Air transportation cumulatively accounts for 2-4% of worldwide carbon emissions. The airline industry has reacted appropriately over the past decade, led by the International Air Transport Association, which in 2009 established targets to include an average improvement in fuel efficiency of 1.5% per year from 2009 to 2020, a cap on net aviation CO2 emissions from 2020 onward, and a reduction in net aviation CO2 emissions by 50% by 2050, benchmarked to 2005 emissions levels .
Meanwhile, aviation traffic worldwide is forecasted to double over the next 15 years , representing further opportunities for airlines to leverage supply chains to not only mitigate global warming risks, but also to build competitive advantages in a domestic transportation market that is now largely consolidated into five main airlines .
Alaska Airlines, recently ranked as the most fuel-efficient U.S. airline for the fifth year in a row by the International Council on Clean Transportation , faces the challenge of improving its supply chain model amid growing concerns over climate change and its recent merger with Virgin America. To further compete with industry titans United, Delta, Southwest, and American, Alaska Airlines must align technological, operational, and digital efforts to create value along its supply chain amid the effects of climate change.
From a technological approach, airlines can benefit in the future from biofuels , which may lessen the dependency on standard jet fuel and also create a buffer from volatile fuel prices. Alaska Airlines, from a short-term perspective, is already making strides by partnering with universities and private companies to develop alternative jet fuels. In late 2016, Alaska flew the first commercial flight with alternative jet fuel made from limbs and branches of trees leftover after forests harvests . From a long-term strategy, it will be prudent for Alaska to continue leveraging these partnerships, as the airline seeks to eventually replace 20% of its Seattle airport fuel-supply in order to reduce CO2 metric tons by 142,000 per year . This will require a continued, dedicated effort in working with the public and private sector to drive further innovation in this space.
Operationally, from a short-term perspective, Alaska Airlines has leveraged a younger, more fuel-efficient aircraft fleet and small technological improvements, including adding split-scimitar winglets, to increase fuel efficiency by 1.5% per aircraft . From a long-term perspective, Alaska has purchase commitments of 68 fuel-efficient aircraft between 2016-2022 , reinforcing its commitment to addressing environmental concerns through its supply chain and purchasing posture. However, in its larger portfolio of Alaska, Horizon, and now Virgin America aircraft, which all use different aircraft suppliers, Alaska must continue to reassess the age of its fleet and make conscious decisions to purchase aircraft that will pay off in the long-term via improved fuel-efficiency and lower lifetime maintenance costs. Furthermore, climate change has increased the probability of severe weather effects, which can impose significant risk to ground operations and add considerable fuel costs in the air due to stronger winds .
Looking forward, a robust aircraft spares management program and improved forecasting programs across its route network can lessen the impact of these severe weather impacts. This may require heavier up-front investments in aircraft, maintenance resources, and forecasting, but the investments would allow the airline to minimize catastrophic, costly effects across its daily operations over the long-term.
Alaska should also consider leveraging improved digitalization across its supply chain to mitigate climate chain effects. With the increasing power of simulation and forecasting, Alaska in the short term can seek to manage and optimize supply chain and logistics processes, such as improved visibility and efficiency between suppliers. Additionally, recent research suggests that through improved forecasting and simulation, optimizing aircraft routing can lessen overall climate impact while minimizing fuel costs . As the power of digitalization improves, Alaska must evaluate processes to optimize routes on the ground and in the air that lessen the environmental burden and improve the bottom line.
Overall, Alaska Airline has led the way in environmental efforts to address climate change concerns across the airline industry. However, questions remain about how Alaska and the broader industry will combat climate change in the future:
- What supply chain synergies can Alaska leverage with Virgin America to posture itself to continue to be the industry leader in combatting climate change?
- In an extremely competitive domestic business environment, to what extent will airlines invest in new technologies across their supply chains to lessen the industry’s contribution to climate change?
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