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Full Video: Delta, Air France-KLM and McKinsey Talk Sustainability at Skift Aviation Forum 2022

Leaders from Delta, Air France-KLM, and McKinsey and Company talk with Skift Editor in Chief Tom Lowry about airlines' carbon impact, at Skift Aviation Forum 2022 in Dallas-Fort Worth. Source: Skift. Skift
Leaders from Delta, Air France-KLM, and McKinsey and Company talk with Skift Editor in Chief Tom Lowry about airlines' carbon impact, at Skift Aviation Forum 2022 in Dallas-Fort Worth. Source: Skift. Skift

Can airlines reduce the total hydrocarbons they burn? Aviation plays a role in the climate emergency, contributing an estimated 3 percent of the world’s carbon emissions a year.

A few top airline industry leaders spotlighted promising ways for aviation to reduce its carbon emissions in an on-stage conversation on November 16 at Skift Aviation Forum 2022 in Dallas-Fort Worth, Texas. The leaders spoke with Skift Editor-in-Chief Tom Lowry.

Switching aircraft to more fuel-efficient planes is one lever to pull, said Marion N. Chivot-Legris, head of sustainability North America at Air France-KLM.

Pursuing alternative fuels, plus hydrogen or electric power, are other steps, said Amelia DeLuca, vice president of sustainability, Delta Air Lines.

Some business travelers, however, would like solutions to come faster, said Danielle Bozarth, senior partner at McKinsey & Company. Consultancies such as McKinsey and corporations such as Microsoft have been examining their travel-related carbon impacts more closely in the past few years.

“We have a commitment to reduce each of our consultants’ emissions footprint by 30 percent by 2025,” Bozarth said about McKinsey. (Side note: A recent report by Skift Research, in partnership with McKinsey & Company, provided four strategies for travel companies to put net-zero words into action.)

Watch this on-stage conversation for the full color — or read a transcript of it — below.

Interview Transcript

Tom Lowry: Danielle, Amelia, and Marion, I hope in the next 25 minutes or so that we can find a solution to the sustainability problem.

Amelia DeLuca: I’m certain we will.

Lowry: Seriously, I think our discussion is very timely given what we’ve seen and some headlines out of COP27 in the last week or so. And I’m really interested in getting your insights for what I personally think is one of the most important sessions at the forum. So, welcome. Before I get going, I just want to remind people that you can ask questions in chat in the app and online, and that we will have a poll with this session. So, please fill it out. I’m going to give you the results of that in a couple of minutes.

Marion, let’s start with you. So, Air France-KLM put out its first climate report in 2008, so 14 years ago. So, that’s a long time ago. And we’ve seen a lot of messaging and intent over that time, but I feel like just from what we’ve covered at Skift, that there was an inflection point during the pandemic, maybe a catalyst. So, can you explain a little bit about what we’re seeing now in terms of maybe some momentum on sustainability?

Marion N. Chivot-Legris for Air France-KLM: Sure. Actually we started our momentum on sustainability 2003, with the nature of the UN Global Compact, the United Nations. It’s basically a principle-based framework. So, nothing new, but it’s true that we saw an acceleration, I would say, in the past three years. Even coming from my personal experience, I joined the aviation industry in April 2020. So, right at the beginning of the pandemic. But I saw it as an opportunity because we saw a lot of pressure, more and more question from civic society at large, especially in Europe, people questioning about the solution when it comes to responsible travel, et cetera.

So, at Air France-KLM, we have a strategy when it comes to sustainability called Destination Sustainability. The second pillar I want to emphasize on it, which is people and culture. And the second one obviously is the environment, which I think it’s pretty obvious.

And we have different levers when it comes to accelerating the change. In the past three years we saw early retirement of our aircraft, for example, and we saw all these airports having all these planes parked and what do we do with these aircraft? So, we put in early retirement the most polluting aircraft of our fleet, for example. And it’s one lever for us to accelerate the reduction of our CO2 emissions. So, for example, for Airbus 350, it’s up to 25% of less emission. So, yeah, obviously sustainable aviation fuel. I won’t emphasize too much on that, but that’s another lever that we put a lot of emphasis on that at the end.

Lowry: Great. Danielle, let me come to you next. So, you’re a road warrior.

Danielle Bozarth of McKinsey & Company: Yes.

Lowry: You’re out there every week talking to companies, clients about sustainability, their strategies. What in your view are the distinct challenges for airlines when it comes to a sustainable strategy?

Bozarth: I think there’s a few of them that we’re hearing from our clients quite broadly. I mean, obviously the demands around making progress against sustainability are frankly not where the technology is. And I think that leaves this industry in a pretty unique position in terms of saying, we clearly recognize where we’re trying to go in totality, but for the majority of our routes and for the majority of our aircraft, frankly there’s not a good solution and there likely won’t be for many years. And so I don’t think that’s completely unique to this industry, but I think it’s more acute in many ways.

Now, I would also note though that I think this industry’s done a great job trying to get ahead of that. I think more people in this room talk about, and frankly, folks out of this room talk about what’s happening with the aviation fuel, around SAF and other things than you would certainly hear in other industries. There’s certainly a lot of energy around innovations in this space that I don’t think we are seeing in other parts of travel at nearly the same level and degree. So, I think that even though the technology may not be there for the majority of what this industry needs it to be at, there is certainly stuff happening on the margin that I think is pretty exciting.

Lowry: Now, when we write about business travel at Skift, we often go to the consulting firms because we know they do a ton of travel. Talk a little bit about, internally at McKinsey, what the strategy has been in terms of pairing back on travel versus your footprint.

Bozarth: Yeah, I mean, I think I will just start by saying that I think COVID showed us and has reminded us that being in person with people, there’s just no replacement for that. And we’re a client service business and getting out there and spending time with our clients is how we get to know people and how we get to know their businesses. So, if nothing else, I think it really reinforced for us how critical that is. We are balancing that. Concurrently we have a net zero goal by 2030, and we also have a commitment to reduce each of our consultants’ emissions footprint by 30% by 2025. And those are pretty significant. And 80% of our emissions is travel. So, it’s a huge issue for us and it’s creating, as you can imagine, a lot of, I think, very good and productive conversations on, how do we balance what is at the very core of our business and what we do with the emissions from the travel that creates.

Lowry: And how crucial is it for you with clients to be in person and have you paired back your own travel in some ways?

Amelia DeLuca of Delta Air Lines: Don’t answer that. Don’t answer that.

Bozarth: I’m happy to note I think my travel this year will be the highest it’s ever been.

Lowry: Oh my God.

Bozarth: But no, I think it’s absolutely critical. I do think it does change how we travel. I think folks at my level in our organization probably are traveling at the same amount. I think we are being more thoughtful at what our teams are doing. And are on site every week? They were pre-COVID. Certainly either they’re taking shorter trips when they go, I recognize that doesn’t take a flight away, or they are going every other week or other things. And so there is very definite ways in terms of how our business has changed as a result.

DeLuca: Tom, can I add something on this?

Lowry: Sure.

DeLuca: I came from Delta’s sales department when I moved into sustainability 18 months ago. And so I’ve stayed very close to the concept of what will business travel do as it confronts its sustainability goals?. And one of the things that’s fascinated me is over the last year, Delta’s actually assembled a green sales team which goes out and has one-on-one conversations with corporates, and we’ve had 500 conversations to date. And every one of those is uniquely different. And so there are not emerging trends yet, I think, that we can say that there are two ways that corporations are going to meet their climate goals. I think what we’re finding is we want to go out there and start with education, that there are things you can do now. There are investments you can make in the future, whether that’s buying SAF [Sustainable Aviation Fuel] this year or just even becoming involved in the scaling of sustainable aviation fuel.

And then there are also ways to involve your travelers, to have them have the confidence that yes, I can feel good about my company, I can feel good about traveling with McKinsey because I know McKinsey is going to meet its goals and it’s holding its suppliers accountable as well. But all of that is very unique right now and I think it’ll be interesting to see where we end up. But there is no one theme right now. We’re all just trying to figure it out together. But I will go back to the point that Danielle made. It’s very collaborative, which I think is important for this industry.

Lowry: Let me stay with you, Amelia. I mean, it seems like the overwhelming priority is the faster production of SAF, of sustainable aviation fuel. I mean, how does the industry get there and who pays for it? It’s very expensive.

DeLuca: We could spend a couple hours on that one. So, a couple things I’ll say. Again, I stepped into this job. I’m like Allison earlier. I drank the Delta Kool-Aid on day one 16 years ago and I’ve never left Delta and I’ve spent my time in the commercial area. And so when you come into sustainability, I get a lot of questions on, “Isn’t this the most daunting job you’ve ever had? It’s sustainability for an airline.” And on the one hand, yes, it is. It’s very hard. On the other hand, I think just working for an airline in general is very hard. So, I’m no stranger to bankruptcy or a COVID pandemic or you name it. Sustainability actually to a degree seems a little bit easier because I got a little more time to solve for it. But we’re hard to decarbonize. We are one of a handful of sectors that’s hard to decarbonize.

And so no one’s going to say, “This is going to be easy for us.” And so I always divide it into saying, “There’s good news and bad news.” The good news is I know what the problem is. The problem is jet fuel. And unlike other industries, even hotels we were talking about before, they may not be hard to decarbonize, but they’re dealing with a whole plethora of issues that they’re dealing with. We are very focused on our entire climate footprint, our entire environmental footprint. But we know that 98% of our emissions come from jet fuel. So, that’s the good news. The bad news is there is literally no solution for that today at scale. So, good news, bad news. But we know and we’re aligned in moving towards SAF. There is, I don’t think, any doubt at this point from any group that SAF will be the answer to the industry getting to net zero at 2050.

Every model under the sun shows that SAF is at least half of the solution, if not more at that point. So, then it just becomes a question of how do we get there? And again, I think it’s just alignment across the industry, which we’re already there, that this needs to happen and not undercutting any pathways. We always say as an industry, so it’s not just Delta, that as an airline industry we are technology and feed stock neutral. Meaning any kind of SAF that can be produced today, you will see us support that SAF, from policy to investments.

As we go, that will change. We know that SAF today is using things like used cooking oil, which is very limited in its availability. And so the whole industry is starting to turn towards green hydrogen and captured carbon to try to say how can we make e-fuels from feed stocks that can be more widely available.

But I think what’s it’s going to take honestly though is it’s going to need to take just very strong collaboration. We’ve seen and we’ve got incredible momentum for the United States government in the form of the IRA package, which puts incentives out there for SAF. We’ve seen certain states. California’s very advanced in its support of sustainable aviation fuel. And after these recent elections, certain states that have maintained their government structure as at least previously it was, like Minnesota for example, or in Michigan, we think will continue to bring in incentives for sustainable aviation fuel, which would be a huge support for what we need. And then those two things, you’ve got government there.

You’ve got corporations like a McKinsey who are very active in saying, “Yeah, I want to buy SAF,” or, “I’m going to support and buy SAF.” So, we’ve got that part working towards it. So, it’s just going to be continued cycle of funds and investments into SAF producers through other financial mechanisms I think that go beyond just corporates, airlines and governments. But again, there’s a lot of support for the financing of SAF right now.

Lowry: Is a government tax on this inevitable? And will that ultimately get passed on to the flyers?

DeLuca: Well, maybe I’ll pass it to… No, I’ll answer. I was going to say, pass it to the European carrier, to answer that one. No, I think we’re uniquely positioned to be able to observe two different models that are coming to be. The United States is clearly incentives-focused. That’s where the United States airlines are very focused. We think incentives are the best way because it allows the market to come online at the best economical model possible. Europe has taken a different approach, which is mandates, of course. Again, there’s risks to that. But we’re watching it come online. Air France-KLM and our partnership with them, France has a mandate for SAF and we’ve watched and we’ve observed how that’s working. And so, we’ll see. I personally think that no one model will win out. The world’s trying to figure it out. But I think it’s all just a learning, which is incredible.

Lowry: Great. Well, Amelia, thank you for teeing me up for Marion because that was my next question. So, how are things different in Europe? I mean, we talked in our prep call about the distinction between Europe and other parts of the world.

Chivot-Legris: Yeah, it’s true that Europe had put some mandates. So, for example, France, we have a mandate since 1st of January, 2022 to incorporate 1% of SAF. That being said, the mandate is not on us. It’s on the fuel producers. So, how we can collaborate towards that mandate. And then there is a bigger mandate of 5% by 2030. And we, at Air France-KLM, went beyond that with a mandate, well, a target of 10%. I think Europe have shaped the discussion on sustainability, and not just for the aviation industry but in general, for a couple of years now.

I would say probably 20, 25 years. And it comes with some restriction. And we, Air France-KLM, received some support from the Dutch and French government during the pandemic and this was linked to some green commitments. I’ll put it that way. So, we need to showcase what we are doing to really accelerate the change. So, we have no choice basically to really show our commitment and to demonstrate that yes, we accelerate the incorporation of SAF, for example, to accelerate the fleet renewal, to really further embed sustainability within the value change. And I think this is a very good exercise. And Europe have been leading the pack for many years on sustainability.

Lowry: So, several weekends ago I put a story up on Skift about climate activists at Schiphol, Amsterdam who had stopped the takeoff of some private jets. I mean, how worrisome is the growing climate activist movement? Or is it just an aside for airlines?

Chivot-Legris: No. Well, I think we need to take seriously this feedback. But again, I think it’s the question and the awareness of sustainability and also the solutions that are out there need to be a bit more visible. At least we need to be more transparent on that activism in Europe on sustainability. I’ve been there for many years and not just again for aviation. I used to work in the banking industry and it was the same, a lot of pressure. But again, for me, activism is also part of the sustainability journey. We need to hear what are the key messages and what do we do as a corporation to answer to these questions. So, that’s very important that we are taking seriously these messages and to adjust. But I think there is an awareness piece that is crucial.

DeLuca: I was going to add, and you heard Allison talk about it earlier, it is core to the DNA of Delta, it’s core to this industry, to be listening, listening to our customers and meeting their needs. We know we’re an industry that often is disruptive. We often do cause misconnects. There is often angst and stress in travel. And we lean into that to say, “I’m listening because I want to be better.” And to me it’s the same thing for climate activism.

Last year when I was at COP, I always talk about the most powerful moment was I was sitting at a McKinsey event with these amazing CEOs from the whole world talking about what they were doing to finance the transition, and they were drowned out by the helicopters overhead that were tracking the climate activists. And you could sit there and get frustrated by that moment or you could say, “This is how it’s supposed to be. This is the only way we’re going to solve it is if we invite all the voices to the table.”

Chivot-Legris: Yeah. Yeah, indeed.

Lowry: And a threat to the business side? I mean, is there a genuine threat at least going forward on from that?

DeLuca: From the climate activists or just from sustainability in general?

Lowry: No, no, no. The activists.

DeLuca: No, I don’t think so. Like I said, I think it’s listening to them. And also I will say, they represent the next generation of travelers. So, again, it is a gift that they are giving us by being loud because we’re going to be able to understand what their needs are. I really think though, the thing about it is when we think about the next generation, and I know we’re going to dive deeper on this, the next generation though, they really connect the climate crisis to a human rights crisis. And so I think the airline industry is really well positioned to try to highlight that we have always been a brand or a sector that is essentially, we are serving people. We always say at Delta, “We’re not taking people to places. We’re taking people to people and people to opportunities.” And so to me, if we try to make sure that we have an airline industry that is not only more sustainable in the future, but actually more accessible… And that’s going to be managing that green premium very tightly.

But I do think we can transform our business. When we start to look at some of these things, we become more fuel efficient through our fleet. We become more fuel efficient through our operations. While SAF starts to scale and those green premiums come down, it could look really different from the cost structure in the future. And again, who knows when we’ll get there and who knows exactly if it’s going to be as smooth as I just laid out there in a chart. But I think we have the ability to actually get to a point where climate activists can really see that yes, this sector is so powerful in what we do and we’re doing it in a sustainable way.

Lowry: So, let’s pause for a reality check and see our [audience] poll results.

DeLuca: They disagree with me in the polls.

Chivot-Legris: Yeah, they disagree.

Lowry: So, we can have that on the screen. There we go. So, are you optimistic about the airline industry’s ability to meet its long-term planning goals? 63% say no and 37% say yes. So, comments.

DeLuca: I’ll start, but I encourage others to lean in here. I get the skepticism. Modeling suggests it’s going to be really hard. Modeling suggests as an industry we’re probably not going to get there. I think there are leading airlines that will achieve their goals. I think other countries and carriers will get there as well and make progress, but maybe not at the same speed. And that’s just a recognition that we’re a global industry. There’s lots of challenges between now and 2050. Things that make me optimistic though I will just mention again, is the alignment across the industry. I think that’s pretty incredible. I think the other thing is, I mentioned this earlier, by God, we’re an industry that can do anything in my mind. Again, look at COVID, right? Who would’ve thought at this point… I mean, yeah, COVID’s given us a real run for our money, but we’re still standing.

Think about the bankruptcies. Think about 9/11. This industry has shown that we can get through anything. So, I’m confident about that. And then the other thing I’ll just mention just from the personal side, and we were talking about this before, but we are all parents of young children. And I think as you start to add in this imperative that’s a business imperative or a business opportunity, no matter how you look at it, combined with a lot of people that just care so deeply about this because we see what we’re leaving behind for our children, that’s what makes me optimistic that we’re going to get there. And I welcome others to add.

Lowry: Danielle?

Bozart: I mean, I love the optimism, to be honest.

Lowry: What, 36%?

Bozart: I think it’s great. I mean, I think the other thing that we don’t anticipate is the speed of technological change. And so I think that it is very hard for us to sit here and if we look in other industries how much we’ve seen over the past decade, it feels to me like this is another space that we can’t predict how things are going to change over the next 25 years. And there is a tremendous amount of energy and investment into that space as well.

Lowry: What are you hearing from your clients on carbon emissions?

Bozart: Well, I think a lot of confusion, to be totally honest. And I think one of the things we discussed at the Skift Global Forum, obviously if you’ll recall Google was on stage and talked about their change in emissions accounting. I think it’s creating, frankly, a lot of confusion in the industry to think about carbon and then obviously all the other emissions that come along with it. And I think that one of the things that…

Lowry: Can you explain just what we were talking about there?

Bozart: Well, I mean, we were talking about contrails before. And I mean, one of the things we were talking about I think is a perfect example, and I’ll let you choose to share your story or not, but how in essence do you talk about the dynamics around those types of emissions? How do you help people think through the trade-offs between, in essence, everything in the emission stack, if you will? Particularly we’re all obsessed with carbon, but there’s frankly a lot of other emissions that are coming out of it as well. And we will have more and more awareness of that and better ability to measure that over time.

DeLuca: Yeah. And I think just to add, I started by saying 98% comes from carbon and jet fuel, but there’s two sides of this, though, that I think we need to be aware of. So, one is what an average consumer sees that they think is not sustainable, which is single-use plastics on board or waste. We all know that’s a really small part of our problem. And sometimes I think, “Should the aviation sector be solving single-use plastics?” I’m not sure. But the fact of the matter is we need consumers to know that we are doing everything we can in our power to embed sustainability in everything that we do. And for Delta, that’s been a north star for us, is that sustainability must cut across everything that we do.

But then there’s emerging science, as Danielle mentioned. So, I know most of us here are aviation geeks. And so the white clouds in the sky when they persist and they’re there for a period of time are known to trap heat. They’re actually potentially up to two times or up to the same amount as carbon’s impact on the planet. And so I was sharing with Danielle that those of us that live and breathe this every day are like, “Oh my God. We got to go. We got to address this. We have to go. Contrails is a thing.” And we have a great partnership with MIT that’s doing just that.

But it’s such a nascent space that to just for me to show up the next day at Delta’s flight ops and be like, “Hello, I’d like to ask you to fly a little bit differently so that you don’t form that cloud. Don’t worry, you’re going to burn a little bit more fuel,” we’re just not there yet. And we just need to be careful that we don’t push too far into the next space where we take an industry that is… Again, it’s a legacy industry. It’s been here for a while. We’ve got great employee relationships and we want to make sure everyone understands what we’re doing. And to the point with Google that it can be measured and quantified, both the impact today as well as the abatement solutions of the future.

Lowry: Right. Marion. So, among our favorite topics to write about these days at Skift is electric powered travel. So, I wanted to ask you, I mean, does electric-powered air travel have any viability commercially? And what are you seeing from Europe in terms of that?

Chivot-Legris: Yeah. Well, I think also we keep in mind that we’re an airline so we can influence, I would say, aircraft manufacturers. KLM, for example, have partnered with Delft University of Technology recently to develop Flying-V, I don’t know if you saw that aircraft, trying to see if hydrogen-powered aircraft would be viable. Airbus have a lot of innovation and a strong roadmap on what could be the next generation aircraft. That being said, experts discussed on the entry-to-service dates around 2035. Now we’re leaning to ’40, ’45. And we do know that for long-haul flights, these are not innovation and technology that are going to be available from day one.

So, I don’t have an exact answer. And to reflect to what we just said, I’ve been working on sustainability for 15 years and I think the trickiest part of the job is there is no black-and-white situation. It’s always gray. And how you navigate through that gray zone and trying to wear the one is learning through the journey itself. Because even myself, I’m a sustainability expert but I’m learning through the research, et cetera. So, I don’t have an exact answer to your question, but I think we need to learn from that and see. And Europe put a lot of emphasis on that Airbus, but also a lot of experts and research teams. We’ll see. But for long-haul, that might be too…

Lowry: I mean, in your mind 25 years from now, are we taking electric short hops, 50-mile flights, 100-mile flights?

Chivot-Legris: Well, I mean, the shorter flights. For example, in France, we have train plus air option now that we developed with Air France, and it’s part of the green bailout package with the government, and we need to offer alternatives by train for example. And that is bringing solutions. They’re not black-and-white solutions, but trying to bring solutions on the table.

Lowry: Okay. Great. Amelia, let me come back to you really quickly. You mentioned hydrogen before. I just want to touch on that again, just elaborate a little bit more on where that stands. I mean, it sounds really like it’s very expensive and just a little bit elusive in terms of …

DeLuca: Agreed.

Lowry: … whether this is going to come to be.

DeLuca: Yeah. Hydrogen is a tricky one for a couple different reasons. One, many, many, many industries will look towards green hydrogen as a solution. So, aviation may not be the first in line. The other problem is it’s called green hydrogen because it’s created off of renewable energy. So, you need first and foremost to have access to renewable energy. So, I just want to mention there’s these building blocks of hydrogen that are kind of scary, but at the same time, again, it is a solution that many industries will use. Will aviation get it first? Probably not, but at least we know there’ll be a lot of people trying to solve for green hydrogen. And so green hydrogen becomes really interesting for us though because it one, can be part of our fuel solution of the future. If you take green hydrogen and combine it with carbon, whether it’s a point source capture or from the air, you combine it, you can have a synthetic fuel. So, it goes into the engines today. It’s synthetic. It’s essentially unlimited because you’ve created the product, and it’s a zero emissions type fuel. So, it sounds pretty good, right?

Lowry: Right.

DeLuca: And again, the IRA [U.S. Inflation Reduction Act] had provisions for both green hydrogen as well as captured carbon as well as renewable energy. So, the amount of inbound calls I have been taking recently from people in the hydrogen space has been fascinating. The second thing though, and Marion just mentioned it, is Airbus who is… Obviously, Delta flies a lot of Airbus planes. We’ll just say it that way. We have a relationship with Airbus on their ZEROe product, which is right now supposed to be previewed in 2035, which would be hydrogen as a propulsion system in the airplane. Now, will we hit 2035 or not? I do think Airbus is an incredible partner. We’re learning a lot through them.

We meet with them monthly to essentially talk about how much space is that hydrogen tank going to have to take up and how does that change the range capabilities. So, to your question of which routes are these going to be deployed on, a lot of that’s being studied right now. It will start with regional. There’s no doubt about that. I do think though, in 2050 a solution that’s a hydrogen or electric can probably cover most of an airline’s regional flying. The question to me is really, how quickly can you get a mainline solution? And that is the one that I think all eyes are on that one.

Lowry: Right. Let me just promote the next session after this. There’s a much deeper dive into sustainable aviation fuel with my colleagues Seth Borko from Skift Research and the folks at Neste. So, if you’re interested, stick around. It’s going to be much deeper. Danielle. So, back in September McKinsey partnered with Skift Research-: Right. Let me just promote the next session after this. There’s a much deeper dive into sustainable aviation fuel with my colleagues Seth Borko from Skift Research and the folks at Neste. So, if you’re interested, stick around. It’s going to be much deeper. Danielle. So, back in September McKinsey partnered with Skift Research …

Bozart: We did.

Lowry: An outstanding report, if I do say so myself, called Accelerating the Transition to Net Zero Travel. Here’s a way that you guys can get it if you haven’t seen it yet.

Bozart: A very large code for you. Yes.

Lowry: Yep. As part of that, you talked about what it is called the Say Do gap, which is the idea that consumers support green travel, sustainable travel, but they’re not willing to pay for it.

Bozart: Absolutely.

Lowry: How do we close that gap?

Bozart: Well, I think actually by closing the green premium in many ways. Probably I’ll step back for a second. We obviously wrote a report together. We looked at a whole bunch of different elements on the path towards sustainability. And I think to Amelia’s point, aviation is actually, it’s quite a bit easier than a lot of the other parts in travel where value chains are frankly much, much more complicated. And there’s much more complicated rubrics of, in essence, not only propulsion but what you’re powering. We spent some time thinking a little bit about how companies should start to think about how they identify and sequence decarbonization initiatives as part of that. There are some frameworks I won’t get into that really help companies start to think through that, particularly given that technology and when technology comes online it’s a key part of that.

We also spent a fair amount of time thinking about the dynamics between business and leisure travel in the report. And I know there was a fair amount of discussion this morning about how consumers are shifting between leisure, as I’ve heard it, or business and leisure, and how those… Obviously, Robert [Isom, CEO of American Airlines] spent some time talking about that this morning. What we’re finding obviously is we talked about the business side of things and we are seeing some more willingness to really change behavior, and we aren’t seeing that yet on the leisure side. And we call it the Say Do gap frankly, because when we survey consumers, and I’m sure you guys see it too, consumers talk about how much they care about sustainability.

They talk about how much maybe they’re willing to pay for it. They’re probably not so as explicit as that. But they understand that it’s the existential question of our time. And then you ask them to go and pay for it and to actually change, take less convenient options, stay in a different hotel, change the distance they go for their vacation, and we see virtually no willingness to pay for it among leisure travelers. And there are certainly exceptions at certain parts and certain generations, but for the very most part it’s not there yet.

Lowry: Amelia, elaborate on what you see in terms of the divide on this with the generations.

DeLuca: Yeah. And I’m a little bit obsessed with this topic right now. You’ve heard me talk about Gen Z a little bit and it’s not just because I’m a millennial and I’m glad that people are stopping talking about me at this point. So, focus on the next group and their problems. Yeah. To Danielle’s point, it’s really interesting because I think there was this large assumption that said that Gen Z is going to be willing to pay for it. They care about this stuff. And our internal data, I shouldn’t say internal, it’s a third party who did it, so these are not just Delta flyers, these are generic flyers across the United States, suggests that while Gen Z care the most about this, they’re the least willing to pay for it.

Because they don’t consider themselves to have caused the problem. They actually look to government. That could be troublesome. But they don’t look to themselves. And I think that’s the most important learning for that. And so I think we need to figure out, and Danielle really brought this up, well, then who is going to pay for it on the leisure side? Or should we just not expect that to happen? No, I will say the corporate support has been really incredible to date. Neste is a partner of ours as well, a partner of Air France-KLM. And we cannot get enough SAF right now to meet the corporate demand that is out there.

And so I would say when we talk about this, don’t take this leisure issue as an alarm right now. I think it’s all about how do we get businesses and create these win-win situations between airlines and businesses, and then offer consumers the ability to participate, whether it’s SAF or offsets or bring your own water bottle on the airplane. We just think there should be a suite of options. And you’ve seen things like that that Delta’s done, even on the food side. We’re not taking beef off the airplane. We’re introducing you to other options. And I think for me, sustainability is just, again, a suite of options that makes you feel like you have a choice and that you feel good about that choice.

Lowry: And Marion, so how do you manage the optics? The emissions is a little hard. I mean, the contrails I guess you can see. But what do you do inside the cabin to make your case?

Chivot-Legris: And to reflect on what you just said on cabin waste, I think it’s a good example. Because people see the single-use plastic issue because it’s up there in the cabin. And cabin waste is very tricky. Working actually in partnership with Delta team on that, trying to lobby a little better international waste regulation. Because even if we want to engage, we have some restriction on the government side. Very few topics when it comes to the customer experience. And I was very interested in hearing from Allison earlier from Delta. The customer experience will embed more and more sustainability features when it comes to responsible catering, either on board, but also in our lunches, how we offer these options to the customer to be able to pick and choose.

Responsible catering, cabin wastes, various things like the menu, trying to reduce paper, et cetera. But again, is it the biggest challenge? It’s because it’s visible. It’s visible for the passenger, for customers. And we receive a lot of feedback on that. But when we explain, “Well, actually there is a bigger issue and this is the issue,” actually we have one issue, which is fuel, “but this is the biggest issue, then they’re willing to, “Oh, okay, what are the options?” And then they tend to reduce the pressure on what’s happening inside the cabin. Which I don’t know if you realize that as well at Delta, but I thought it was just …

DeLuca: Yeah. it was really eye-opening that Delta had a banner year in 2021 and 2022 in terms of sustainability. These just new incredible goals. SAF procurement, we were just everywhere. All these things. The thing that got the most traction was our new amenity kit, which most customers don’t even get. And it’s an amenity kit where you’ve got five items where we pulled the plastic off of it and then they were handmade by Mexican artisans. Personally, I love that though, because it’s starting to tell me again what I said earlier, that the climate crisis is very much a human rights crisis. And if we look at it through the lens that it’s not just environmental, but it’s environmental/social …

Lowry: Social. Yeah.

DeLuca: … underneath sustainability, that’s very powerful. And again, I don’t think we want to treat it as a, “Hey, don’t look at that. Look at this,” but more about, again, just meet our consumers where they’re at. Because the main thing is, you just need to keep traveling. Don’t stop traveling. And that’s the most important thing to me.

Lowry: So, as we wrap up, I mean, what I’m taking away is we need more education, there’s a lot of gray areas, and there needs to be resources and much better infrastructure. So, if we’re sitting and having this panel three years from now, would any of that change?

DeLuca: Who wants to go first?

Lowry: Crickets.

Bozart: Well, I think it’s education too, in many ways. We weren’t talking about this in anywhere the way we are five years ago. And so I think there has been a tremendous amount of education. I’ll let you guys talk about the actual availability, which I think is a harder nut to crack.

DeLuca: Yeah. I think you’re going to start to really feel traction when sustainable aviation SAF starts to scale. And the numbers, just so you know, last year the U.S. industry used something like 15 million gallons of SAF and we need to get to 3 billion by the back half of this decade. That’s clearly not going to be linear. But there will be an inflection point at some point, we believe around 2025, 2026. So, in theory, in three years, if that is happening the way it’s forecasted too, I think we’re going to feel a lot better on like, “Okay, it’s moving finally.”

Lowry: Marion, final word.

Chivot-Legris: Yeah. Further collaboration. I think that will move the needle.

DeLuca: Yes.

Lowry: Oh, great. Thank you so much. Unfortunately, we’re out of time. But Danielle, Amelia, Marion, thank you so much.

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