Five noteworthy aviation sustainability developments in the past seven days curated by the Ishka SAVi team.
Here are the new developments to keep in mind:
1. Deal reached on long-awaited Single European Skies (SES) with ‘charges’ to discourage emissions - The Council of the EU (headed by ministers from member states) and the European Parliament on 6th March after a near-17-hour trilogue announced a provisional agreement on the reform of the Single European Sky, including proposal for the recast of the Single European Sky regulation (SES 2+). A list of key elements of the provisional agreement can be found in the announcement.
On the emissions front, the European Parliament transport committee notes that “under the new rules the Commission will adopt EU performance targets on capacity, cost efficiency, climate and environmental factors for air navigation services (ANSPs)” which will be reviewed every three years. ANSP charges levied on airlines could “encourage them to be more environmentally friendly, for example by using the most fuel-efficient available routing or alternative clean propulsion technologies.” The provisional agreement is now subject to approval by the Council and the Parliament.
The much-delayed Single European Sky II (SES2+) initiative is touted as an enabler of up to 10% emissions reductions through operational efficiencies. Progress on the file has been a recurrent demand by the aviation industry over the past decade. The leading European airline association, Airlines for Europe (A4E), which recently warned against carelessly “rushing” the file ahead of the June 2024 European elections, has not yet delivered its verdict on the 6th March provisional agreement, but noted that “on first look” it seems “still some way off.” Two days earlier on 4th March, A4E published an analysis on the set of compromises of SES2+ being discussed by policymakers which it said “either dilute any reforms or result in an outcome that is worse than the current situation.” Among the compromises, A4E claimed that a preference for “shortest routes” over “efficient trajectories” would increase airline fuel use and emissions. On 6th March, the European Regions Airline Association (ERA) called the provisional agreement “disappointing” and a “missed opportunity” for European regional airlines.
2. Malaysia to allow airlines to charge ‘carbon levy’ that could pay for SAF – Malaysian transport minister Anthony Loke on 4th March announced that local and international airlines operating in Malaysia will be allowed to start charging a “carbon levy” once amendments to the Malaysian Aviation Commission (Code of Conduct) Regulations 2018 have been finalised by the Malaysian Aviation Commission (Mavcom) in April. Unlike neighbouring Singapore, which will impose a carbon levy to subsidise SAF usage from 2026, airlines operating in Malaysia could add this ticket fee voluntarily. According to reporting by Malay Mail, Loke said certain airlines would adopt the fee to purchase SAF while others would use it to pay for carbon credits to offset their emissions. In 2023, Malaysia Aviation Group – the parent company of Malaysia Airlines – became the first organisation in Malaysia to sign a SAF offtake agreement with domestic energy giant Petronas.
3. SEC adopts ‘watered down’ climate-disclosure rules without Scope 3 requirements – The US response to Europe’s influential Corporate Sustainability Reporting Directive (CSRD) was adopted on 6th March by the US Securities and Exchange Commission (SEC). The SEC Climate-Related Disclosures requirement (see final rules in full here) ultimately will not force companies to quantify pollution from their supply chains or customers, known as Scope 3 emissions. For aircraft lessors, for instance, this would have meant reporting the emissions of aircraft operations of their lessees (although companies in California may still need to). For a side-by-side of ISSB IFRS and EU CSRD requirements, see this comparison table by David Carlin (LinkedIn). For a pre-adoption comparison, see this guest report by PwC published last September.
4. Ampaire acquires ‘aerotowing’ OEM Magpie Aviation – Hybrid and fully-electric OEM Ampaire on 4th March announced the acquisition of Magpie Aviation, a developer of innovative electric aviation technologies best known for its ‘aero-towing’ concept. Ampaire says the acquisition will broaden its IP and contract portfolio through “Magpie's multiple pending patents and government contracts” in both the commercial and defence sectors. In July 2023, Ampaire also acquired California-based eVTOL developer Talyn Air, which also had defence contracts. As of 8th March 2024, Ampaire has commitments for up to 313 ‘EcoCaravan’ Cessna Caravan conversions. The clean propulsion OEM space is not unfamiliar with M&A. In 2022, Electra consolidated its eSTOL development with the acquisition of rival Airflow, and in 2023 UK aircraft producer Britten-Norman merged with Cranfield Aerospace Solutions (CAeS), which is developing a hydrogen-electric retrofit solution for the BN-2 Islander. The integration design of that hydrogen fuel cell into the nacelle of the aircraft was recently completed.
5. UK Spring budget raises ticket taxes and delivers joint £200M for clean propulsion – The politically-charged UK Spring budget – expected by many observers to be the last before an electoral defeat by the UK Conservative Party in an impending 2024 general election – rowed back a 2021 measure by Prime Minister Rishi Sunak (then finance minister) to half air passenger duty (APD) on UK flights. APD is not an environmental tax, but it carries an environmental value as it is the only UK government levy on flying, which is exempt from fuel duty and VAT. The government is making “a one-off adjustment” to rates of APD on non-economy passengers to account for high inflation “and help to maintain the value of APD in real terms.” In parallel, the UK Chancellor announced £200 million ($256 million) of joint government and industry funding for aerospace R&D projects “supporting the development of energy-efficient and zero-carbon aircraft technology and accelerating the transition to net zero aviation.” See the announcement for a breakdown of the £200 million allocation.
