Guilt over the toll air travel takes on the environment is becoming more and more commonplace, with customers looking for ways to offset the carbon emissions caused by their flights or looking for altogether different modes of transport.
“‘Flight shaming’ is gaining traction and it could cost airlines billions,” says global bank Citi, which also claims that over the next five years the cost of carbon offsetting leisure travel alone will reach $3.8 billion per year, with the potential for that number to be 10 times higher.
While this could be tragic news for airlines, rail operators and sustainable tour operators, among other businesses, could be beneficiaries as consumers pay more attention to their carbon footprint and carbon offsetting becomes “big business”, reports CNBC.
The cost to airlines could be catastrophically high and will either be absorbed by the consumer or the airline.
Either way, the airlines lose out, as the higher price of flights to the consumer could also lead to an air travel slowdown.
“If this burden were to be fully absorbed by the consumer, our price elasticity analysis shows that there would be a shortfall in volume growth of -0.4 per cent per annum vs. current forecasts. And while this does not sound detrimental, if this onus were to fall on the (largely fixed cost base) airlines, the cost of carbon offsetting all leisure consumption could be as much as 27 per cent of airlines’ profits by 2025,” wrote analyst Mark Manduca.
The cost of offsetting corporate travel will cost another $2.4 billion, reducing airline profits by an additional 17 per cent. Again, that actual cost could be 10 times higher.
Aside from rail and sustainable tourism operators, governments, forest landowners and carbon plans will benefit from this trend, as carbon offsetting projects often include planting trees and invest in green spaces that reduce greenhouse gasses and counteract carbon emissions.
Citi speculates that airlines may get creative and shame customers into paying for carbon offsetting.
“We hypothesise that some airlines will ‘reward’ customers who choose to offset their carbon footprint by granting them a green seat on an aircraft. Meanwhile, customers who do not offset will be allocated a red one and placed into a state of ‘shame’,” said Citi.
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