The ongoing pandemic has had a consequential impact on all sectors of the national economy, but perhaps none more than the airline industry. As Group Executive, Government, Industry, International, Sustainability at QANTAS Airways, Andrew Parker has visibility over the disruption that has unfolded and the potential for sustainable change moving forward. We sat down with Andrew to discuss what is on the horizon for the nation’s carrier.
You witnessed first-hand the devastation that crises can wreak on industries dependent on the global movement of people. How did Qantas respond to the challenge, and how will COVID shape the way businesses think about risk?
The aviation industry has experience in managing and reacting to risk. Whilst COVID has certainly been one of the biggest challenges the broader community and airlines have experienced in the last 100 years, it isn’t the first crisis and won’t be the last. We have in place a robus Risk Governance framework that is consistent across all of the group’s activities, and this has stood us in good stead during this period.
Qantas was very quick to recognise the impact on our business and to take the necessary steps to reduce operating costs in recognition of the near total collapse in revenues. We engaged with all stakeholder groups, employees, supply partners, lenders, the government and our customers to introduce measures to preserve cash to give the groups flying businesses their best chance of survival over what has continued to be an everchanging and unknown time frame.
Sadly, we had to stand down over 25,000 of our employees in the first phase, reduce overall numbers by a minimum of 8500, raise capital from the market to fund ongoing cash flow, and talk to our suppliers to seek deferred payment terms. These are very significant changes to a business based around its people. As borders slowly start opening again we will rebuild the business in a smarter way. We know the travel experience will be different post COVID but we believe Qantas is well positioned to meet the needs and expectations of its customers.
Aviation produces around 2 per cent of all global CO2 emissions. How has Qantas responded to the challenge of committing to real emissions reductions in an industry reliant on fuel emissions?
Reducing our impact on the environment is one of the core pillars of the Qantas Strategy. We recognise that we must demonstrate a clear focused plan that delivers a tangible and measurable pathway to real emissions reductions over time. We have taken a number of industry leading initiatives including being the second airline in the world to adopt a net zero emissions target for 2050, committed $50m over the next 10 years to support the development of a sustainable aviation fuel ( SAF ) industry and are exploring with our aircraft and engine suppliers new low emission technologies including hybrid electric and hydrogen powered aircraft.
Qantas Group joined the Climate Active 100+ coalition and was an early adopter of both the Taskforce for Climate Related Financial Disclosures (TCFD) and of the Carbon Offset Reduction Scheme for International Aviation (CORSIA). These measures are all designed to track and measure, on a consistent basis, real emissions reductions and we believe will be important to demonstrate to our stakeholders our real progress in reducing our emissions.
Over the next year we plan to develop interim targets to chart a clear path to our net zero emissions 2050 goal and embed sustainability in all key business decision making.
How can we ensure that the COVID recovery emphasises sustainability imperatives?
One of the most common statements I hear from investors, employees and customers is “when you resume full flying services, we expect you to be doing this more sustainably and not return to the ways of the past”. For Qantas, this is not optional – it’s a fundamental part of our post COVID flying strategy. We are determined to make progress on the development of SAF production in Australia, to expand our carbon offset options for customers and to introduce operational and technology improvements that reduce our carbon footprint.
Whilst investors are leading the pressure for airlines to clearly set emissions reductions pathways and targets, they are not lone voices. Our customer engagement research continues to flag that customers will choose businesses with a clearly demonstrated sustainability plan over one which is vague in its targets and commitments. Our employees also insist we take action and view this as a fundamental component of our brand and in their choice of employer. In summary, not only is it the right thing to do, but it makes complete business sense to continue to emphasise and drive our sustainability initiatives.
What are some of the lessons and opportunities you see coming out of Qantas’ Fly Carbon Neutral program?
The Qantas Fly Carbon Neutral program has been running for over 10 years and is one of the most successful airline consumer emissions offsetting programs in the world. Up to 10% of our passengers who directly book their flights with us choose to offset their flying. As this is only 50% of the passengers we carry (the rest book their flights through agents) we are expanding the offering to our agency partners in 2021. Despite the significant reduction in flying we are really pleased to see that the 10% take up has been maintained and slightly increased over the last 12 months which demonstrates our passengers value the program and want to participate in it.
We believe we can do more however and would like to see that take up closer to 50% across the Qantas and Jetstar brands. The challenge is always to better communicate the program to our passengers. Many are still not clear what a carbon offset is and how it benefits the environment and also how little the cost is to offset your flight. Offsetting the cost of a Sydney / Melbourne return flight costs less than the price of a cup of coffee.