concerned about the environment. Going green for any airline has to be done because the airline wants to make changes and can show that those changes will be cost effective and that they will make sense. Analyzing the costs required to "go green" with options like biofuel can be a complex process that should not be entered into lightly or too hastily for any airline. Even though there are clear advantages to going green in many cases, there are certainly pitfalls that have to be faced by airlines - and that need to be navigated carefully.

The Best and Worst Green Airlines

Airlines such as Continental and Southwest are friendly to the environment and have spent time concentrating on going green (Burleson & Maurice, 2006; Waitz, et al., 2004). JetBlue and Frontier are also very focused on green travel. Most of the green airlines are in the United States, but there are other countries where airlines see that going green may be beneficial to them. One of the non-U.S. airlines that is focused on going green is SriLankan Air. Singapore Airlines, RyanAir, and Delta were also found to be among the best for environmentally friendly airlines (Burleson & Maurice, 2006; Waitz, et al., 2004). These companies have been interested in the carbon footprint that they leave behind, as well as the fuel that they use, the recycling with which they can get involved, and other factors. Because of their dedication to going green, they have been recognized by many environmental groups. The goal for these airlines was not recognition, however, but the opportunity to work with their customers to show a commitment to the planet (Burleson & Maurice, 2006; Waitz, et al., 2004).

As for airlines that are the least environmentally friendly, SAS Scandinavian and American Eagle are both at the bottom of the list (Burleson & Maurice, 2006; Waitz, et al., 2004). These are airlines that have done nothing at all in order to make themselves more environmentally conscious or environmentally friendly, and they are inefficient when it comes to their flights. They do not fill their planes as often as they should, and they have more flights scheduled than they need from many of the airports they service (Burleson & Maurice, 2006; Waitz, et al., 2004). Because of that, they are using more fuel and polluting the environment more heavily than their green counterparts (Burleson & Maurice, 2006; Waitz, et al., 2004). One of the ways in which airlines can go green is to be more efficient with their flights, but this is something that American Eagle and SAS Scandinavian have not considered or have considered and then disregarded as being the proper direction for their business model. Their schedules have not changed, and that indicates that they are not interested in lessening their carbon footprint.

The Costs of Going Green

Going green is not free (Doganis, 2002). There are always costs and trade-offs to be considered, and that is true of any company that is considering being environmentally friendly. The costs associated with going green are certainly not limited to the airline industry, either. Every industry has costs that have to be incurred when companies in that industry focus on green or environmental issues. For the airline industry, one of the main costs of going green is fuel (Doganis, 2002). Biofuels and other alternatives are very expensive for planes, and many planes are not equipped to use them properly. Because of that, major changes would have to be made to the planes - and that, of course, costs a great deal of money when there are many planes in the fleet. In addition, the only other way airlines could get planes that were properly equipped would be to purchase new planes (Doganis, 2002). That would not be a good, cost-saving measure, either, and would likely be avoided by most airlines.

Airlines that want to go green do not need to focus only on the emissions created by the planes. It is also important for them to look at issues such as recycling and what kinds of items they are using for their passengers (Doganis, 2001). By switching over to recycled materials, and by recycling once the items have been used, an airline can cut costs over time. However, that same airline may find that it has to spend more money in the beginning in order to make sure that it is getting the kinds of products that it really wants and needs (Doganis, 2001). Buying recycled or green items is generally more expensive, because these items still cost slightly more to produce. Eventually, those costs may come down, and that could entice more airlines to go green or take more measures to protect the environment. Airlines that are worried about the financial cost of going green must consider that against the costs of not going green when it comes to what customers want and how satisfied they will be with an airline that is unconcerned about the environment (Doganis, 2001).

Advantages and Disadvantages of Going Green

Going green has its advantages, but there is also a downside to being environmentally friendly. The largest advantage, of course, is the actually help that is given to the planet when individuals and companies choose to go green (Smith, 2002). Because the pollution from so many planes flying every day is significant, the more airlines that go green the more benefit the planet gets. But what is the benefit for the airline? Good customer relations is one of the largest benefits that any airline can get, and when the airline focuses on going green - which matters to a large number of its customers - then the airline reaps the benefits of customers who want to fly on that airline because they like the policies of the company (Smith, 2002). Of course, some people do not care about going green, and the airline will not get any advantage with those customers - but more people are going green every day, and there is a serious market for products and services that are environmentally friendly.

One of the most significant disadvantages of going green for any airline is the cost that is undertaken (Smith, 2002). That was addressed in the previous section. There are more disadvantages than cost, however, because an airline must put a great deal of time and effort into environmental practices. The changes that an airline undergoes because of its desire to go green are far-reaching, and they can upset some of the employees who now feel that they must do more work or that they must act or react in a different way because they work for a "green" company (Smith, 2002). When employees are unhappy, that can quickly extend to the customers because those customers see the dissatisfaction the employees display about their company (Smith, 2002). There are not always easy ways for a company to make changes, and some of the "green" products and ideas will not work well for an airline that has strict rules to follow and quotas to meet. Many airlines are restricted in what they can do by the FAA and other regulatory agencies (Smith, 2002).

How Companies Decide to go Green

There are many ways in which companies decide to go green (Friends, 2007; National, 2007; Kim, et al., 2007). Various issues can make them consider going green, and there are often multiple concerns which they must address when they are thinking about going green and attempting to determine if they should take that step or if they would be better served by avoiding the movement to become environmentally friendly. For some airlines, it is not that they do not care about the environment but only that they do not see going green as financially feasible (Friends, 2007; National, 2007; Kim, et al., 2007). If they have incentives, that can affect how they feel and whether they will go green. If there are few incentives, most airlines will decide not to go green because there will not be a large enough benefit to offset the costs they must address (Friends, 2007; National, 2007; Kim, et al., 2007). Companies, overall, decide to go green in the same way that they decide to do anything else - because it is cost effective for them and they feel as though it will be of benefit to them in the long run (Friends, 2007; National, 2007; Kim, et al., 2007).

Cost is a huge factor in whether a company decides to go green. There are also other factors, such as customer satisfaction concerns, pressure from governmental or regulatory agencies, and what the competition is doing (Friends, 2007; National, 2007; Kim, et al., 2007). Those are all valid considerations when companies are trying to decide whether to go green. The competition may be one of the most important considerations, as well, because an airline that does not keep up with its competition can see its sales numbers fall. For customers who feel that environmental health is very important, an airline that goes green and advertises all of the wonderful things they are doing for the environment may be the right choice, even if the cost of flying on that airline is slightly more than other airlines will charge (Friends, 2007; National, 2007; Kim, et al., 2007). By paying close attention to the competition's choices and comparing them with customer attitudes, it is possible for an airline to make its decision about whether to go green in a way about which it feels good.

Positive Motivations for Going Green

Governmental regulations may eventually force the airline companies to at least take some measures toward becoming more environmentally friendly (Intergovernmental, 2007; Intergovernmental, 1999). In addition to what airlines may be required to do, there are many choices that airlines can make now that can help them go green and feel good about their choices. One of the most positive motivations regarding going green for any airline is the way that customers feel about the environment. If people who fly - especially those who fly frequently - want to be involved with companies that care about the environment, then the airlines should give them what they want so that they will retain their business. The airlines can make a lot of money that way, simply by making some changes that signify their commitment to the environment (Intergovernmental, 2007; Intergovernmental, 1999). Of course, all of the positive motivation in the world has little to do with how much something costs, so airlines still have to relate their motivations to whether what they want to do is cost effective for them and will benefit them overall.

Surveying customers and talking to them about the environment can help airlines decide whether they want to consider going green. Knowing that being environmentally friendly will bring them in many more customers and promote loyalty to their airline is a great positive motivation for any airline (Intergovernmental, 2007; Intergovernmental, 1999). In addition, the company may be able to bring in better employees because it will find people who are conscientious about the environment and about their own working environment. These employees can be more dedicated to their employer than others, and they may also have good ideas about going green and about other aspects of the company. Because of the ability to attract great employees that are dedicated and committed to quality work, an airline can be highly motivated to go green and reap the benefits of being friendly to the planet.

Going Green and Profit Margins

An airline is not only interested in how much money it is bringing in, but also in the difference between what is coming in and the operating costs that are going out to pay employees and maintain planes and equipment (States, 2007; The U.S., 2006). In other words, the money that comes into an airline is far from being all profit - and the profit margin is very important to the airline. Any airline company that is considering going green needs to look carefully at the price that it will pay for that from a financial standpoint (States, 2007; The U.S., 2006). How much will going green cut into the profit margin of the airline? Will going green reduce the airline's profit to the point that the airline will no longer be able to be successful? If that is the case, the airline may not be able to go green because to do so would potentially put it out of business. It could go green and then raise fares to compensate, but that could drive away some of its customer base and stop the airline from seeing a big advantage from going green (States, 2007; The U.S., 2006).

Fuel is one of the largest areas of financial importance for any airline. Because airlines generally have many planes flying every day and all of those planes must be fueled frequently, the fuel costs for airlines can run into the hundreds of thousands of dollars (States, 2007; The U.S., 2006). By going green and switching to biofuel, an airline may see its profit margin decrease and may put undue stress on its financial reserves. Profit margins must stay at specific levels in order for a company such as an airline to continue to operate, and going green is supposed to increase that profit margin - but that could take time. In other words, the profit margin for an airline that has gone green will often be lower in the beginning, but it will be higher in the long run. For airlines that have enough cash, that is something worth considering. For other airlines that might not be operating with as much of a reserve, spending extra money up front to go green might not be possible or desired (States, 2007; The U.S., 2006).

Stockholders and Going Green

When an airline decides to go green, it has to consider its stockholders (Lee, et al., 2007; Next, 2009). If an airline is not careful of the people who support it, that airline could find itself in serious trouble financially. Stockholders do not call all of the shots, of course, but what they need and want should be taken into consideration, because they can strongly affect the company. Stockholders own shares in the company, and they can buy or sell shares. They can also vote on the people who operate the company, and they buy the stock with the expectation of getting dividends based on the price of the stock (Lee, et al., 2007; Next, 2009). Because of that, all stockholders have a vested interest in what the company does - including going green. If the airline goes green and the stock price goes up because of that, the stockholders will be pleased. Of course, the reverse is true, as well. When the stock price goes down the stockholders make less than they had hoped for, and they want to know the reasons behind the drop (Lee, et al., 2007; Next, 2009).

If the fact that the airline is going green is what is causing the stockholders to make less money, the stockholders are not going to be happy with that. They will start to sell their shares because the company is not performing well, and the selloff of shares will cause the price of those shares to drop even further (Lee, et al., 2007; Next, 2009). This could become a vicious circle from which an airline can have trouble recovering. When airlines go green, they can expect a change in their profit margin and their bottom line - which can directly affect the stock price in either a positive or a negative way. It is vital that airlines keep that in mind when they consider whether they want to go green and whether it will be cost effective to do so (Lee, et al., 2007; Next, 2009). If stockholders see that going green is a good move for the airline, they will be encouraged to purchase more shares and that will help to drive up the price of the stock. The higher the stock price and the more money made by the airline, the higher the stockholder dividends received (Lee, et al., 2007; Next, 2009).

The EPA - Pressure to go Green

Going green is mostly about money for the airlines, but there are other reasons that it should be considered. For example, the Environmental Protection Agency (EPA) often puts pressure on companies to go green and protect the environment (Executive, 2007; U.S. Supreme, 2007). The agency has rules and regulations that have to be followed, and airlines are already subject to those. In addition, however, there is more that the EPA is trying to do, and stronger regulations that the agency would like to see passed for the airlines (Executive, 2007; U.S. Supreme, 2007). Eventually, the airlines may have no choice but to go green in order to meet the regulations passed by the EPA. Right now, however, going green is not required because the EPA has not passed regulations that require it or that insist that a company of any kind go green. Emissions standards have to be met, but these standards are much lower than what going green would offer (Executive, 2007; U.S. Supreme, 2007).

Alternative Fuels

Lately, there has been a lot of talk about biofuels. These alternative fuels are made from recycled products like grease, or they are synthesized in some other way (Executive, 2007; U.S. Supreme, 2007). Because of that, they are far different from gasoline. Of course, jet fuel is also different from gasoline, so there are concerns as to the compatibility of biofuels in aviation. That is a subject that warrants more study in order to help determine whether alternative fuels will be readily accessible to airlines - and how much the use of a different kind of fuel will actually cost. Even though alternative fuels may be much better for the environment, airlines will not want to switch to those kinds of fuels if they are cost prohibitive (Burleson & Maurice, 2006; Waitz, et al., 2004).

Airlines Going Green in Other Countries

The United States is not the only country where airlines are going green, although that is seen more commonly in the U.S. than elsewhere. Still, Singapore Air, and SriLankan Air are both focused on going green, and there are others, as well (Burleson & Maurice, 2006; Waitz, et al., 2004). Conversely, there are companies like SAS Scandinavian, that have absolutely no interest in going green (Burleson & Maurice, 2006; Waitz, et al., 2004). Some of the reasons behind airlines going green in other countries have to do with the costs of the changeover. These airlines are sometimes not able to go green because they simply cannot afford to do so - and because they do not have regulations in their country that require them to do so. The U.S. is becoming more strict about emissions from aircraft, but other countries are more relaxed when it comes to their emissions standards (Burleson & Maurice, 2006; Waitz, et al., 2004). For those countries, there is no real incentive to go green and it is likely that the airlines in those countries will operate as cheaply as they can and still maintain their safety and customer service records.