In business parlance, a hockey stick projection is one that shows the first few years of progress toward a goal as being mostly flat. But then the graph magically rockets up in future years just like the handle of a hockey stick. This allows an important goal to be met at the last minute. For Southwest, avoiding the hockey stick means having plausible stretch goals that can be met by 2030. Southwest’s goals for 2030 are to reduce its carbon emissions per available seat mile (including scope 1 and scope 2 emissions) by at least 20 percent.
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THX. Malphus asserted that the airline is “absolutely” seeing interest in sustainability from their customer base. Southwest’s customers include consumers, business travelers, and shippers that use the belly of passenger planes to move freight. Business travelers are the most likely to prioritize flying with an airline committed to sustainability. Many corporations have their own sustainability programs. Corporate travel departments can contribute to sustainability goals by dictating that “green” airlines be used.
To achieve the 2030 carbon reduction goals Southwest will invest in fleet modernization, sustainable aviation fuel, route optimization, carbon offset programs, and industry and government partnerships.
Southwest has the largest fleet of Boeing
In terms of route optimization, Southwest is already using sophisticated route optimization software that is designed to achieve high asset utilization. This asset utilization is achieved by flying routes passengers want to travel on – in other words, the planes are fuller – and by keeping the planes in the air as much as possible.
But Ms. Malphurs is talking about a different kind of route planning. By using advanced data, real-time weather information, and better connectivity with air traffic control, planes on a predetermined route can use less fuel. In conjunction with the Federal Aviation Administration’s (FAA) NextGen program, plans will fly precise paths with higher predictability on arrival times. This will result in planes spending less time flying circles around an airport waiting to land.
The next pillar of the plan is by 2030 to replace 10% of the aviation fuel the company uses with sustainable aviation fuel (SAF). “Today,” Ms. Malphus explained, “Just one tenth of one percent of the fuel used in the industry is SAF.” Southwest is exploring different partnerships. But currently their most important partner is Velocys. Southwest has signed an agreement with Velocys to purchase 219 million gallons of SAF at a fixed price, over a fifteen-year term. Velocys is building a new biorefinery in Mississippi that is scheduled to begin commercial delivery of fuel in 2026. Velocys will synthesize biofuels out of forest residues at this facility. Of the four pillars in their sustainability plan, Ms. Malphus expressed the most enthusiasm for the promise of sustainable aviation fuel.
After blending, the Velocys plant will enable approximately 575 million gallons of net zero SAF. That sounds like a lot of fuel, but planes burn a lot of fuel. This should be considered an experiment that, if successful, would need to be scaled very quickly to hit the goal of 10% SAF. When scaling involves building new plants, which can’t be done overnight, that is not a trivial endeavor. This, while it is their most promising SAF relationship, is not the only partnership they are pursuing.
The third pillar of the plan is a carbon offset program. Carbon offsets are transactions where an organization finances decarbonization projects outside its operations. In return, the organization gets to claim the carbon reduction from the projects toward their sustainability goals.
Many environmentalists are skeptical of offset programs. They believe, for example, that planting trees as a carbon offset is unreliable; forests can burn down. United Airlines CEO Scott Kirby has called carbon offsets “a splashy marketing claim.” United is pledging to reduce their carbon intensity by half by 2035, and achieve net zero by 2050, and to do so without relying upon carbon offsets.
But Ms. Malphus believes that “there is just not enough new technology to achieve our goals without this.” The media has reported on advances that will allow for electric or hydrogen-based airplanes. “But the reality is, for us, with the size of aircraft we use, this is not realistic.”
Finally, Southwest recognizes that no one company can drive sustainability by themselves. Industry partnerships, government support, and collaboration across the entire value chain will play a crucial role in Southwest’s sustainability efforts. For example, Southwest is “massively dependent on the development of a green (energy) grid.” Energy is an input in the production of sustainable fuels. These fuels are greener if more green energy used.
THX. Malphus believes airline passengers should not have to pay a premium for sustainable travel. “We are moving away from the assumption that green should command a premium.” As more companies commit to sustainability, and new technologies are developed at scale, industry can accelerate carbon neutrality efforts without forcing customers to pay the green premium.