Boston – June 5, 2023 – A new study from Bain & Company reveals airlines can cut up to 70% of aviation emissions by 2050 by improving engine and aircraft efficiency, broadly adopting sustainable aviation fuel (SAF) and optimizing aircraft operation. However, limitations to current technology mean this might not be enough for the industry to achieve its goal of reaching net zero by 2050—especially if air traffic continues to grow at a faster rate than GDP.

As a result, airlines seeking to fund their net zero transitions will start increasing ticket prices by 2026, Bain & Company predicts, reducing forecasted global demand by 3.5% by 2030. These are among the findings of Bain & Company’s study, “A Realistic Path to Net-Zero Emissions for Commercial Aviation,” released today.

“As air traffic continues to grow, airlines are under increasing pressure to reduce emissions in service of their 2050 net zero goals,” said Jim Harris, co-leader of Bain & Company’s Aerospace, Defense & Government Services practice. “Unfortunately, many of the technologies the industry needs to decarbonize are unlikely to be operating at scale by 2050. Leading airlines will develop a strategy to secure an affordable supply of sustainable aviation fuel, mitigate the rise in operating costs, and manage the impacts of declining demand as a result of higher prices.”

Best bets for 2050

Bain’s research shows airlines can reduce CO₂ emissions by 43% through fuel efficiencies with current aircraft renewal cycles and operational improvements. A new generation of evolutionary engines and aircraft-frame design improvements would deliver 80% of these efficiency gains. Continued efforts to optimize flight and ground operations would deliver the rest. For additional improvement, airlines would need to drastically accelerate fleet renewal cycles. But an industrywide move to replace fleets ahead of schedule is unlikely given the business case for amortizing the full value of investments in aircraft. Incorporating SAF on a wider scale could reduce CO₂ emissions by up to 23%.

The high cost of SAF

Bain & Company’s analysis shows SAF prices in 2050 will remain two to four times higher than the average historical price of Jet A fuel, the most commonly used aviation fuel, over the past decade. To meet its 2050 goals, the industry will need to invest up to $2.1 trillion. This, combined with the high maintenance costs of new aircraft, means airlines’ overall costs are likely to increase by up to 18% by 2050.

The research reveals that with current policies, total SAF supply will be limited to 135Mt in 2050, roughly 35% of the projected demand for global jet fuel. However, Bain & Company highlights three government actions that could significantly increase SAF supply: providing incentives to biofuel refineries rather than renewable diesel, prioritizing aviation for access to biofuel feedstock, and directing green hydrogen to SAF refineries to boost the yield of the Fischer–Tropsch process. These policies would bring total SAF production to 60% of global jet fuel demand.

Solutions likely to fall short

There’s no single solution for decarbonizing commercial aviation by 2050. All technologies that can contribute to the net-zero goal face challenges, but two are specifically likely to fall short of expectations by 2050.

• Hydrogen and full-electric propulsion. Bain’s analysis shows hydrogen and full-electric propulsion are likely to reduce less than 5% of 2050 aviation emissions. Neither will mature fast enough to replace a substantial portion of the existing fleets in the next 30 years. And the first hydrogen and full-electric aircraft will face significant economic and technological obstacles. In the case of full-electric propulsion, battery densities are unlikely to evolve fast enough to power narrow-body or wide-body jets.
• Carbon offsets. Airlines can theoretically compensate for residual emissions by purchasing carbon credits to make up for greenhouse gasses. But offsets won’t help the industry reach carbon neutrality. Recent questions about offset accounting methods have undercut its viability as a solution, and several airlines are moving away from offsets.

A path ahead

Leading aviation companies can prepare for a disruptive decade ahead by taking a few important steps.

• Develop a strategy to secure an affordable supply of SAF. That may include investing in fuel production (buy, build, or partner) and advocating for fair regulation or subsidies for SAFs.
• Rethink fleet-renewal plans, considering the cost of decarbonization and changes in competitive dynamics, including different regional mandates for SAF.
• Mitigate the rise in operating costs. Review fleet-renewal cycles, increase cabin density, adjust fleet usage and seat count, and review network plans.

Editor's Note: For more information or interview requests please contact Katie Ware at katie.ware@bain.com or +1 646 562 8107.