Demand management could be achieved via a frequent flyer levy with regular flyers reducing usage by at least one return flight per year, and those currently only taking one return flight unaffected.
In the context of combating climate change, demand management is often associated with government interference, or with a decline in standards of living, but this does not need to be the case. In fact, the Climate Assembly has shown that the UK public supports limits on demand for flying, provided the measures used to achieve this are fair. Indeed, the climate impacts now evident around the world will only get worse over time, lowering global standards of living. In addition, demand management and technological solutions can work together, with the policy emphasis applied to each changing over time. This is particularly important in the aviation sector where it will take many years to deploy supply-side decarbonization solutions, and carbon budgets to prevent runaway climate change are rapidly diminishing. Finally, if indeed demand management is an inevitability due to the slow pace of decarbonization in the aviation sector, but continues to be overlooked in the short term, it is increasingly likely that a sudden and abrupt demand management policy may be imposed on the sector as climate impacts accelerate over the coming decades. This could cause an unexpected major crash in the sector and an even greater reduction in air traffic than would otherwise be necessary.
The current cost of living and energy crises highlight how important demand management can be in reducing harmful impacts. Inflationary cost pressures, the supply–demand tightness of oil markets and the Russian invasion of Ukraine are all being felt in the aviation sector too. Meaning people may begin flying less in the near term simply due to increased airfares as a result of high jet fuel prices. As early as January 2022, the International Air Transport Association (IATA) began warning of rising airfares, due to fuel costs. Perhaps this is unsurprising given that fuel represents around 25 per cent of an airline’s costs. In July 2022, the director of IATA, Willie Walsh said, ‘Flights are getting more expensive because of the high price of oil and it’s becoming clear to everybody that that will be reflected in higher ticket prices’. However, with more airlines hedging fuel prices, and airlines desperate not to pass on prices to consumers as demand returns in the post-pandemic world, only time will tell if the tightness of the oil market continues and how consumers respond if airfares do substantially rise, in a world of households having to deal with inflationary pressures across the economy. But it is clear from the Climate Assembly, that the UK public supports limits on demand for flying – provided that the approach taken is perceived as fair – and that demand should be controlled depending on how technological solutions progress.
A prudent risk-minimization approach would be to fly less far, less frequently, over the remainder of the 2020s. Under this lower-risk scenario, the analysis in this paper shows that demand in terms of passenger-kilometres flown in 2030 would need to be 36.1 per cent lower than in 2019, with demand returning to 2019 levels by 2050. This precautionary principled approach of minimizing the risks is fast becoming more akin to a necessary approach, particularly when non-CO₂ effects of flying are considered. Taking action to supress near-term demand to enable supply-side decarbonization to catch up is aligned with the CCC progress update of October 2022, which states, ‘The Government’s plans for aviation focus on sustainable aviation fuel and zero/low-emission aircrafts. These technologies have potential, but there are significant risks in their delivery. In the near term, managing demand would have a much greater benefit for the climate.’
If near-term demand action is delayed, but the UK aviation sector is still to stay within its fair share of global carbon budgets, demand in 2050 will need to be around one-quarter lower, relative to 2019. This scenario embodies significant risk. Namely, that a large proportion of the dwindling carbon budget is expended over the next decade, reliance on uncertain future supply-side decarbonization, and the requirement for even greater demand reduction over the long term.
While non-CO₂ effects – such as water vapour emitted at high altitudes as part
of an aircraft’s contrails – remain uncertain, even the most optimistic interpretation of this uncertainty indicates carbon budgets for the aviation sector may need to be significantly revised down. As a result, demand would need to be constrained
by more than 60 per cent out to 2030, relative to 2019, to minimize devastating
climate risks.
The analysis in this paper strongly suggests that DfT’s modelling of the aviation sector’s supply-led decarbonization pathway is highly optimistic. If DfT and the industry are confident this pathway can be achieved, they will need to implement – and enforce – emissions limits that decline to 2050. This would mean putting in place the right policy environment to encourage and incentivize the rapid development and deployment of technological solutions, otherwise this will not happen. This must include financial mechanisms to discourage emissions and encourage cleaner flights, such as rising kerosene tax and carbon price, along with policies to ensure social and political consent by prioritizing fairness via a fiscal mechanism such as a tax on frequent flying.
Because of the unequal distribution of who takes flights, relatively large reductions in aviation emissions can be achieved without changing travel behaviours for the majority of people – or preventing or even changing people’s annual family holiday patterns. If a demand-management policy, such as a frequent flyer levy, were to be introduced, it is instructive to estimate how passenger behaviour would need to change to achieve the required demand reduction indicated by the modelling here. Analysing National Travel Survey statistics, and assuming average flight distances flown remain roughly constant, it may be possible to achieve a 36 per cent reduction in demand if a future demand-management policy shifted behaviour such that most people who currently take more than one return flight per year reduced that number by one return flight and took no more than four. This would leave the 77 per cent of the UK population who currently take no more than one return flight unaffected. This is a moderate level of behaviour change to put the aviation sector on a climate compatible trajectory, affecting only a small proportion of people with a high consumption of flights.
Under the frequent flyer levy proposal, produced by the New Economics Foundation and climate charity Possible in 2021, leisure passengers would be charged no frequent flyer levy on their first return flight, increasing to £585 on their tenth flight of the year. These indicative levy rates were modelled based on limiting air passenger demand to 25 per cent above 2018 levels. As such, to achieve the demand reduction indicated by the modelling here a higher levy would be required, although it remains to be seen whether a frequent flyer levy implemented as the sole tax or policy measure can achieve this. Research in 2021 by Ipsos and the Centre for Climate Change and Social Transformations found that over two-thirds of the UK public support a frequent flyer levy.
While this paper has highlighted demand management within the aviation sector in the context of a frequent flyer levy, many potential policies exist to reduce demand. These include carbon pricing, fuel duty, reforms to air passenger duty or VAT, and reductions in the availability of flights via management of airport capacity. A coherent policy approach will be required to ensure fairness, public consent and effectiveness, including multiple measures along with changes to the wider transport sector, particularly around affordability of international train travel.
Demand management measures in the aviation sector and beyond will have geopolitical implications. The geopolitical consequences of reduced energy demand will most acutely play out between oil and gas producer and consumer nations, with oil and gas trade forming an integral part of international relations over the last century.
While greater focus on the demand-side offers a pathway to significant emissions reductions, it is also clear that demand-side emission reductions can be implemented swiftly – as was demonstrated during the COVID-19 pandemic. For instance, during 2020 Europe lowered primary energy consumption by 8.6 per cent, compared to 2019, equivalent to over one-third of Russian supplied fossil fuels. Furthermore, the pandemic highlighted the role of individuals in collective action, and many people felt morally compelled and responsible to act for others.
