Home > Corporations, Current, Incentives, Information > Are the “Best” Airlines Environmentally Friendly?

Are the “Best” Airlines Environmentally Friendly?

Earlier this year, the Wall Street Journal recently released its 2014 rankings of major airlines, as determined by evaluating the carriers according to seven different factors, including on-time arrivals, cancelled flights, mishandled baggage, and complaints. Environmental-impact factors were not included in the Journal’s analysis. Here are the Journal’s results:

PJ-BZ531_MIDSEA_16U_20150114114822

FiveThirtyEight also recently released a ranking of major airlines, but their analysis focused exclusively on environmental impact. More specifically, FiveThirtyEight ranked carriers based on fuel efficiency:

The International Council on Clean Transportation (ICCT), an independent nonprofit funded by private foundations and entities such as the UE and World Bank, has been tracking airline fuel efficiency since 2010. Its latest report found no overall net gain in fuel efficiency from 2012 to 2013, and a 27 percent gap between the three most efficient carriers — Alaska, Spirit and Frontier Airlines— and the least efficient one, American Airlines.

The report’s “fuel efficiency score” is a unitless measure calculated using an airline’s revenue passenger miles, the number of airports it serves and its flight frequency per unit of fuel burned. A score of 1.00 is the industry average. The greater the number, the better the efficiency.

Here are their results:

538fuel

As the following crude chart indicates, setting aside outliers like Alaska and American, there generally appears to be an inverse relationship between consumer satisfaction and fuel efficiency:

airlinesatisfaction

This chart plots the eight airlines appearing in both reports according to their ranks for consumer satisfaction (WSJ) and fuel efficiency (FiveThirtyEight), a larger number being “better” (i.e., greater consumer satisfaction or greater fuel efficiency). As plotted, Frontier, Southwest, JetBlue, Delta, and Virgin American illustrate an unmistakable inverse relationship between consumer satisfaction and fuel efficiency: as the former increases, the latter decreases. The two extreme outliers are Alaska, which earned top marks for both consumer satisfaction and fuel efficiency, and American, which was ranked second-worst in consumer satisfaction and worst in fuel efficiency.  

From an airline’s perspective, achieving customer satisfaction is a factor of resource commitment and idea execution. It costs money to make things nice. It also requires necessarily profit-motivated business leaders in a somewhat inelastic industry to shift their attention to the customer experience and devise and execute initiatives that improve consumer satisfaction. It thus seems plausible that both Delta, a large carrier with significant resources, and Alaska, a smaller carrier with the structural agility (and greater business need) to better address and improve the customer experience, are well-positioned to deliver high marks in consumer satisfaction.

The middling placement of Southwest along the consumer satisfaction axis merits brief comment, because it highlights the fact that the Journal’s ranking rubric did not address matters related to ticketing. Five years ago, one would have expected Southwest to earn higher marks in customer satisfaction. Today, with its low ticket prices, possible as the result of a favorable bet on long-term fuel prices, apparently a thing of the past, Southwest’s unique features– online booking, fluid boarding, and non-existent checked-luggage fees– now feel outdated and cumbersome. All airlines now have online booking, and Southwest blocks popular airline ticketing search engines like Hipmunk and Kayak from querying its flights. That limited chaos boarding model, which was some airport variety of a feel-good progressive campout when everyone was saving money now exists as an additional stressor in an increasingly expensive, yet hardly escapable experience. As for that checked luggage? It’s still free, but you get what you pay for: Southwest rated worst in mishandled baggage. And, the Journal article adds, “old equipment is failing more often under increased passenger loads: Southwest Airlines says its baggage belts suffered a lot of breakdowns that left luggage in huge piles.”

My guess is that matters of ticketing– chiefly, the cost and ease of booking flights– have a meaningful effect on how customers evaluate their satisfaction with a particular air carrier.

On the fuel-efficiency front, relative factors include the age of an air carrier’s fleet and use of airports with efficient air-traffic-management systems. For example, a navigation system in use at SEA-TAC, where Alaska is based, seems to especially bolster that carrier’s fuel-efficiency marks. From a glance at the data above, high fuel efficiency also appears to be more prevalent with smaller carriers. With new aircraft being key– but expensive– drivers of fuel efficiency, perhaps there is something about shorter routes that keeps fuel efficiency high. On the other hand, it appears that the larger airlines, which probably can better afford to update their fleets, are choosing not prioritize fuel efficiency. This may be because fuel efficiency does not translate well into cost efficiency in the airline industry. This also may be because airline customers are not overly concerned with the environmental impact of their retail decisions, a possibility bolstered by the absence of environmental factors in the Journal’s report.

One of the fundamental environmental challenges is the difficulty of incorporating environmental costs into the consumer-choice calculus. Providers of air-transportation services may be taking advantage of this consumer reality, along with minimal innovation in the supply chain, to avoid confrontation of environmental impact. If consumers do not value it, and the cost of competing with rivals on that front is high, providers are likely to lack either incentive or motivation to prioritize improvements in environmental impact.

Rather than continuing to engage in more speculating on the airline industry than Southwest, I’ll end here with a request for your observations and ideas in the comments below. If you would like to contribute to the 539 Fund, send an email to questionspresented[at]gmail[dot]com.

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  1. April 1, 2015 at 12:29 pm

    Let’s consult on future statistical analyses in the future.

    A few comments: the WSJ provides rankings, but that doesn’t mean that the difference between each airline is the same. For example, Alaska could be significantly ahead of Virgin in their weighted metric, but Virgin might be just a smidge above Delta. Also, you do the same thing with fuel efficiency. The difference between Frontier and Alaska is 0 (or at least < 0.01) while the difference between Virgin and American is 0.09, a factor of about 10 or more difference.

    Also, when you claim an "inverse relationship" between customer satisfaction and fuel efficiency (the crux of this article), you throw out two outliers without clear justification for their dismissal from the overall trend. You have explained why you think Alaska hits such high marks (small size), but not why you can drop their from your overall trend. Moreover, even without the so called outliers, I don't see anything particularly close to an inverse relationship. I sort of see a linear relationship with a negative correlation coefficient (only with the exclusion of the "outliers").

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