In this episode of our ‘Sustainability in the Air’ podcast, Akshat Rathi, award-winning senior climate reporter for Bloomberg News speaks with SimpliFlying’s CEO Shashank Nigam. Rathi is the host of Bloomberg’s podcast Zero that explores the policies, tactics and clean technologies pushing for a zero emissions future. He is also the author of the book Climate Capitalism, which tracks the unlikely heroes driving the fight against climate change.
Here are the key highlights of the conversation:
The economic case for climate action (3:40)
Challenging the “hard to decarbonise” label in aviation (5:45)
The need for correct pricing in air travel (8:18)
Climate capitalism and corporate responsibility (16:40)
The role of government in creating a level playing field (22:40)
The potential of electric aircraft in decarbonising aviation (34:15)
Addressing greenwashing and activist pressure (39:58)
Rapid Fire! (43:51)
Keep reading for a quick overview of the episode.
Why pricing flights as “luxury goods” matters
Rathi advocates for a reevaluation of how air travel is priced. He argues that current prices, especially those offered by low-cost airlines that offer “ridiculously” cheap flight tickets, do not account for the true environmental cost of aviation.
“It’s ridiculous to me that you can fly for 20 pounds from London to Rome,” Rathi states. “That should not be possible, and yet it is, and that is wrong. If you want to fix aviation, you have to start to price the ticket right.”
Rathi argues that fossil fuel use, especially in aviation, has been greatly under-priced since it has never justified the cost incurred by the environment from the pollution that ensues. While flying has enabled global mobility and brought on significant societal benefits, it has not been without serious degradation of the planet.
Moreover, aviation, Rathi states, is a “luxury good” that needs to be priced accordingly. It is, therefore, imperative to recognise and incorporate these external costs into the price of air travel and effectively pay the “real price”. He also supports the idea of a frequent flyer levy to curb the demand for air travel, particularly among frequent flyers who account for a disproportionate share of aviation emissions.
5 takeaways from the conversation
1. The economic case for climate action
Rathi argues that addressing climate change head-on is more cost-effective than managing its impacts.
“It will cost more if we let climate change run rampant than it will to pay for the solutions to reduce emissions… The Stern Review looked at the cost of climate impacts and compared it to the cost of climate action, and the difference is huge.”
The Stern Review, published in 2006, was a landmark study that analysed the economic impacts of climate change. It concluded that the benefits of strong, early action on climate change far outweigh the costs of inaction.
Rathi extends this principle to the aviation industry, suggesting that the costs associated with transitioning to more sustainable practices – such as investing in SAF or developing electric aircraft – would be far less than the potential costs of climate-related damages if the industry continues on its current business-as-usual trajectory.
2. Challenging the “hard to decarbonise” label
Rathi contests the notion that aviation is a “hard to decarbonise” industry. He argues that for years, the aviation industry has sheltered behind the label, which is not only a misconception now but has also stalled the industry’s progress towards net zero emissions.
“Hard to decarbonise is a phrase that’s been around, and it’s been applied to a number of industries, and I think the words that we use around climate solutions need to change as the set of solutions change. It’s no longer an excuse. That would have been fair to say if there were no technologies available at scale to decarbonise [aviation]. That’s not the case today.”
Rathi points to the existence of sustainable aviation fuels (SAF) and the development of electric and hydrogen propulsion aircraft as evidence that technological solutions to decarbonise aviation exist.
The primary challenges now are the cost and scaling up of these solutions. For example, an analysis by SAF supplier SkyNRG estimates that by 2050, Europe and the US could collectively produce 120 Metric tonnes, or 42 billion gallons, of SAF. But to do so, 400 new refineries will be needed in the US and Europe – at a total cost of $650 billion.
Using solar power as an example, Rathi illustrates how the technology was initially expensive and even considered economically unviable. As with almost every technology, the push for solar involved a combination of technological advancement, government policy, entrepreneurship, and international competition. A similar formula could also be applied to aviation, he suggests.
“Between the creation of a technology and its eventual price for commercialisation, there is a big gap, and that gap needs to be filled. And there are clear examples and steps that can be taken to do that, and they can be a mix of steps.”
3. The role of governments in creating a level playing field
Rathi emphasises the importance of government policy in facilitating the transition to sustainable aviation. He argues that government intervention is necessary to create a level playing field, as voluntary green initiatives can lead to competitive disadvantages for companies.
“The difficulty with any climate policy is that a company trying to do something green voluntarily is usually making itself less competitive in the market because it is paying a higher price to do something that nobody else is doing. Which is why you want governments to step in to level the playing field.”
Rathi advocates for proactive collaboration between industries and governments to develop requisite regulations to ensure a gradual transition to sustainable travel, urging corporations to view governments as allies rather than as obstacles to addressing climate change. Failing which, harsher and stricter regulations may have to be put in place by the governments to meet the climate targets.
4. Climate Capitalism: a proposed business paradigm
Rathi argues that the current capitalist business model, which focuses primarily on revenues and profits, is unsustainable. He suggests that capitalism’s inherent drive for growth can be redirected towards sustainable practices if corporations collaborate with society and governments to redefine growth priorities.
This would involve a significant shift in business practices, especially for carbon-intensive industries like aviation. Under a climate capitalism model, Rathi suggests, companies would need to acknowledge their role in climate change, maintain transparency about goals and challenges, disassociate from industry groups that oppose climate action, be candid about available solutions, and cooperate with governments on supportive policies.
”Capitalism has a way of chasing growth, because that’s the incentive system that it is created for. But that growth is shaped by what society and governments choose what growth needs to be,” says Rathi. “And I think we’ve been choosing wrong. Corporations can help work with the system to choose right.”
5. The future of the aviation industry
Rathi predicts that the most valuable companies in the aviation sector will be those that decarbonise the fastest. He draws a parallel with the automotive industry, where Tesla, the electric vehicle manufacturer, has achieved a higher market valuation than traditional automakers.
“The most valuable auto company in the world is an electric car company. That will start to be true in other sectors of the economy. The most valuable electric utility is going to become the utility that will have the most decarbonised power. That’s going to be true eventually of aviation — the company that has decarbonised the fastest, has probably the most electric aviation to offer, will become the most valuable.”
In aviation’s context, this could mean that airlines investing heavily in SAF, more efficient aircraft, or developing electric or hydrogen-powered planes could see their valuations rise. It could also be that new entrants focused on sustainable aviation technologies could potentially disrupt the industry, he suggests.
However, this prediction faces several challenges. Unlike the automotive industry, where electric vehicles can often be a direct replacement for internal combustion engine vehicles, the path to zero-emission aircraft is less clear, particularly for long-haul flights. The high capital costs and long lifespan of aircraft will also make rapid fleet turnover difficult.
Ultimately, while the path to cleaner flying may be contested and controversial, it will always be two things: unpredictable and exciting.
‘Sustainability in the Air’ is the world’s leading podcast dedicated to sustainable aviation. Through in-depth conversations with top aviation leaders, we break through the clutter and provide a clear roadmap for a net-zero future.
