Airlines are already shouldering part of the blame for changing weather patterns and now they will be expected to come clean on what they are doing to mitigate the negative effects they are having on the environment. With a growing number of reports illustrating the growing damage air travel is causing, 2008 is likely to be a year when investors and other stakeholders take more notice of what airlines are doing to neutralise their emissions.
Budget airlines in particular have been targeted by environmentalists as they are helping drive the current boom in air travel through cheap fares. Ironically, airlines like easyJet have newer, more fuel efficient fleets and normally fly fuller aircraft than legacy airlines, which makes them more environmentally friendly. Nevertheless, there is growing pressure on them and other airlines to include the environment in their reporting procedures.
And with airlines likely to be included in an EU emissions trading scheme from 2011, investors should also be taking note of the carbon neutral measures they are taking.
A from PricewaterhouseCoopers (PwC) on the preparedness of European aircraft operators for the trading scheme indicates that they are far from ready though. The EU Emissions Trading Scheme puts a price on carbon that businesses use and creates a market for carbon.
PwC says that airlines should be treating this as a strategic business issue rather than merely a matter of environmental compliance. "Carbon risk is fast becoming part of the currency of analyst and investor scenario planning and dialogue," says PwC.
The scheme may only initially apply to flights within the EU, which means the biggest affect will be on budget airlines.
UK-listed airlines including easyJet and British Airways already have a number of programmes in place to reduce their carbon emissions and help neutralise the impact of flying.
