Serial airline entrepreneur and current Breeze Airways CEO David Neeleman has never been shy about expressing his opinions, even (or perhaps especially) when they are counter to industry norms. At the World Aviation Festival in Amsterdam this week Sustainable Aviation Fuels were in his crosshairs, and he made sure his view was heard, including a contentious exchange with IATA CEO Willie Walsh.
Neeleman went out of his way to bring up SAFs in a keynote interview, making sure the world knew he was opposed to the idea.
Look, I understand climate change exists. It exists…. I just think SAF is a very inefficient way to deal with the problem. You know, they until every truck. The big challenge we have in this industry is that we use diesel fuel and we use distillates. And if all the cars go electric, which slowed down now, but if they did, all the refineries will go out of business and we won’t have diesel fuel.
So my plan would be to look at all those industries that are actually using distillate and diesel fuel. They are much more efficient things that are rolling down a road, as opposed to flying in the air, and help cross subsidize those things so that we can, we can not affect the price of a ticket and layoff hundreds of thousands of people in our industry, because airline tickets become to expensive.
SAF interrupts with the food supply. It does all sorts of stuff, and doesn’t really solve the problem. I just think it’s a complete waste of money. And I think there are ways to handle climate change, to help, that actually makes economic sense where in an airplane SAF makes no economic sense whatsoever.
SAF is, of course, an interim solution. And it is an extraordinarily expensive one. But the aviation industry is building planes today that will fly through 2050 on liquid fuels. And traditional carbon offset programs have also proven to be a debacle, albeit at much lower direct cost so far.
Perhaps the conversation could have ended there, but towards the end of a follow-on session with four CEOs on stage, Neeleman raised the issue again, similarly to how he raised it at the end of his one-on-one interview. This time around he specifically challenged IATA CEO Willie Walsh, who had spoken in favor of SAFs earlier in the morning.
It was very much not a typical trade show panel discussion. The two talked over each other at times, each trying to get in the last word on whether SAFs would be viable, and whether they are worth the expense.
Neither convinced the other, of course. And both are probably right in some ways and probably wrong in others. But Neeleman’s insistence that offsets are sufficient belies the industry’s goals. And Walsh rightfully called out the Breeze modern aircraft argument; everyone is moving to more efficient aircraft and engines and that alone will not come anywhere close to delivering the industry targets.
An audio recording of the exchange is included below, as is a (slightly cleaned up) transcript.
David Neeleman (Breeze): Are we going to let Willie off the hook on all the SAF comments that he made earlier?
Let me ask a question. We, as an industry, we create two and a half percent of the CO2, right? Two and a half percent, right? Transportation is 14%. I have a Tesla, and it makes sense for me to have a Tesla because it’s cheaper than buying gas. That doesn’t work with airplanes.
If he’s talking about $171 billion what if we took $30 billion of that 171 and helped transportation go from 14% down to 10% where we had an offset that was greater than what we were consuming? Doesn’t that make a lot more sense than trying to force because what Willie didn’t say,
Willie Walsh (IATA): What David’s forgetting about is that is happening with other industries, and that’s why, you know it’s two and a half percent today. The question is, what will it be in 2050? It won’t be two and a half,
DN: But if we offset it 100% it doesn’t matter. But talk about the food supply. What’s going to happen?
WW: No, but the challenge, David is
DN: You’re blowing it all through the tailpipes, airlines,
WW: An airline like yours, if you want to say, you know, I am not going to do anything to address my environment[al impact], I wish you well.
DN: I am doing stuff. I’ve got the most efficient engines.
WW: Everybody has most fuel-efficient engines, because we all have the same engines as you have, you know. So you know, therefore the one that sets out “I’m the greenest out there!” you’re not. You’re gonna be as we say, the cream of the crap, not the cream of the crop. So you have no choice. You have no choice.
DN: Willie, two thirds of the people here won’t have a job if this happens. You’re gonna absolutely crush the industry.
WW: It’s not me. I represent the industry. I don’t represent you because I’m not a member. You’re not part of IATA. But, actually, I defend you as I’m defending the industry. And I recognize that there are people within the industry that don’t care about the environment and aren’t prepared to do anything about it, fair play to you. I wish you well.
DN: It has nothing to do with caring about the [environment]. It’s being economical and doing it smart, instead of just ramming something through.
WW: The smart answer that you’re coming up with is, “We continue to burn fossil fuel to the last day,” and that’s not going to work. That’s certainly not going to work in parts of the world where they recognize that airlines will not be allowed to do that. And what you’ll get, not everywhere, but what you’ll get, and you’ll certainly see it in Europe, is “Okay, we’re now going to focus on demand suppression. We’re going to stop people from flying we’re going to start dealing with the gross emissions rather than the net emissions. Then you won’t have an industry.”
And here’s, here’s the measure. You know, I started this industry, 1979. Seat Factors in 1979 at a global level, were less than 60% in the 80s, average seat factors for the industry in that 10 year period, 64% in the 90s, 67% in the 2000s, 74% and so far this decade where, you know, if I ignored the disruption because of the covid, we’re 82%. So the industry has become more efficient because we’re filling more of our seats. So we’re not standing still, we’re working harder, and therefore our fuel efficiency has improved significantly.
But what will happen if we don’t face up to playing our part in the transition to net zero is you will see pressure put on airlines certain parts of the world, not everywhere, where taxes come and say, “I’m going to tax this.”
Taxing won’t have an environmental benefit because instead of, you know, reducing the number of flights, it will reduce the number of people on those flights, and we start slipping back from 82% seat factors to 74% seat factors to 64% seat factors. The industry will still be there. It’ll just be so much more inefficient, and it will be the preserve of the wealthy people who would be out there.
It is such a retrograde step. So I fundamentally believe as an industry, we have to recognize that there is a global movement to address environmental performance, and we have to play our part in that. And it’s going to be challenging.
DN: Yeah, It’s impossible, really. From what you’re describing, $174 billion … there’s a better way if we could $30 billion of that and said we’re not doing our part. No, we’re paying $30 billion, and we’re electrifying, 100,000 or 200,000 or a million trucks a year that we are doing our part. We’re just doing it in a smarter, more efficient way.
WW: But we’re doing that already. So CORSIA is exactly that. CORSIA is part of the solution as well, which, in the interim, before we have SAF will be using our money to provide decarbonization opportunities to other industries. That’s how CORSIA works. So we’re doing that as well. The problem is there’s a limit to how much we can do that.
DN: Well, they’re 14% we’re two and a half. There’s a long way to go from the other side. We can, we can take away double what we’re producing with a heck of a lot less money than you’re talking about.
WW: Well, you know, I think if you look at it locally, it’s not going to work that way, because, but the well, the opportunity to electrify, electrification is not going to work everywhere in the world in the same way as you know, rail doesn’t work everywhere in the world. And if we look at how this industry is going to develop, David operates in the US domestic market in 2000 US domestic RPKs – so the share of the that was 26.2% of global aviation. Iin 2023 it was 15.4%. Growth rate in the US domestic market 1.8% compounds.
China, 2.4% in 2,011.2% in 2023 growth rate of 11.4% compounds. India is growing their domestic market, 11.4% compounds. Brazil, your old home, 7.2%. Japan, 0.8%. So what you’re seeing is, you know, the shape of the industry is changing. And you know the US domestic market in terms of its contribution to global aviation has changed. But the growth is going to come in other parts of the world where many of the options that you talk about just won’t be possible. And the only global solution we have, and I talk about the industry at a global level, the only global solution we have is through sustainable aviation fuel, and that’s why, you know, we believe it is, it is the most significant part of the transition. she
DN: But you never talked about food supply interruption. How much acres and how much water will have to be produced?
WW: For it to be truly sustainable, it cannot compete with food.
DN: Well it will, of course it will,
WW: But that’s then it won’t be sustainable. So for the fuel to be sustainable, the sustainability criteria says it cannot compete with food production or land use. That’s, that is the criteria. You should read some of the stuff.
DN: The CEO of Ethiopian, at your conference got up to say we can’t even feed our own people, and Willie’s talking about that we have to be sustainable.
WW: He can create jobs by developing sustainable aviation fuel through other feed stocks that are available, that don’t compete with food production, and generate jobs in his economy and reduce his dependence on importing oil,
DN: It sounds like vaporware.
More news from World Aviation Festival 2024
- Neeleman, Walsh get testy over SAFs
- No search, just vibes: Alaska Airlines plans "Vibe Quiz" destination recommendation engine
- SkyFive, Viasat ink roaming deal for air-to-ground networks
- Breeze looks to grow Ascent cabin
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David is absolutely right we have to move on to a more sensible path here.
The mission is to reduce global CO2 substantially however there are industries, and particularly aviation, that are incredibly difficult to decarbonise.
We have a choice, we either strangle the industry by insisting on SAF production (which will run right up against the food chain) and will never scale-up quickly enough, or we utilise monies – through carbon taxation, to speed up the transition in more easily decarbonised industries. Aviation should contribute by flying best in class equipment (if the manufacturers could increase production); more efficient flying (routing), and minimising all other carbon intensive equipment and facilities.
Like Neeleman, you seem to believe that the other things are not already happening, and with significant funding allocated.
Flying newer planes helps. Flying more efficiently helps. But these planes are going to be burning liquid fuel for 30+ years. Accepting that will be the same JET-A they burn today is abdication of responsibility by the industry.
Maybe the higher costs and limited supply of SAFs will limit aviation’s growth. I’m not convinced that’s necessarily all bad. There are puts and takes with all of this, and saying any singular approach is the only viable option is probably a mistake IMO.