The aviation industry has been one of the hardest hit in the COVID-19 pandemic, and pathways for its recovery are still uncertain. When governments worldwide began announcing stimulus packages, academics and non-governmental organisations alike called for a “green recovery”; to use the pandemic as an opportunity to boost investments in low-carbon sectors while moving away from fossil-fuel dependent ones. As airlines solicited governments for bailouts, some urged for airline support packages to include Paris Agreement-aligned targets, while others called for bailouts to be denied entirely — partly due to the aviation sector’s rapidly growing carbon emissions, which are projected to consume a quarter of the 1.5 degree carbon budget by 2050. In Southeast Asia, this relief has not been so widespread, but what does this mean for airlines in the region and their ability to implement climate action?
Government Assistance So Far
According to bailout trackers, 616 USA airlines have, as of to date agreed on a total of over USD$42.32billion in loans with no climate conditions and the possibility of a second bailout amounting to another 25 billion, while 28 European airlines have agreed on over $34 billion altogether, of which only two accepted non-binding climate conditions. In the ASEAN region, however, the story is slightly different. Of the 66 scheduled airlines in the ten ASEAN countries, only ten airlines received a combined total of less than $4 billion in bridging loans, soft loans and fee relief. None of them had climate conditions.
Garuda Indonesia was granted a bridging loan of $1 billion, while Singapore Airlines received over $260 million in fee relief in addition to salary offsets. The Thai government granted Thai Airways $1.8 billion for bankruptcy rehabilitation, as well as soft loans totalling $790 million for Thai AirAsia, Thai AirAsia X, Bangkok Airways, Nok Airlines, Thai Smile Airways, Thai Lion Air and Thai Vietjet Air. Airlines from Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines and Vietnam have yet to receive definitive government aid despite requests, apart from a minimum tax exemption for Cambodia’s airlines.
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What Do Airline Bailouts Mean for Climate Action?
Many commentators around the world have come out in opposition to airline bailouts, citing their apparent inability to prepare for crises, furloughing of employees, and poor performance even before the pandemic hit. Instead, unemployment benefits and private financing declarations have been suggested. A paper in the Oxford Review of Economic Policy found that among leading economists surveyed, unconditional airline bailouts were judged to have the lowest economic payoff and lowest overall desirability. If a bailout is used, they argue, it should at least carry the condition that the airline take steps to reach carbon neutrality by 2050, a goal that would be aligned with the Paris Agreement to limit warming to 1.5 degrees; failing which, the funding would be converted to taxpayer-owned equity.
The aviation industry accounts for 2-3% of global carbon emissions, but the growth in its emissions is rapid. While the International Civil Aviation Organization (ICAO) projected that airplane emissions would triple by 2045 compared to 2018 levels, a 2019 study from the International Council on Clean Transportation (ICCT) found that emissions may be increasing more than 1.5 times as fast as the ICAO predicted. While COVID-19 has caused a drop in air travel, to return to such a scenario post-pandemic would be untenable for humanity’s climate response. Airlines must either take aggressive climate action or relinquish their place in our future; and many who have received assistance have not been pressured to do the former.
Among the ten ASEAN airlines who received aid, no green strings were attached, and climate action has been meagre. Four of these airlines have released sustainability reports mentioning IATA’s climate targets, but have no concrete targets of their own, with the exception of Singapore Airlines, which is focusing on electricity consumption reduction and increasing use of solar for buildings. Most described measures for increasing fuel, operational and aircraft efficiency, participated in carbon offsetting initiatives and reported year-on-year carbon emissions, showing drops in emissions intensity but steady increases in absolute emissions. As recipients of taxpayer assistance, these airlines should be urged to devise concrete carbon-zero pathways with interim targets for sustainable fuel use, electric aircraft and stronger carbon offset standards.
What Next for Airline Workers Left in the Lurch?
Most airlines in ASEAN have not received any financial assistance since the onset of COVID-19. Many are small carriers that cannot afford the investments needed for a sustainable transition. So, what could a “green recovery” look like for them? This particular elephant in the room has been seldom discussed in the ASEAN region, but a global network of organisations, including five from Southeast Asia, are calling for degrowth in among airlines to tackle climate change. Stay Grounded is adamant that air travel be radically reduced, and it has a point: the 2019 ICCT study lead researcher commented that progress in airline fuel efficiency was outstripped by increases in demand. This is reflected in the absolute emissions of many airlines, which are stubbornly increasing despite reduced emissions intensities. In its 2019 report, Stay Grounded argues that technological solutions should be combined with a reduction in flights, and questions the existing social norms of hypermobility and hyperactivity. Its recommendations include raising kerosene and carbon taxes, frequent flyer levies, banning or capping domestic flights and flights with rail alternatives, issuing a moratoria on airport infrastructure expansion and promoting land-based modes of transport and virtual conferencing where possible; the ultimate objective being a reduced demand for air travel.
Though unforeseen, the pandemic will be no small contributor to this objective. In ICAO’s recovery projections up to March 2021, the Asia Pacific has the lowest passenger revenue for international travel out of all regions, and second lowest for domestic travel. Experts from Oliver Wyman, a consultant firm, expect that by 2023, there will be fewer airlines and fewer flight options globally. However, there will also be even more job losses. ASEAN, whose leaders placed high hopes on aviation driving its integration and tourism industry, will no doubt be severely affected, but perhaps it is also a chance to pivot. As air travel shrinks, electrified land travel can expand. The challenge is to make this transition as smooth and equitable as possible.
Central to a green recovery is our people. Airline workers who have lost their income cannot wait years for the sector to rebound. From what ASEAN governments save on airline assistance, plenty is needed for unemployment support, including immediate financial assistance as well as education, reskilling and retraining programmes for transition to jobs in other sectors. In addition, land travel expansion is already well underway, and one of its major drivers in Southeast Asia is the Belt and Road Initiative (BRI). Kuala-Lumpur-Singapore and Bangkok Suvarnabhumi-Singapore are some of the busiest international airline routes in the world; yet the ambitious Kunming-Singapore high-speed rail could connect China and all mainland Southeast Asia countries. Such a project could allow for air travel within the region to shrink while meeting demand for interconnectivity and creating new jobs. Of course, the infrastructure alone does not ensure a just transition, and policies that prioritise the needs of local workers and those affected by the transition are required. For example, construction of the Laos-China portion of the railway is beset with concerns that only Chinese workers are hired, and that increased tourist traffic only patronises Chinese-owned hotels and restaurants already in Laos, providing little benefit to local communities in exchange for a huge construction debt. Policymakers no doubt face the daunting challenge of negotiating for their citizens’ gains with powers much larger than themselves.
In addition, despite the need for climate action, the archipelagos of Southeast Asia will have a more difficult time replacing airlines. While intra-island transport could be fulfilled by railways, some level of domestic air travel is still required — even more reason for Indonesia and Philippines’ flag carriers, Garuda Indonesia (which received aid) and Philippine Airlines (which received an injection of $364 million from its billionaire CEO Lucio Tan) to ramp up climate action in order to continue supporting their domestic networks in a low-carbon future.
The road to carbon neutrality for Southeast Asia’s aviation sector, if taken, would be heavily disruptive and daunting. Like many climate action measures, it is both ambitious and absolutely necessary. Whether through extensive deployment of sustainable aviation fuel and technologies, or a widespread conversion to renewable-based land travel, the amount of investment, innovation and commitment needed will be extraordinary. What remains to be seen is whether airlines in Southeast Asia, one of the regions most threatened by the climate crisis, will find it a worthy endeavour.