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Deep transition through innovation

29 September 2020

This content is for professional investors only as defined by the MiFID in CH, AT, DE, IT, LU, ES, SE.

By Apolline Brilland, Analyst / Portfolio Manager - Global Equities, La Française AM.

ZEROe – paving the way to large scale decarbonization in the aviation industry

"Flygskam" or Flight shaming' is a Swedish-born movement that calls for curbs to air travel due to its environmental impact. And the movement is gaining traction. The number of passengers who flew through Swedish airports dropped by four percent in 2019 due to a notable decline in domestic traffic according to Swedish state-owned airport operator Swedavia. This movement which has spread across Europe in line with the Friday for Future movement, might be seen as anecdotal, but it highlights how consumer behavior impacts global warming. Consumers are becoming more and more climate conscious and we believe that sustainability will play an increasing role in user behaviour. 

Whilst globally, transport of all sorts, including road travel, contributes to around one fifth of all emissions, the aviation industry represented a total of 1Gt of CO2 emissions worldwide, the equivalent of about 3% of total global CO2 emissions from fossil fuel combustion1.  However, due to evolving consumer habits and increasing intercontinental mobility, emissions from air travel have grown rapidly over the past decades. 

Currently, climate conscious travelers have only two choices: fly or not fly (and use an alternative means of travel). However there have been interesting initiatives in the airplane construction industry over the past decade which have led to the first developments of electric planes, mostly focused on relatively small carriers and so far allowing for only very short distances. 

Harbour Air’s Seaplane to e-plane initiative made its commercial maiden flight last December. Equipped with a magniX 750-horsepower fully electric propulsion system, this 6 passenger Havilland Beaver marks the start of a new era in aviation: the electric age. However, the weight of the batteries and the long charging times make battery driven planes unsuitable for larger range flights or passenger numbers over ten.

With electric aviation still decades away from becoming mainstream, Airbus has been working for years on a hydrogen / fuel cell powered propulsion system, more suitable for larger capacities. In February 2020, La Française’s equities investment team had the opportunity to talk to Guillaume Faury, CEO of Airbus, at an Industrial Conference about opportunities for large scale decarbonization in the aviation industry.

 * Source International Energy Agency, 2019

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