Commercial Aviation in a Carbon Constrained Future: Effective Technological, Operational and Policy Responses from an Enterprise of Enterprises View

Aviation is a key enabler of the globally integrated economy, but is also a rapidly growing emitter of greenhouse gas emissions that contribute to climate change. As a result of its carbon intensity, the aviation enterprise is facing substantial challenges as fuel prices increase dramatically while its carbon emissions are likely to be regulated by a global carbon trading regime in the post-Kyoto agreement.

Specifically for the Middle East region, commercial aviation is registering very high growth rates and is considered central to sustaining economic growth. The Middle East is currently well poised with easy access to fuel, a good geographic location that on the routes between Europe and Asia, and outside the carbon trading scheme that will include European aviation. On the other hand, these growth rates create the danger of a glut in airport and aircraft capacity and as a consequence the potential for price wars. At the same time, the comfort of fast growth may leave the airlines and airports in the M.E. unprepared for the possibility of global enactment of carbon policies and a change in the public perception of air travel.

Given these challenges for aviation globally and in the Middle East, we are creating modeling tools and a knowledge database that would allow informed policy decisions and business strategies that are robust under different possible future scenarios.

The research approach is based on a two pronged effort: (1) qualitative research in the form of interviews with industry leaders and extensive literature reviews and (2) development of quantitative system dynamics models.

The qualitative research portion is intended on the one hand to support the modeling effort by providing insights into the primary interactions among stakeholders and their internal decision-making processes. In addition to this, qualitative research is intended to identify the areas where different institutional structures and collaboration among stakeholders can have the greatest leverage towards preparing aviation for a carbon constrained future.

To this end, modeling of the commercial aviation enterprise using hybrid system dynamics and agent-based modeling methods will provide quantitative demonstrations of the impact of different public policies and business strategies. Thus, combining the two approaches is an effective way to support the decision making process of commercial aviation stakeholders either in the public or private sector for medium to longer-term planning.

Both interviews and the modeling process are under way. Until now, we have discussed these issues with Middle East and European stakeholders and have identified several areas where a divergence in the viewpoint exists. We also extensively review the literature and keep track of any new publications on these topics as this is a very active area of research. On the modeling front, we have conducted several baseline experiments using a modified existing commercial aviation model and we are in the process of designing the architecture for a new generation of models that would allow regional differentiation between airlines as well as internalize the carbon markets and fuel price feedback loops.