Abstract
Airlines globally are affected as the combined impact of rising fuel prices and introduction of CO2 taxation schemes reduce profit. In the past decade alone, the price of jet-fuel has quadrupled and the fuel component of DOC has increased from 14% to a third of total operating expenditure in 2013. Currently, airlines attempt to improve their financial position by downsizing or reconstructing their operations. This strategy has only limited effectiveness and avoids addressing the central DOC problem. With an increasing demand for jet-fuel and a reduction in global supply, the price of fuel is projected to increase further. The air transport sector faces a considerable challenge in reducing its cost base to keep air travel affordable and environmentally sustainable. Aviation is a significant contributor to the emission of carbon dioxide (CO2), a gas that is attributed to global warming. To address this contribution, International Air Transport Association (IATA) has issued a global commercial aviation mandate to reduce net CO2 to 50% of 2005 levels by 2050 with carbon neutral growth from 2020. In 2012, IATA stated that air travel capacity increase (5.3% per annum) outpaced percentage efficiency improvements (2% per annum) resulting in 20 million tonne increase in net CO2 emissions.
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