American Airlines: Grounded by extreme heat
How will the largest air carrier in the world respond to the challenge of rising temperatures?
During June 2017, a heatwave swept the state of Arizona. Temperatures soared and the mercury hovered around 120 F in the central hours of the day1. Passengers flying out of Phoenix Sky Harbor airport (PHX) quickly found out that extreme heat is not an ally of airplanes. American Airlines was forced to cancel more than 40 regional flights out of PHX between the hours of 3:00 to 6:00 pm, since the Bombardier airplanes flying these routes are not licensed to operate above 118 F2.
Impact of higher temperatures
When temperature increases, air density decreases, which reduces lift and makes it harder for airplanes to take off3. Longer takeoff runs mean that airlines burn more fuel, which is negative for both the environment and for the profitability of a carrier, given that fuel is one of the main cost drivers of airline operations4.
Additionally, if an airport has short runways, high temperatures might restrict the maximum weight that an aircraft can lift. This means that the plane can carry less passengers or less cargo onboard, negatively impacting revenue generated. According to a study released by Columbia University5, 30% of the flights departing during the most blistering parts of the day will not be able to take off at their maximum weight by 2050. New York La Guardia airport (LGA), where American Airlines also operates a hub, is an example of where this scenario could become a reality.
It is clear, then, that American Airlines’ profitability could be negatively impacted by climate change in the medium term, and that management should pay attention to reducing greenhouse gas (GHG) emissions and to combating associated risks. The airline industry is responsible for 2-4% of the global emissions6, with American being the largest player globally – measured by fleet size, revenue and number of daily flights7 – and the largest user of jet fuel8.
American Airlines and its focus on reducing fuel consumption
American Airlines has, in fact, a long track record of coming up with innovative ways to reduce fuel consumption, even if the ultimate objective for these initiatives has usually been to achieve cost savings. The company is famous for saving $40,000 by removing one olive from salads9 served in the 80s or for having a “polished metal” livery in the 90s, which reduced the weight of an aircraft compared to painting it10. More recently, American Airlines claimed that, by switching from paper to iPads, they saved 1.2 million dollars in fuel over the course of a year11.
At a larger scale, American Airlines efforts to reduce emissions in the short to medium term can be summarized as follows12:
- Retiring older aircraft and replacing them with new, more fuel-efficient aircraft.
- Reducing fuel consumption through the Fuel Smart Program, which is an employee-led effort to safely reduce fuel consumption.
- Working with the FAA and vendors to facilitate efficient airspace procedures, which also reduces aircraft emissions.
- Replacing existing cargo containers with lightweight versions
American Airlines also announced a partnership with Ocean Park, a boutique investment bank, to develop a biofuel strategy. American is part of the global aviation coalition supporting the goal to achieve carbon-neutral growth from 2020 onward13.
Reaching the next level
While these efforts are directed in the right direction, American Airlines still has a lot of room for improvement. Some of its competitors, such as United Airlines, are already flying some commercial routes with biofuel on a regular basis14. In addition, according to Corporate Social Responsibility data15, GHG emissions generated by American’s mainline operations have steadily declined by 1% over the last 3 years. Yet, GHG emissions derived from regional operations continue to grow rate of 3-5% per annum. Regional emissions are significant, since they amount to almost 1 out of every 5 CO2 equivalent tons emitted by American Airlines.
These data suggest that American Airlines ought to review their fleet strategy for regional operations in a similar way to what is being achieved for mainline fleet. One hypothesis that could explain the current status quo lies in the fact that regional operations are managed by affiliate carriers, who may not have the same incentives or capital to modernize their fleet. American Airlines could therefore partner with them to devise a medium-term plan.
American Airlines should also introduce better reporting systems that monitored fuel efficiency, akin to those of Alaska Airlines, a leader in fuel efficiency. Better monitoring systems should translate make bigger progress every year from an economic and from an environmental perspective.
Is there a different path?
What remains to be evaluated is whether American Airlines is better off dealing with climate change by modernizing their fleet or by restructuring hub operations by, for example, converting PHX and LGA to focus cities and re-routing transfer passengers to other hubs which are less prone to disruption.
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Sources
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- Hansen, Z., “Nearly 50 flights canceled Tuesday as Phoenix nears 120-degree day”, The Arizona Republic (Jun. 20, 2017)
- Martin, H., “Climate change may make it too hot to fly, study says”, LA Times (Jul. 24, 2017)
- Wichter, Z., “Too hot to fly? Climate Change may take a toll on air travel”, New York Times (Jun. 20, 2017)
- http://www.boeing.com/commercial/aeromagazine/articles/qtr_4_08/article_05_1.html
- Coffel, E., & Thompson, R. Horton, “The impacts of rising temperatures on aircraft takeoff performance”, Climatic Change (2017) 144:381–388
- Gulliver, “Can’t stand the heat”, The Economist (Jul.24, 2017)
- American Airlines, 10-K report (2016)
- American Airlines, “American Airlines hires Ocean Park to assist with renewable jet fuel evaluation” (Sep. 28, 2016)
- Bonné, J., “How to cure airlines’ ills”, CNBC.com (Feb. 18, 2003)
- http://www.boeing.com/commercial/aeromagazine/aero_05/fo/fo01/story.html#table1
- https://www.wired.com/2012/09/how-can-airlines-reduce-fuel-costs/
- American Airlines, 10-K report (2016)
- American Airlines, Ocean Park partnership communication (2016)
- Fellet, M., “Now boarding: commercial planes take flight with biobased jet fuel”, Chemical & Engineering News, 94 (2016), issue 37, pp. 16-18.
- American Airlines, Corporate Social Responsibility Report (2016)
I was in Arizona this past summer right after the heat wave broke. Fortunately, my flights (which happened to be on American Airlines) from La Guardia to Phoenix and back were not affected since temperatures had cooled somewhat, but I can appreciate what a nightmare this would have caused for passengers and airlines alike.
This article highlights the logical actions that American Airlines and other airlines are taking to address issues caused by climate change. It seems to be a vicious cycle – the hotter the air becomes, the more fuel is burned during takeoff, leading to increased greenhouse gasses, which ultimately drives the temperature higher. In my view, simply restructuring hub operations is only a temporary solution – one that inhibits its ability to uphold its customer promise, and therefore could cause passengers to switch to other airlines that better serve hubs like PHX and LGA. The alternative solution of modernizing its fleet will not only allow American Airlines to operate more fuel-efficiently and minimize its carbon footprint, but it will be able to uphold its customer promise. As part of this strategy, the company may want to consider limiting its use of regional jets in hubs most susceptible to high temperatures in order to minimize disruption, given that these jets can only operate at temperatures below 118 degrees Fahrenheit. [1] Larger planes can operate at up to 127 degrees Fahrenheit, and thus may be a better aircraft choice to help to minimize some of the variability caused by high temperatures. [1]
Sources:
[1] Amy Wang, “It’s so hot in Phoenix that airplanes can’t fly”, The Washington Post, June 21, 2017,
https://www.washingtonpost.com/news/capital-weather-gang/wp/2017/06/20/its-so-hot-in-phoenix-that-airplanes-cant-fly/?utm_term=.4f29b112f05f, accessed November 2017.
Despite being a frequent traveler, I had never really thought of the climate change challenges faced by airlines! Eduard’s article explains the significant logistical challenges that airlines will have to tackle as climate change leads to an increase in temperature (disproportionately in some destinations than others). In addition to the climate change mitigation measures outlined in the article, airlines such as American should also consider adaptation strategies in the short-run, including:
• Improving working conditions especially for employees on the tarmac (for example, by providing air-conditioned trailers) [1]
• Building longer runways to facilitate takeoff [1]
• Raising traveler awareness about the issue of “weight restriction days” to curb consumer discontent if significant delays arise due to the issue [2]
• Investing in innovation to build aircraft that are more resilient to the weather challenges caused by climate change
[1] Ferris, Robert. There’s a scientific reason why hot weather has grounded planes at Phoenix airport. CNBC. June 2017.
[2] Gallegos, Jenna. Rising temperatures could bump you from your flight. Thanks, climate change. The Washington Post. July 2017.
Eduard I found this essay very interesting! I believe that airlines need to plan according to climate change not only to decrease costs today, but also to be able to operate in 2050. Information you provided also proves that American Airlines also share the same motivation and will definitely be better off by investing to reduce emissions because it is a necessity rather than an improvement. Moreover, efforts in industry to decrease emissions are also supported by major aircraft manufacturers such as Airbus and Boeing. Boeing began production of 737 MAX is up to 15% more fuel efficient than current models. [1] Furthermore Boeing’s studies are not limited to engines but also includes a new tail design, non-stick coating formula. [1] On the other hand Airbus also works on similar innovations and increased number of gears in A320neo jet to decrease fuel consumption. [1] In my opinion, to address climate change both airline companies and aircraft manufacturers should start a joint-effort to create solutions more effectively.
[1] Wendy Koch, “5 Technologies that could help curb airline emissions”, National Geographic, June 10 2015, https://news.nationalgeographic.com/energy/2015/06/150610-technologies-could-reduce-airplane-emissions/, accessed November 2017
This is an interesting industry through which to analyze the effects of climate change. However, I remain skeptical that the airline industry will make the appropriate changes to minimize their carbon footprint. I think the main issue is that there are no significant incentives for them to change their behaviors. Additionally, it is such a low margin and competitive industry that there is probably little room for creative or altruistic initiatives. This stands in contrast to industries directly impacted by climate change, such as agriculture. Agriculture needs to implement changes or they will feel relatively immediate ramifications. Besides the occasional impact to aircraft being able to take off, it will be decades (if ever) until the airline industry is directly affected.
Eduard, this is an extremely interesting article that I find touches on many of the important issues that challenge the aircraft supply chain as a whole. I believe that you are right that American and other airlines should take steps now to ensure their future viability as the environment continues to change.
Unfortunately, I believe that Alex is right and that, in this industry, the name of the game is profitability, which has had a surprisingly negative effect on the rate of adoption of the newer, more fuel-efficient aircraft, at least as it relates to replacing the current fleet. One of the most fascinating dynamics that I see in this industry is the role that fuel prices play in airline fleet behavior. When fuel prices are high, airlines are incentivized to invest in new planes to capture the efficiency benefits. Likewise, when fuel prices are low as they have been over the past few years, airlines typically can’t justify replacing old planes with new ones and will fly those older, less efficient planes.
While next generation plane production and orders continue to grow significantly (orders at this year’s Paris Air Show were the most since 2013 [1]), anecdotally from my prior job I recall that retirements declined significantly (both on an absolute basis and as a percentage of total fleet) from 2013 through 2016 – a period when WTI oil prices fell from $98.17 per barrel to a low of $26.19 in 2016.[2] Consequently, I’m afraid much of the production growth is driven by increased air traffic, improved sentiment following the global recession, and the continued rise of the middle class in Asia rather than replacing the old fleet with less efficient engines. The fleet continues to age!
However, I believe that airlines do understand the need for increased efficiency over the long-term. As fuel prices continue to stabilize as we have seen this year, hopefully airlines will revisit those investments and begin to replace the aging, less efficient planes.
Sources:
[1] https://centreforaviation.com/insights/analysis/2017-paris-air-show-produces-an-unexpected-flurry-of-ordering-lessor-purchasers-were-prominent-353835
[2] https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm
Thank you for the great read, Eduard! Like Maha, I fly a lot, and never understood the impact of high temperature on flight delays – I learned a lot from your article.
I share Alex and WL’s concern about airlines prioritizing short-term profitability over long-term sustainability investments.
However, I do think airline operations are more exposed to the immediate ramifications of climate change than Alex indicated. Climate change needs to be top of mind for airline carriers not only because of high temperatures grounded flights, but also because of the huge disruption and cost to airlines when natural disasters occur. Research suggests that global warming may contribute to more frequent and intense storms and floods [1]. These events are extremely disruptive to airlines. This year, we had many hurricanes and earthquakes, and most major airlines reduced their revenue estimates; while this occurred for many reasons, weather-related losses certainly contributed. For example, Southwest estimates losses of $100M in the third quarter of this year alone related to natural disasters [2]. If natural disasters continue to increase in frequency and intensity, this will have (and already is having) a very tangible impact on airlines’ operations and profitability. The magnitude of these losses may be the incentive the airline industry needs to ramp up climate change in the nearer-term.
[1] https://earthobservatory.nasa.gov/Features/RisingCost/rising_cost5.php
[2] https://www.bloomberg.com/news/articles/2017-09-28/southwest-air-says-natural-disasters-to-cut-revenue-100-million
Thanks for your post, Eduard! It brings back many memories as I was actually hiking just outside of Phoenix the week that the heat wave hit and American Airlines was forced to cancel flights – the heat was unbearable!
In response to your question, I think that American Airlines could restructure their hub operations in the short-term to reduce the impact of heat waves on flight delays. It is ultimately up to Boeing and other aircraft manufacturers to invest in R&D to develop more modern fleets and this will take significant time and funds. In the interim, American Airlines can take a more proactive approach by restructuring their hubs to avoid centralizing operations in cities at greater risk of heat waves.
Furthermore, another issue for American Airlines to keep in mind as temperatures increase will be ensuring that the ground crew that load and unload aircraft can work safely and comfortably under harsh conditions [1].
[1] https://www.nytimes.com/2017/06/20/business/flying-climate-change.html
I actually experienced this when I was coming home from Greece this past summer. Our plane was bound for New York’s JFK airport and was fully loaded with passengers and cargo, sitting on the runway. The temperature got so high that they had to delay takeoff and make the plane lighter by offloading cargo. Another thing that contributes to the weight of these aircraft is that they also serve as couriers sometimes and agree to carry packages and cargo for companies that are shipping internationally. One thing American could do is stop this practice, but that’s unlikely because it generates revenue. Like you suggested, they will probably search for a solution that has the least impact on their business and revenue. One of the advancements that airlines are experimenting with now is the introduction of nanotechnology to paint and to the structure of the aircraft. The paint makes the aircraft more aerodynamic and reduces the fuel needed to power it. Some companies are experimenting with metals infused with nanotechnology that are lighter and stronger than those we currently use to build airplanes. These advancements have the potential to revolutionize the industry and radically change how much fuel is used to power flight. An example of the application of this nanotechnology is included below:
https://www.nanowerk.com/news/newsid=20125.php
As a Phoenix native, I can absolutely relate to this topic. Even though this is the only thing Phoenix ever makes the national news for, this is something that the residents face for about 5 long summer months. We are trained to book summer flights in the early morning or late at night, just to make sure that it won’t be cancelled during the hottest weeks. In my opinion, the extreme summer temperatures are an inhibitor to business growth in the city because there is a long-term fear that events like this will prohibit travel more often and/or make the city uninhabitable. Some research suggests that high temperatures could reach 130 degrees Fahrenheit by the end of the century [1].
I take a bit of an optimistic view of American Airlines outlook on climate change. Although there is definitely a trade-off between profitability and fuel/sustainability improvements, if they want to stay in business long term, it’s almost a necessity that they make these investments. There are other climate change effects beyond the takeoff problem and even the risk of natural disasters. As the global temperatures increase, extreme turbulence will significantly increase on flights worldwide. Extreme turbulence is enough to throw humans and luggage around the cabin and consists of forces strong than gravity (!!). [2] The increased safety concerns add even more evidence that American and frankly, all airlines, need to do their part in the climate change discussion.
In response to your final question, I am hopeful that American will focus on the modernization of their airline fleet, rather than restructuring around “risky” cities. The increase of modern aircraft designs may allow for increases in stability to respond to the turbulence safety concerns.
[1] http://www.latimes.com/nation/la-na-phoenix-climate-adapt-20170327-story.html
[2] https://www.sciencedaily.com/releases/2017/10/171004120456.htm
It is interesting to read the article as it is not normally apparent that a rising temperature will cause the airline operations to become increasingly damaging to the climate. It is good to see that American Airlines is taking the lead in curbing climate change. However, it will be useful to see how they can incentivize the regional partners can also adopt similar policies and participate in adopting green practices. One way to do this is to link perks and benefits of the green initiatives done by the regional partners.
It will be exciting to see if American Airlines starts advertising the green image causing healthy competition in the market for better initiatives.
Getting more stringent specifications for the new airplanes and re-routing the newer fleet on the riskier routes may be a viable short term measure.
Fascinating article, I learned a few things I did not previously know about planes!
You raise some interesting points that can be applied to many large companies. They all show awareness of climate change, but when you look at how the companies are actually operating, you question how committed to changing they are. While American is realizing GHG reductions in their mainline fleet, I wonder why they are seeing an increase in their regional fleet? I appreciate the research you did on American’s competitors. To know that a competitor is already consistently using biofuels and that Alaska Airlines has a better fuel efficiency monitoring system both show feasible steps American can take in the right direction. Being that American is the largest of the airline companies, I think they should be making an effort to be a leader in green technologies. If you are a big company, it is your duty to think big too. American should be among the leaders in airline green technology, and for the moment it appears that they are following their competition.
Thanks for the insightful article, Eduard. I managed to escape Phoenix in May of this just before the heat wave! Unfortunately, I think this will start to be the new norm. Other than moving more hubs to cooler climes, an impractical solution, airlines will need to take measures to combat this risk, including by phasing out old airlines as you mentioned.
On the fuel front, it’s good to hear about their carbon-neutral grown goal, but they need to go beyond that, especially given the huge contributor (I didn’t realize it was so significant) airline travel is to carbon emissions.