Etihad Airways' CEO says that airlines that fail to follow its sustainability lead may soon be 'history'

• Etihad Airways CEO Tony Douglas believes that airlines that don't focus on sustainability may be forced out of business.
• More leisure travelers and businesses are focusing on the emissions of their travel and choosing green airlines.

Etihad Airways is betting all of its chips on sustainable aviation, and says that airlines that aren't doing the same might soon be "history."

Tony Douglas, Etihad's chief executive officer, told Insider at the Dubai Airshow in November that airlines will soon compete on environmental performance, and those that aren't making changes now could lose future customers.

"Increasingly, travelers will make choices that do include carbon emissions and therefore, the environmental performance [of their airline,]" Douglas said. "The people that don't respond in the sort of ways that we've been doing may well be history."

Etihad's ultimate goal is to achieve net-zero emissions by 2050 and cut its 2019 emissions in half by 2035.

The airline knows how to cut back on emissions but mastering the balancing act between environmental sustainability and economic sustainability remains elusive.

On October 23, Etihad flew its self-described "most sustainable flight ever" from London to Abu Dhabi, UAE in which it reduced emissions by 72% to a similar flight two years prior. From reducing plastic waste by using plant-based water bottles to reducing fuel burn by obtaining a more direct air route, the airline was able to reduce waste and save around 64 tonnes of carbon dioxide emissions.

A mixture of 62% traditional jet fuel and 38% sustainable aviation fuel, or SAF for short, powered the flight for additional carbon savings.

But replicating those sustainable conditions on every flight would be too costly for Etihad and the airline "would be insolvent within about 20 minutes," Douglas said, based on the cost of sustainable aviation fuel alone.

"The reason why we actually do these flights is to draw people's attention to the much larger challenges here," Douglas said. "Whilst I can predict an end to the pandemic … I actually don't predict an end to the challenge of commercial aviation sustainability."

Sourcing and using sustainable aviation fuel was a challenge as the fuel was brought in from Amsterdam and Etihad wasn't even able to fill the plane with as much of the biofuel as it wanted.

"There's no infrastructure to be able to deliver [SAF] directly to aircraft," Douglas, the former chief executive officer of Heathrow Airport, said. "You can't get prices down until availability goes up, but you're not going to get availability to go up until you get prices down."

Etihad's focus on sustainability came as a result of a restructuring plan undertaken by the airline after failed investments in foreign carriers such as Alitalia, Jet Airways, and Air Berlin, all of which have permanently ceased flying.

"The fallout from that was a transformation plan which had to radically reshape, resize, and get us on a sustainable footing," Douglas said of the investments. "It was analogous to open-heart surgery on the balance sheet."

That plan included a fleet renewal centered around leading next-generation aircraft from Airbus and Boeing.

Boeing's 787 Dreamliner, which Etihad nicknamed the "Greenliner," is currently Etihad's leading long-haul aircraft. Airbus' A350-1000 XWB aircraft, or the "Sustainable Fifties" in Etihad parlance, joined the fleet in 2019 but won't fly passengers until 2022.

Etihad travelers are now being incentivized to make sustainable choices with the launch of the airline's "green loyalty" program. Travelers with smaller carbon footprints, whether it be those traveling without extra luggage, will receive extra frequent flyer miles.

"The idea that this gets passed through to ticket prices to our guests, the traveling public, I actually find reprehensible," Douglas said of so-called green taxes on travelers. "There is a societal need to travel and therefore, penalizing the passenger through increased ticket pricing I actually struggle with conceptually in one sense."

Competing airlines are "welcome" to copy Etihad's sustainable game plan, Douglas said, warning that those that don't might lose major corporate clients that are adopting new environmentally-friendly travel policies.

"I kind of feel for them because not everybody has the ability to do so," Douglas said of competitors that aren't taking sustainable measures. "Having said that, I think going forward it will be the principle differentiator of who succeeds and who fails."