Tuesday, August 17, 2021

A sustainable flight path

Back in 2012, when the Kerala State Electricity Board hiked grid tariffs from ₹4 to ₹7 a unit, a large commercial establishment like the Cochin International Airport saw its annual electricity bill almost double to ₹12 crore. The power hike disrupted the business viability plan for India’s first greenfield airport—which started operations in 1999—under the Public-Private Participation (PPP) model. With over 18,000 investors from 30 different countries, Cochin International Airport Ltd (CIAL)—Cochin airport’s parent company—in a bid to lower its power bill, decided to shift towards solar power.

What began as an economic imperative snowballed into a green initiative like no other. In 2015, Cochin airport became the first in the world to be fully powered by solar energy. With an installed solar power capacity of 40 MWp (Megawatts-peak), the airport has achieved cost savings of approximately ₹40 crore per annum and has avoided CO2 emissions of more than 45,000 metric tons. Over the next two decades the airport estimates that it would avoid CO2 emissions of more than 9 lakh metric tons, which it says is equivalent to planting 90 lakh trees or not driving 2,400 million miles!

Sustainability is the need of the hour, and India’s aviation sector is embracing it with open arms. While there have been early adopters like Cochin International Airport, the Covid-19 pandemic has made sure that the pace of adoption is hastened by all stakeholders.

In fact, with the pandemic having ravaged through India’s aviation sector, which is presently in the red, CIAL’s cost savings hold it in good stead. According to aviation research firm CAPA India, Indian Airlines are projected to lose $4.1 billion and airport operators nearly $1 billion in the ongoing fiscal on account of air traffic disruptions due to the pandemic-led lockdown measures.

For fiscal 2021, India’s largest airline, IndiGo, reported a net loss of ₹5,806 crore as against a net profit of ₹233 crore in the previous fiscal. InterGlobe Aviation, which runs the airline IndiGo, says its quarterly net loss jumped to a high of ₹1,147 crore in the January to March quarter from ₹871 crore a year earlier as the second wave of Covid-19 infections battered demand. The on ground situation could worsen given the buzz around a possible third wave of infections. CAPA India expects domestic and international air travel to rebound to the pre-Covid-19 levels only by the third quarter of fiscal 2023 and by the end of fiscal 2024, respectively.

So far, all stakeholders in the aviation industry admit that the sudden onset of the pandemic in early 2020 accentuated the need for better efficiencies, including reducing the impact on the environment. Their thought process was simple: bringing in sustainability will increase viability for airlines and airports in a hostile aviation industry. “The pandemic presented multifarious challenges for the aviation industry, while also bringing attention to climate change. There is a dire need to take sustainability in our stride,” says Christoph Schnellmann, CEO, Yamuna International Airport Private Limited, the company that is building the greenfield Noida International Airport. “Sustainable operations are not only good for the environment but they also enable higher efficiency, including cost and time savings,” he adds.

But what comes first? Does sustainability lead to efficiency or do efficient operations fund sustainable equipment and practices? Ronojoy Dutta, Wholetime Director and CEO, Inter-Globe Aviation, is curious whether this is a classic chicken and egg story. At IndiGo, though, he says, the answer is that sustainability brings efficiency, which generates ROI (return on investment) on the investment over a period of time. “If we are looking at reaping the benefits of tech-enabled sustainable practices three to five years down the line, we need to start now,” says Dutta, emphasising that the airline has leveraged time and resources in the last year to become “leaner” and “cleaner”. On an ongoing basis, the airline has been investing in a new, more energy efficient aircraft fleet, replacing its older generation of Airbus 320 CEOs with NEO aircraft, which will reduce fuel burn by 15%.

16/08/21 Anshul Dhamija/Fortune India

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