Editorial: Air New Zealand backtracks on climate targets a blow to airline

Boeing 777s are less efficient than new generation planes such as Dreamliners.

Editorial

EDITORIAL

Air New Zealand’s backtrack on an ambitious decarbonisation goal is another blow to the airline as it heads towards announcing a sharply reduced profit later this month.

The extremely tough second half of its financial year will set it back from what was shaping as a strong financial recovery from the ravages of Covid-19.

Pre-tax earnings for the 2024 financial year are forecast to be in the range of $190-230 million, sharply lower than the 2023 earnings of $585m.

That will hurt. But the airline has also been stung by being forced to back down from an ambitious carbon reduction target announced just two years ago. It wanted to cut carbon intensity by 28.9% by 2030 compared with 2019 levels.

An aspiration to be the “world’s least unsustainable airline” has long been a key part of Air New Zealand’s image-building. Airlines are big polluters and being seen to be as green is valuable for Air New Zealand, a small airline that covets an outsized brand presence among global carriers.

Its target was six times as ambitious as a 2023 agreement by the global aviation industry which aims to lower carbon emissions by 5% by 2030.

Now, it is the first carrier to ditch climate targets, attracting the sort of worldwide attention it doesn’t like.

It said it was removing its 2030 science-based carbon intensity reduction target and would withdraw from the Science Based Targets initiative, a United Nations-backed corporate climate action group.

The airline says many of the levers needed to meet the target, including the availability of new aircraft, the affordability and availability of alternative jet fuels, and global and domestic regulatory and policy support, were outside its direct control and remain challenging.

Deliveries of new fuel-efficient Dreamliner aircraft are now running years behind schedule, meaning it is plugging gaps in its network with older planes that are up to 20% more polluting.

Sustainable aviation fuel (Saf) can be dropped into existing engines and infrastructure and is seen as the most effective way of cutting pollution by all airlines, responsible for at least of global carbon emissions.

Air New Zealand burns some 1.3 billion litres of jet fuel a year, mostly on overseas flights. To meet the now-abandoned 2030 target, it would need 302 million litres of Saf a year. During the last three years, it has taken delivery of just under three million litres.

It is working with partners to use small-battery trial aircraft for short routes, and further out, hydrogen technology for longer routes.

Other countries are imposing mandates to require airlines operating from them to use minimum amounts of Saf.

There is no such requirement in New Zealand, a country with biomass that could be turned into Saf if big producers could be incentivised to do so.

In the meantime, it’s back to the drawing board for Air New Zealand, which says it remains committed to net-zero goals in 2050 and is working on a new near-term target “that could better reflect the challenges relating to aircraft and alternative jet fuel availability within the industry”.