Full Video: Delta, Air France-KLM, and McKinsey Talk Sustainability at Skift Aviation Forum 2022

Leaders from Delta, Air France-KLM, and McKinsey and Company talk with Skift Editor in Chief Tom Lowry about airlines' carbon impact, at Skift Aviation Forum 2022 in Dallas-Fort Worth. Source: Skift. Skift

Leaders from Delta, Air France-KLM, and McKinsey and Company talk with Skift Editor in Chief Tom Lowry about airlines’ carbon impact, at Skift Aviation Forum 2022 in Dallas-Fort Worth. Source: Skift. Skift

Can airlines reduce the total hydrocarbons they burn? Aviation plays a role in the climate emergency, contributing an estimated 3 percent of the worlds carbon emissions a year.

A few top airline industry leaders spotlighted promising ways for aviation to reduce its carbon emissions in an on-stage conversation on November 16 at Skift Aviation Forum 2022 in Dallas-Fort Worth, Texas. The leaders spoke with Skift Editor-in-Chief Tom Lowry.

Switching aircraft to more fuel-efficient planes is one lever to pull, said Marion N. Chivot-Legris, head of sustainability North America at Air France-KLM.

Pursuing alternative fuels, plus hydrogen or electric power, are other steps, said Amelia DeLuca, vice president of sustainability, Delta Air Lines.

Some business travelers, however, would like solutions to come faster, said Danielle Bozarth, senior partner at McKinsey & Company. Consultancies such as McKinsey and corporations such as Microsoft have been examining their travel-related carbon impacts more closely in the past few years.

We have a commitment to reduce each of our consultants emissions footprint by 30 percent by 2025, Bozarth said about McKinsey. (Side note: A recent report by Skift Research, in partnership with McKinsey & Company, provided four strategies for travel companies to put net-zero words into action.)

Watch this on-stage conversation for the full color or read a transcript of it below.

Interview Transcript

Tom Lowry: Danielle, Amelia, and Marion, I hope in the next 25 minutes or so that we can find a solution to the sustainability problem.

Amelia DeLuca: Im certain we will.

Lowry: Seriously, I think our discussion is very timely given what weve seen and some headlines out of COP27 in the last week or so. And Im really interested in getting your insights for what I personally think is one of the most important sessions at the forum. So, welcome. Before I get going, I just want to remind people that you can ask questions in chat in the app and online, and that we will have a poll with this session. So, please fill it out. Im going to give you the results of that in a couple of minutes.

Marion, lets start with you. So, Air France-KLM put out its first climate report in 2008, so 14 years ago. So, thats a long time ago. And weve seen a lot of messaging and intent over that time, but I feel like just from what weve covered at Skift, that there was an inflection point during the pandemic, maybe a catalyst. So, can you explain a little bit about what were seeing now in terms of maybe some momentum on sustainability?

Marion N. Chivot-Legris for Air France-KLM: Sure. Actually we started our momentum on sustainability 2003, with the nature of the UN Global Compact, the United Nations. Its basically a principle-based framework. So, nothing new, but its true that we saw an acceleration, I would say, in the past three years. Even coming from my personal experience, I joined the aviation industry in April 2020. So, right at the beginning of the pandemic. But I saw it as an opportunity because we saw a lot of pressure, more and more question from civic society at large, especially in Europe, people questioning about the solution when it comes to responsible travel, et cetera.

So, at Air France-KLM, we have a strategy when it comes to sustainability called Destination Sustainability. The second pillar I want to emphasize on it, which is people and culture. And the second one obviously is the environment, which I think its pretty obvious.

And we have different levers when it comes to accelerating the change. In the past three years we saw early retirement of our aircraft, for example, and we saw all these airports having all these planes parked and what do we do with these aircraft? So, we put in early retirement the most polluting aircraft of our fleet, for example. And its one lever for us to accelerate the reduction of our CO2 emissions. So, for example, for Airbus 350, its up to 25% of less emission. So, yeah, obviously sustainable aviation fuel. I wont emphasize too much on that, but thats another lever that we put a lot of emphasis on that at the end.

Lowry: Great. Danielle, let me come to you next. So, youre a road warrior.

Danielle Bozarth of McKinsey & Company: Yes.

Lowry: Youre out there every week talking to companies, clients about sustainability, their strategies. What in your view are the distinct challenges for airlines when it comes to a sustainable strategy?

Bozarth: I think theres a few of them that were hearing from our clients quite broadly. I mean, obviously the demands around making progress against sustainability are frankly not where the technology is. And I think that leaves this industry in a pretty unique position in terms of saying, we clearly recognize where were trying to go in totality, but for the majority of our routes and for the majority of our aircraft, frankly theres not a good solution and there likely wont be for many years. And so I dont think thats completely unique to this industry, but I think its more acute in many ways.

Now, I would also note though that I think this industrys done a great job trying to get ahead of that. I think more people in this room talk about, and frankly, folks out of this room talk about whats happening with the aviation fuel, around SAF and other things than you would certainly hear in other industries. Theres certainly a lot of energy around innovations in this space that I dont think we are seeing in other parts of travel at nearly the same level and degree. So, I think that even though the technology may not be there for the majority of what this industry needs it to be at, there is certainly stuff happening on the margin that I think is pretty exciting.

Lowry: Now, when we write about business travel at Skift, we often go to the consulting firms because we know they do a ton of travel. Talk a little bit about, internally at McKinsey, what the strategy has been in terms of pairing back on travel versus your footprint.

Bozarth: Yeah, I mean, I think I will just start by saying that I think COVID showed us and has reminded us that being in person with people, theres just no replacement for that. And were a client service business and getting out there and spending time with our clients is how we get to know people and how we get to know their businesses. So, if nothing else, I think it really reinforced for us how critical that is. We are balancing that. Concurrently we have a net zero goal by 2030, and we also have a commitment to reduce each of our consultants emissions footprint by 30% by 2025. And those are pretty significant. And 80% of our emissions is travel. So, its a huge issue for us and its creating, as you can imagine, a lot of, I think, very good and productive conversations on, how do we balance what is at the very core of our business and what we do with the emissions from the travel that creates.

Lowry: And how crucial is it for you with clients to be in person and have you paired back your own travel in some ways?

Amelia DeLuca of Delta Air Lines: Dont answer that. Dont answer that.

Bozarth: Im happy to note I think my travel this year will be the highest its ever been.

Lowry: Oh my God.

Bozarth: But no, I think its absolutely critical. I do think it does change how we travel. I think folks at my level in our organization probably are traveling at the same amount. I think we are being more thoughtful at what our teams are doing. And are on site every week? They were pre-COVID. Certainly either theyre taking shorter trips when they go, I recognize that doesnt take a flight away, or they are going every other week or other things. And so there is very definite ways in terms of how our business has changed as a result.

DeLuca: Tom, can I add something on this?

Lowry: Sure.

DeLuca: I came from Deltas sales department when I moved into sustainability 18 months ago. And so Ive stayed very close to the concept of what will business travel do as it confronts its sustainability goals?. And one of the things thats fascinated me is over the last year, Deltas actually assembled a green sales team which goes out and has one-on-one conversations with corporates, and weve had 500 conversations to date. And every one of those is uniquely different. And so there are not emerging trends yet, I think, that we can say that there are two ways that corporations are going to meet their climate goals. I think what were finding is we want to go out there and start with education, that there are things you can do now. There are investments you can make in the future, whether thats buying SAF [Sustainable Aviation Fuel] this year or just even becoming involved in the scaling of sustainable aviation fuel.

And then there are also ways to involve your travelers, to have them have the confidence that yes, I can feel good about my company, I can feel good about traveling with McKinsey because I know McKinsey is going to meet its goals and its holding its suppliers accountable as well. But all of that is very unique right now and I think itll be interesting to see where we end up. But there is no one theme right now. Were all just trying to figure it out together. But I will go back to the point that Danielle made. Its very collaborative, which I think is important for this industry.

Lowry: Let me stay with you, Amelia. I mean, it seems like the overwhelming priority is the faster production of SAF, of sustainable aviation fuel. I mean, how does the industry get there and who pays for it? Its very expensive.

DeLuca: We could spend a couple hours on that one. So, a couple things Ill say. Again, I stepped into this job. Im like Allison earlier. I drank the Delta Kool-Aid on day one 16 years ago and Ive never left Delta and Ive spent my time in the commercial area. And so when you come into sustainability, I get a lot of questions on, Isnt this the most daunting job youve ever had? Its sustainability for an airline. And on the one hand, yes, it is. Its very hard. On the other hand, I think just working for an airline in general is very hard. So, Im no stranger to bankruptcy or a COVID pandemic or you name it. Sustainability actually to a degree seems a little bit easier because I got a little more time to solve for it. But were hard to decarbonize. We are one of a handful of sectors thats hard to decarbonize.

And so no ones going to say, This is going to be easy for us. And so I always divide it into saying, Theres good news and bad news. The good news is I know what the problem is. The problem is jet fuel. And unlike other industries, even hotels we were talking about before, they may not be hard to decarbonize, but theyre dealing with a whole plethora of issues that theyre dealing with. We are very focused on our entire climate footprint, our entire environmental footprint. But we know that 98% of our emissions come from jet fuel. So, thats the good news. The bad news is there is literally no solution for that today at scale. So, good news, bad news. But we know and were aligned in moving towards SAF. There is, I dont think, any doubt at this point from any group that SAF will be the answer to the industry getting to net zero at 2050.

Every model under the sun shows that SAF is at least half of the solution, if not more at that point. So, then it just becomes a question of how do we get there? And again, I think its just alignment across the industry, which were already there, that this needs to happen and not undercutting any pathways. We always say as an industry, so its not just Delta, that as an airline industry we are technology and feed stock neutral. Meaning any kind of SAF that can be produced today, you will see us support that SAF, from policy to investments.

As we go, that will change. We know that SAF today is using things like used cooking oil, which is very limited in its availability. And so the whole industry is starting to turn towards green hydrogen and captured carbon to try to say how can we make e-fuels from feed stocks that can be more widely available.

But I think whats its going to take honestly though is its going to need to take just very strong collaboration. Weve seen and weve got incredible momentum for the United States government in the form of the IRA package, which puts incentives out there for SAF. Weve seen certain states. Californias very advanced in its support of sustainable aviation fuel. And after these recent elections, certain states that have maintained their government structure as at least previously it was, like Minnesota for example, or in Michigan, we think will continue to bring in incentives for sustainable aviation fuel, which would be a huge support for what we need. And then those two things, youve got government there.

Youve got corporations like a McKinsey who are very active in saying, Yeah, I want to buy SAF, or, Im going to support and buy SAF. So, weve got that part working towards it. So, its just going to be continued cycle of funds and investments into SAF producers through other financial mechanisms I think that go beyond just corporates, airlines and governments. But again, theres a lot of support for the financing of SAF right now.

Lowry: Is a government tax on this inevitable? And will that ultimately get passed on to the flyers?

DeLuca: Well, maybe Ill pass it to No, Ill answer. I was going to say, pass it to the European carrier, to answer that one. No, I think were uniquely positioned to be able to observe two different models that are coming to be. The United States is clearly incentives-focused. Thats where the United States airlines are very focused. We think incentives are the best way because it allows the market to come online at the best economical model possible. Europe has taken a different approach, which is mandates, of course. Again, theres risks to that. But were watching it come online. Air France-KLM and our partnership with them, France has a mandate for SAF and weve watched and weve observed how thats working. And so, well see. I personally think that no one model will win out. The worlds trying to figure it out. But I think its all just a learning, which is incredible.

Lowry: Great. Well, Amelia, thank you for teeing me up for Marion because that was my next question. So, how are things different in Europe? I mean, we talked in our prep call about the distinction between Europe and other parts of the world.

Chivot-Legris: Yeah, its true that Europe had put some mandates. So, for example, France, we have a mandate since 1st of January, 2022 to incorporate 1% of SAF. That being said, the mandate is not on us. Its on the fuel producers. So, how we can collaborate towards that mandate. And then there is a bigger mandate of 5% by 2030. And we, at Air France-KLM, went beyond that with a mandate, well, a target of 10%. I think Europe have shaped the discussion on sustainability, and not just for the aviation industry but in general, for a couple of years now.

I would say probably 20, 25 years. And it comes with some restriction. And we, Air France-KLM, received some support from the Dutch and French government during the pandemic and this was linked to some green commitments. Ill put it that way. So, we need to showcase what we are doing to really accelerate the change. So, we have no choice basically to really show our commitment and to demonstrate that yes, we accelerate the incorporation of SAF, for example, to accelerate the fleet renewal, to really further embed sustainability within the value change. And I think this is a very good exercise. And Europe have been leading the pack for many years on sustainability.

Lowry: So, several weekends ago I put a story up on Skift about climate activists at Schiphol, Amsterdam who had stopped the takeoff of some private jets. I mean, how worrisome is the growing climate activist movement? Or is it just an aside for airlines?

Chivot-Legris: No. Well, I think we need to take seriously this feedback. But again, I think its the question and the awareness of sustainability and also the solutions that are out there need to be a bit more visible. At least we need to be more transparent on that activism in Europe on sustainability. Ive been there for many years and not just again for aviation. I used to work in the banking industry and it was the same, a lot of pressure. But again, for me, activism is also part of the sustainability journey. We need to hear what are the key messages and what do we do as a corporation to answer to these questions. So, thats very important that we are taking seriously these messages and to adjust. But I think there is an awareness piece that is crucial.

DeLuca: I was going to add, and you heard Allison talk about it earlier, it is core to the DNA of Delta, its core to this industry, to be listening, listening to our customers and meeting their needs. We know were an industry that often is disruptive. We often do cause misconnects. There is often angst and stress in travel. And we lean into that to say, Im listening because I want to be better. And to me its the same thing for climate activism.

Last year when I was at COP, I always talk about the most powerful moment was I was sitting at a McKinsey event with these amazing CEOs from the whole world talking about what they were doing to finance the transition, and they were drowned out by the helicopters overhead that were tracking the climate activists. And you could sit there and get frustrated by that moment or you could say, This is how its supposed to be. This is the only way were going to solve it is if we invite all the voices to the table.

Chivot-Legris: Yeah. Yeah, indeed.

Lowry: And a threat to the business side? I mean, is there a genuine threat at least going forward on from that?

DeLuca: From the climate activists or just from sustainability in general?

Lowry: No, no, no. The activists.

DeLuca: No, I dont think so. Like I said, I think its listening to them. And also I will say, they represent the next generation of travelers. So, again, it is a gift that they are giving us by being loud because were going to be able to understand what their needs are. I really think though, the thing about it is when we think about the next generation, and I know were going to dive deeper on this, the next generation though, they really connect the climate crisis to a human rights crisis. And so I think the airline industry is really well positioned to try to highlight that we have always been a brand or a sector that is essentially, we are serving people. We always say at Delta, Were not taking people to places. Were taking people to people and people to opportunities. And so to me, if we try to make sure that we have an airline industry that is not only more sustainable in the future, but actually more accessible And thats going to be managing that green premium very tightly.

But I do think we can transform our business. When we start to look at some of these things, we become more fuel efficient through our fleet. We become more fuel efficient through our operations. While SAF starts to scale and those green premiums come down, it could look really different from the cost structure in the future. And again, who knows when well get there and who knows exactly if its going to be as smooth as I just laid out there in a chart. But I think we have the ability to actually get to a point where climate activists can really see that yes, this sector is so powerful in what we do and were doing it in a sustainable way.

Lowry: So, lets pause for a reality check and see our [audience] poll results.

DeLuca: They disagree with me in the polls.

Chivot-Legris: Yeah, they disagree.

Lowry: So, we can have that on the screen. There we go. So, are you optimistic about the airline industrys ability to meet its long-term planning goals? 63% say no and 37% say yes. So, comments.

DeLuca: Ill start, but I encourage others to lean in here. I get the skepticism. Modeling suggests its going to be really hard. Modeling suggests as an industry were probably not going to get there. I think there are leading airlines that will achieve their goals. I think other countries and carriers will get there as well and make progress, but maybe not at the same speed. And thats just a recognition that were a global industry. Theres lots of challenges between now and 2050. Things that make me optimistic though I will just mention again, is the alignment across the industry. I think thats pretty incredible. I think the other thing is, I mentioned this earlier, by God, were an industry that can do anything in my mind. Again, look at COVID, right? Who wouldve thought at this point I mean, yeah, COVIDs given us a real run for our money, but were still standing.

Think about the bankruptcies. Think about 9/11. This industry has shown that we can get through anything. So, Im confident about that. And then the other thing Ill just mention just from the personal side, and we were talking about this before, but we are all parents of young children. And I think as you start to add in this imperative thats a business imperative or a business opportunity, no matter how you look at it, combined with a lot of people that just care so deeply about this because we see what were leaving behind for our children, thats what makes me optimistic that were going to get there. And I welcome others to add.

Lowry: Danielle?

Bozart: I mean, I love the optimism, to be honest.

Lowry: What, 36%?

Bozart: I think its great. I mean, I think the other thing that we dont anticipate is the speed of technological change. And so I think that it is very hard for us to sit here and if we look in other industries how much weve seen over the past decade, it feels to me like this is another space that we cant predict how things are going to change over the next 25 years. And there is a tremendous amount of energy and investment into that space as well.

Lowry: What are you hearing from your clients on carbon emissions?

Bozart: Well, I think a lot of confusion, to be totally honest. And I think one of the things we discussed at the Skift Global Forum, obviously if youll recall Google was on stage and talked about their change in emissions accounting. I think its creating, frankly, a lot of confusion in the industry to think about carbon and then obviously all the other emissions that come along with it. And I think that one of the things that

Lowry: Can you explain just what we were talking about there?

Bozart: Well, I mean, we were talking about contrails before. And I mean, one of the things we were talking about I think is a perfect example, and Ill let you choose to share your story or not, but how in essence do you talk about the dynamics around those types of emissions? How do you help people think through the trade-offs between, in essence, everything in the emission stack, if you will? Particularly were all obsessed with carbon, but theres frankly a lot of other emissions that are coming out of it as well. And we will have more and more awareness of that and better ability to measure that over time.

DeLuca: Yeah. And I think just to add, I started by saying 98% comes from carbon and jet fuel, but theres two sides of this, though, that I think we need to be aware of. So, one is what an average consumer sees that they think is not sustainable, which is single-use plastics on board or waste. We all know thats a really small part of our problem. And sometimes I think, Should the aviation sector be solving single-use plastics? Im not sure. But the fact of the matter is we need consumers to know that we are doing everything we can in our power to embed sustainability in everything that we do. And for Delta, thats been a north star for us, is that sustainability must cut across everything that we do.

But then theres emerging science, as Danielle mentioned. So, I know most of us here are aviation geeks. And so the white clouds in the sky when they persist and theyre there for a period of time are known to trap heat. Theyre actually potentially up to two times or up to the same amount as carbons impact on the planet. And so I was sharing with Danielle that those of us that live and breathe this every day are like, Oh my God. We got to go. We got to address this. We have to go. Contrails is a thing. And we have a great partnership with MIT thats doing just that.

But its such a nascent space that to just for me to show up the next day at Deltas flight ops and be like, Hello, Id like to ask you to fly a little bit differently so that you dont form that cloud. Dont worry, youre going to burn a little bit more fuel, were just not there yet. And we just need to be careful that we dont push too far into the next space where we take an industry that is Again, its a legacy industry. Its been here for a while. Weve got great employee relationships and we want to make sure everyone understands what were doing. And to the point with Google that it can be measured and quantified, both the impact today as well as the abatement solutions of the future.

Lowry: Right. Marion. So, among our favorite topics to write about these days at Skift is electric powered travel. So, I wanted to ask you, I mean, does electric-powered air travel have any viability commercially? And what are you seeing from Europe in terms of that?

Chivot-Legris: Yeah. Well, I think also we keep in mind that were an airline so we can influence, I would say, aircraft manufacturers. KLM, for example, have partnered with Delft University of Technology recently to develop Flying-V, I dont know if you saw that aircraft, trying to see if hydrogen-powered aircraft would be viable. Airbus have a lot of innovation and a strong roadmap on what could be the next generation aircraft. That being said, experts discussed on the entry-to-service dates around 2035. Now were leaning to 40, 45. And we do know that for long-haul flights, these are not innovation and technology that are going to be available from day one.

So, I dont have an exact answer. And to reflect to what we just said, Ive been working on sustainability for 15 years and I think the trickiest part of the job is there is no black-and-white situation. Its always gray. And how you navigate through that gray zone and trying to wear the one is learning through the journey itself. Because even myself, Im a sustainability expert but Im learning through the research, et cetera. So, I dont have an exact answer to your question, but I think we need to learn from that and see. And Europe put a lot of emphasis on that Airbus, but also a lot of experts and research teams. Well see. But for long-haul, that might be too

Lowry: I mean, in your mind 25 years from now, are we taking electric short hops, 50-mile flights, 100-mile flights?

Chivot-Legris: Well, I mean, the shorter flights. For example, in France, we have train plus air option now that we developed with Air France, and its part of the green bailout package with the government, and we need to offer alternatives by train for example. And that is bringing solutions. Theyre not black-and-white solutions, but trying to bring solutions on the table.

Lowry: Okay. Great. Amelia, let me come back to you really quickly. You mentioned hydrogen before. I just want to touch on that again, just elaborate a little bit more on where that stands. I mean, it sounds really like its very expensive and just a little bit elusive in terms of

DeLuca: Agreed.

Lowry: whether this is going to come to be.

DeLuca: Yeah. Hydrogen is a tricky one for a couple different reasons. One, many, many, many industries will look towards green hydrogen as a solution. So, aviation may not be the first in line. The other problem is its called green hydrogen because its created off of renewable energy. So, you need first and foremost to have access to renewable energy. So, I just want to mention theres these building blocks of hydrogen that are kind of scary, but at the same time, again, it is a solution that many industries will use. Will aviation get it first? Probably not, but at least we know therell be a lot of people trying to solve for green hydrogen. And so green hydrogen becomes really interesting for us though because it one, can be part of our fuel solution of the future. If you take green hydrogen and combine it with carbon, whether its a point source capture or from the air, you combine it, you can have a synthetic fuel. So, it goes into the engines today. Its synthetic. Its essentially unlimited because youve created the product, and its a zero emissions type fuel. So, it sounds pretty good, right?

Lowry: Right.

DeLuca: And again, the IRA [U.S. Inflation Reduction Act] had provisions for both green hydrogen as well as captured carbon as well as renewable energy. So, the amount of inbound calls I have been taking recently from people in the hydrogen space has been fascinating. The second thing though, and Marion just mentioned it, is Airbus who is Obviously, Delta flies a lot of Airbus planes. Well just say it that way. We have a relationship with Airbus on their ZEROe product, which is right now supposed to be previewed in 2035, which would be hydrogen as a propulsion system in the airplane. Now, will we hit 2035 or not? I do think Airbus is an incredible partner. Were learning a lot through them.

We meet with them monthly to essentially talk about how much space is that hydrogen tank going to have to take up and how does that change the range capabilities. So, to your question of which routes are these going to be deployed on, a lot of thats being studied right now. It will start with regional. Theres no doubt about that. I do think though, in 2050 a solution thats a hydrogen or electric can probably cover most of an airlines regional flying. The question to me is really, how quickly can you get a mainline solution? And that is the one that I think all eyes are on that one.

Lowry: Right. Let me just promote the next session after this. Theres a much deeper dive into sustainable aviation fuel with my colleagues Seth Borko from Skift Research and the folks at Neste. So, if youre interested, stick around. Its going to be much deeper. Danielle. So, back in September McKinsey partnered with Skift Research-: Right. Let me just promote the next session after this. Theres a much deeper dive into sustainable aviation fuel with my colleagues Seth Borko from Skift Research and the folks at Neste. So, if youre interested, stick around. Its going to be much deeper. Danielle. So, back in September McKinsey partnered with Skift Research

Bozart: We did.

Lowry: An outstanding report, if I do say so myself, called Accelerating the Transition to Net Zero Travel. Heres a way that you guys can get it if you havent seen it yet.

Bozart: A very large code for you. Yes.

Lowry: Yep. As part of that, you talked about what it is called the Say Do gap, which is the idea that consumers support green travel, sustainable travel, but theyre not willing to pay for it.

Bozart: Absolutely.

Lowry: How do we close that gap?

Bozart: Well, I think actually by closing the green premium in many ways. Probably Ill step back for a second. We obviously wrote a report together. We looked at a whole bunch of different elements on the path towards sustainability. And I think to Amelias point, aviation is actually, its quite a bit easier than a lot of the other parts in travel where value chains are frankly much, much more complicated. And theres much more complicated rubrics of, in essence, not only propulsion but what youre powering. We spent some time thinking a little bit about how companies should start to think about how they identify and sequence decarbonization initiatives as part of that. There are some frameworks I wont get into that really help companies start to think through that, particularly given that technology and when technology comes online its a key part of that.

We also spent a fair amount of time thinking about the dynamics between business and leisure travel in the report. And I know there was a fair amount of discussion this morning about how consumers are shifting between leisure, as Ive heard it, or business and leisure, and how those Obviously, Robert [Isom, CEO of American Airlines] spent some time talking about that this morning. What were finding obviously is we talked about the business side of things and we are seeing some more willingness to really change behavior, and we arent seeing that yet on the leisure side. And we call it the Say Do gap frankly, because when we survey consumers, and Im sure you guys see it too, consumers talk about how much they care about sustainability.

They talk about how much maybe theyre willing to pay for it. Theyre probably not so as explicit as that. But they understand that its the existential question of our time. And then you ask them to go and pay for it and to actually change, take less convenient options, stay in a different hotel, change the distance they go for their vacation, and we see virtually no willingness to pay for it among leisure travelers. And there are certainly exceptions at certain parts and certain generations, but for the very most part its not there yet.

Lowry: Amelia, elaborate on what you see in terms of the divide on this with the generations.

DeLuca: Yeah. And Im a little bit obsessed with this topic right now. Youve heard me talk about Gen Z a little bit and its not just because Im a millennial and Im glad that people are stopping talking about me at this point. So, focus on the next group and their problems. Yeah. To Danielles point, its really interesting because I think there was this large assumption that said that Gen Z is going to be willing to pay for it. They care about this stuff. And our internal data, I shouldnt say internal, its a third party who did it, so these are not just Delta flyers, these are generic flyers across the United States, suggests that while Gen Z care the most about this, theyre the least willing to pay for it.

Because they dont consider themselves to have caused the problem. They actually look to government. That could be troublesome. But they dont look to themselves. And I think thats the most important learning for that. And so I think we need to figure out, and Danielle really brought this up, well, then who is going to pay for it on the leisure side? Or should we just not expect that to happen? No, I will say the corporate support has been really incredible to date. Neste is a partner of ours as well, a partner of Air France-KLM. And we cannot get enough SAF right now to meet the corporate demand that is out there.

And so I would say when we talk about this, dont take this leisure issue as an alarm right now. I think its all about how do we get businesses and create these win-win situations between airlines and businesses, and then offer consumers the ability to participate, whether its SAF or offsets or bring your own water bottle on the airplane. We just think there should be a suite of options. And youve seen things like that that Deltas done, even on the food side. Were not taking beef off the airplane. Were introducing you to other options. And I think for me, sustainability is just, again, a suite of options that makes you feel like you have a choice and that you feel good about that choice.

Lowry: And Marion, so how do you manage the optics? The emissions is a little hard. I mean, the contrails I guess you can see. But what do you do inside the cabin to make your case?

Chivot-Legris: And to reflect on what you just said on cabin waste, I think its a good example. Because people see the single-use plastic issue because its up there in the cabin. And cabin waste is very tricky. Working actually in partnership with Delta team on that, trying to lobby a little better international waste regulation. Because even if we want to engage, we have some restriction on the government side. Very few topics when it comes to the customer experience. And I was very interested in hearing from Allison earlier from Delta. The customer experience will embed more and more sustainability features when it comes to responsible catering, either on board, but also in our lunches, how we offer these options to the customer to be able to pick and choose.

Responsible catering, cabin wastes, various things like the menu, trying to reduce paper, et cetera. But again, is it the biggest challenge? Its because its visible. Its visible for the passenger, for customers. And we receive a lot of feedback on that. But when we explain, Well, actually there is a bigger issue and this is the issue, actually we have one issue, which is fuel, but this is the biggest issue, then theyre willing to, Oh, okay, what are the options? And then they tend to reduce the pressure on whats happening inside the cabin. Which I dont know if you realize that as well at Delta, but I thought it was just

DeLuca: Yeah. it was really eye-opening that Delta had a banner year in 2021 and 2022 in terms of sustainability. These just new incredible goals. SAF procurement, we were just everywhere. All these things. The thing that got the most traction was our new amenity kit, which most customers dont even get. And its an amenity kit where youve got five items where we pulled the plastic off of it and then they were handmade by Mexican artisans. Personally, I love that though, because its starting to tell me again what I said earlier, that the climate crisis is very much a human rights crisis. And if we look at it through the lens that its not just environmental, but its environmental/social

Lowry: Social. Yeah.

DeLuca: underneath sustainability, thats very powerful. And again, I dont think we want to treat it as a, Hey, dont look at that. Look at this, but more about, again, just meet our consumers where theyre at. Because the main thing is, you just need to keep traveling. Dont stop traveling. And thats the most important thing to me.

Lowry: So, as we wrap up, I mean, what Im taking away is we need more education, theres a lot of gray areas, and there needs to be resources and much better infrastructure. So, if were sitting and having this panel three years from now, would any of that change?

DeLuca: Who wants to go first?

Lowry: Crickets.

Bozart: Well, I think its education too, in many ways. We werent talking about this in anywhere the way we are five years ago. And so I think there has been a tremendous amount of education. Ill let you guys talk about the actual availability, which I think is a harder nut to crack.

DeLuca: Yeah. I think youre going to start to really feel traction when sustainable aviation SAF starts to scale. And the numbers, just so you know, last year the U.S. industry used something like 15 million gallons of SAF and we need to get to 3 billion by the back half of this decade. Thats clearly not going to be linear. But there will be an inflection point at some point, we believe around 2025, 2026. So, in theory, in three years, if that is happening the way its forecasted too, I think were going to feel a lot better on like, Okay, its moving finally.

Lowry: Marion, final word.

Chivot-Legris: Yeah. Further collaboration. I think that will move the needle.

DeLuca: Yes.

Lowry: Oh, great. Thank you so much. Unfortunately, were out of time. But Danielle, Amelia, Marion, thank you so much.

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