11. The Economic and CO₂ Emissions Performance in Aviation: An Empirical Analysis of Major European Airlines

The sustainability of aviation in global supply chains is of increasing importance to airline management and policy makers. With mounting environmental pressures and market volatilities, airlines need to find strategies for simultaneously managing their economic and environmental (emissions) performance, two objectives that can support but also contradict each other. This chapter aims to evaluate the relative performance of airlines’ carbon and cost efficiency and how this relationship has changed over time. We compute and compare the carbon efficiency of 14 major European airlines for the period of 1986–2007. As jet fuel is the most important resource in the aviation supply chain, we examine whether there is a relationship between fuel prices and carbon efficiency. We also test whether unit cost, distance flown and load factors have an impact on airline carbon efficiency. The results show that the fuel prices and their volatility have affected and improved carbon efficiency of airlines. Our findings also confirm previous anecdotal evidence suggesting a significant negative relationship between carbon efficiency and unit cost.