Oct152019

Frequent flyer activists heat up over climate crisis report suggestion

Yesterday I read several articles responding to the suggestion airline frequent flyer programs be eliminated.

Climate Activists Want To Ban Frequent Flyer Programs – One Mile at a Time

While some people view frequent flyer programs as being elitist, the reality is that it makes travel affordable for many people.

Climate Activists Have a Really Dumb Idea: Banning Frequent Flyer Programs – View from the Wing

The drive to ban reward travel confuses the average and marginal effect of flying on the environment.

BANNING FREQUENT FLYER MILES IS A DUMB IDEA. HERE’S WHY… God Save the Points

Air Miles democratize travel. They are not for one percenters, they are for everyone, and most people earn them without flying. Something those college kids probably haven’t figured out yet. There’s at least 20 ways to earn miles from home.

A Quixotic Plan To Ban Frequent Flyer Programs By Government Fiat – Live and Lets Fly

A Flawed Approach To Climate Change

But the study represents a fundamental misunderstanding of the way frequent flyer programs historically operate and a profound underestimate of the upside of widespread, affordable airfare.

 

Of note to me is I don’t think any of these blogs actually provided a direct link to the report discussed. If they did, I missed their link and all apologies.

Behaviour change, public engagement and Net Zero (Imperial College London) – Dr. Richard Carmichael Center for Policy and Technology and Centre for Environmental Policy – Oct 10, 2019

The Committee on Climate Change (CCC) appointed Dr. Richard Carmichael from Imperial College London to help understand the potential for people to make choices that can contribute to reducing emissions, and what this means for policy. This independently published report, sets out a range of policy interventions that could encourage changes across surface transport, aviation, heating and diet change. It helped to inform the Committee’s report on Net Zero – The UK’s contribution to stopping global warming report published in May 2019.

Behaviour change in Net Zero The IPCC Special Report on the impacts of global warming of 1.5 degrees above pre-industrial levels strengthened the case for pursuing greater efforts to reduce greenhouse gas emissions. In May 2019 the Committee on Climate Change (CCC) updated its advice to the UK Government detailing the recommended timing and scenarios for a net-zero emissions target to contribute to the global ambitions set out in the Paris Agreement. The CCC recommended a UK target of net-zero emissions by 2050 and this has now also been adopted by Government which is now legally committed to delivering it. It is in this context that this report considers the contribution of behavioural and societal shifts to delivering the long-term UK Net Zero target and how policy can support these changes. It identifies opportunities for where shifts in behaviour could deliver deep emissions reductions and recommends policies that could help to deliver them. – [opening paragraph of report’s executive summary with my bolded text].

Data and ICT (information and communications technology) have emerged as an important asset and tool for enabling consumers to make informed decisions for redesigning financial incentives for shifts in demand (diet and aviation).

Loyalty Traveler Data Analysis of report

Key data points from report:

  • The UK has reduced emissions by 40% since 1990 while its economy has grown. This progress has come largely from things that have not involved consumers changing their behaviour – notably decarbonisation of electricity supply.
  • On a global basis, household consumption accounts for almost three-quarters of greenhouse gas emissions.
  • For high-income European countries, the largest contributions to household consumption footprints come from car and plane mobility, animal-based foods, and heating. The recommendations discussed in this report therefore focus on transport, aviation, heating and diet as areas where shifts in behaviour are both feasible and could deliver large reductions in emissions.
  • Approaching 2050, aviation is expected to make up a large share of the UK’s remaining positive emissions as other sectors contract. The CCC’s Net Zero scenarios allow for a growth in UK demand of up to 25% on current levels but the risk of much larger growth in demand has been forecast. Flying is a uniquely high-impact activity and is the quickest and cheapest way for a consumer to increase their carbon footprint.
  • Low-carbon aviation technology is expected to remain technically unfeasible and so it is vital to restrain rising demand despite this having been considered politically difficult to address hitherto.
  • a large proportion of flights being taken by a small, wealthy segment of the population: an estimated 70% of UK flights are taken by just 15% of the population. Given that there is a finite budget of carbon emissions allowable if global warming is to be held below 1.5 degrees, the highly uneven distribution of emissions due to flying raises equity concerns.
  • If averaged over all households, UK aviation now makes up around 12% of a household’s carbon footprint. However, emissions from flying vary enormously between households. While the average household’s annual carbon footprint is approximately 8.1 tonnes (CCC, 2016a) return flights from London to Los Angeles for two people have a carbon footprint of approximately 5.7 tonnes CO2e for Economy Class and over 9 tonnes CO2e for Premium Economy. The emissions from one return ticket from London to New York are roughly equivalent to that of heating a typical home in the EU for a whole year (European Commission, 2019).

The last statement is the key point to counter the blogger argument that frequent flyer programs are the great equalizer in travel. 70% of flights in the UK are taken by only 15% of the population resulting in a highly disparate level of contribution to global carbon footprint by a small proportion of the population.

Another data point from the report drives home this disparity with frequent flying by a small proportion of the population being an outsized problem for the general population impacted by rising temperatures around the planet.

Aviation demand. Currently, flights make up around 12% of emissions from UK households but this is very unevenly distributed within the population and is growing. The CCC Net Zero ‘Further Ambition’ scenario, can accommodate a maximum growth of 25% in aviation demand from current levels by 2050, at which time, with much-reduced emissions from other sectors, it would account for about 30% of the UK’s remaining positive emissions. There is a real risk that aviation demand may grow well beyond levels allowed for (Department for Transport, 2017b). While some advances in fuel efficiency are anticipated, switching to low-carbon aviation technology is expected to remain technically unfeasible and so it is vital to explore how rising demand can be restrained, despite this having been considered politically difficult to address. — Behaviour change, public engagement and Net Zero

This data point refutes the argument made by Gary Leff of View from the Wing “The drive to ban reward travel confuses the average and marginal effect of flying on the environment.” Flying has much more than a marginal effect on the environment. The report acknowledges there is little political incentive to tackle public demand for aviation growth. And with the total co-opting of frequent flyer programs by banks over the past two decades, there is significant push back from the airline industry and financial services to curtail the cash cow fueling the growth of frequent flyer programs.

U.S. Airlines Report Sky-High Profit From Frequent Flyer Programs – Skift –  Aug 13, 2018

“As recently as 2011, the underlying airline business was bankrupt so they used these partnerships for financing,” he said. Some carriers, he added, would sell miles up front at a discount because they needed cash.

UBS Takes on AmEx, Chase in Credit-Card Rewards War – Bloomberg – May 23, 2017.

The offering — dubbed the UBS Visa Infinite card — carries a $495 annual fee and sweeteners including an annual $500 airport lounge credit if users spend $50,000 a year.

I particularly like the SEO tagged link: https://www.bloomberg.com/news/articles/2017-05-23/ubs-dives-into-credit-card-fray-with-chase-amex-to-woo-wealthy

The Climate Report’s actual suggestions

Much of the 81-page Climate Report centers on how to create a behavioral framework across society that makes climate change a more pressing issue for the public and drives a response to action towards low carbon lifestyles. Aviation is only one of the topics covered in the report,

Aviation Demand – The number of passengers flying, miles flown, number of flights and emissions are all rising (CCC, 2018). Forecasts indicate that demand for aviation will continue to grow in the period to 2050. Under the CCC’s Further Ambition Net Zero scenario, allowing for a 60% increase in aviation demand from 2005 levels (25% from present levels), this sector will by 2050 account for around 30% of the remaining positive UK emissions. There is a risk, however, of larger increases in demand for flying, with estimates of up to 127% for long-haul (DfT, 2017). –  page 33 report.

Aviation’s impact in the UK allows for a 60% increase by 2050 in aviation demand from 2005 levels. Most of that increase has already been used in the 14 years since 2005, leaving only a window for another 25% increase in demand from 2019 to 2050. Millions of consumers tying their everyday spend to a credit card providing frequent flyer miles currencies certainly works against lowering demand for additional air travel.

Frequent Flyer Levy

One of the major suggestions to combat unlimited rise in aviation demand is a frequent flyer levy, a progressive tax correlated to the number of miles flown. This is considered more equitable as it more directly targets frequent flyers.

Frequent Flyer Levy – While half of the UK population do not fly at all in any given year, it is estimated that 70 per cent of flights are taken by just 15 per cent of the population (DfT, 2014). There is a finite budget of carbon emissions allowable if global warming is to be held below 1.5 degrees so this highly uneven distribution of emissions due to flying raises equity concerns. The greatest beneficiaries of aviation’s generous tax treatment in the UK (it is exempt from fuel duty and zero-rated for VAT) are therefore those who pollute most and could most easily afford to pay more. The norm of unlimited flying being acceptable needs to be challenged and, as a very highly-polluting luxury, it is suitable to taxation.

Given the small number of frequent fliers, most of the population would be unaffected by the levy and families would not be penalised for an annual holiday in the sun. Frequent flyers, who strongly tend to be wealthier and less price-sensitive, would incur increasingly powerful taxation to discourage additional flights. A levy which escalates in line with excessive flying behaviour would be less regressive than a simple carbon tax on flying (e.g., via aviation fuel tax) as instead of all passengers being equally exposed to the same tax per mile on all flights, those flying infrequently would pay less for the same flight than those flying frequently. – page 34 report.

…an Air Miles Levy which escalates with air miles travelled rather than simply the number of flights taken. It should also factor in the much larger emissions for First Class tickets which can have 7 times the emissions of an economy ticket (Murray et al., 2019) due to more spacious cabins and more unfilled seats. By factoring-in distance, the levy would be more closely linked to emissions and fall more heavily on those polluting more. It would also more effectively discourage long-haul flights: as most flying is for leisure, some shift from long-haul to short-haul destinations would be expected, delivering further emissions reductions. Averaging-out flying habits over a longer period than one year would also be fairer: a three or four-year period, for example, could mean a traveller could take a long-haul trip without incurring a substantial levy if they took few other flights during the rest of the period. Travel for work should be kept separate from personal allowances and the 3-year cycle should be based on travellers’ dates of birth, rather than calendar year or tax year, to prevent distorting demand at the beginning and end of these periods.

The report summarizes its recommendations in three bullet points.

Recommendations:

• Introduce an Air Miles Levy which escalates as a function of air miles travelled by the individual traveller and factors-in larger emissions for First Class tickets. This would provide strong price signals against excessive flying by 15% of the UK population responsible for 70% of flights without raising prices for other travellers as an aviation fuel tax would. It would also encourage shifting from long-haul to short-haul leisure destinations while using 3 or 4 year accounting periods would allow travellers greater flexibility for an occasional long-haul flight without incurring the levy.

• Introduce a ban on air miles and frequent flyer loyalty schemes that incentivise excessive flying (as was enforced in Norway 2002-13).

• Encourage more responsible flying by mandating that all marketing of flights show emissions information expressed in terms that are meaningful to consumers (e.g., as proportion of an average household’s annual emissions now and under Net Zero). – report page 35.

Most of the arguments provided by Boarding Area bloggers focused on the second point for eliminating frequent flyer programs.

There is also evidence that mobility can be induced, or fulfil purposes other than transport needs. For instance, as much as 60% of Low-Cost-Carrier (LCC) demand may be stimulated by low prices. Evidence also suggests that frequent flyers engage in additional flights to maintain their privileged traveller status (so-called ‘mileage runs’ or ‘status runs’) and that frequent flying is related to status and social identity (Gössling and Cohen, 2014). Introducing restrictions to ‘all-you-can-fly’ passes and loyalty schemes which offer air miles would remove incentives to excessive or stimulated flying.

My personal take: I am guilty of incentivized frequent flying.

60% of low cost carrier demand is stimulated by low prices. Guilty.

I increased my travel to Europe significantly since 2015 in large part due to $70 one way tickets from San Francisco to Copenhagen on WOW Airlines and numerous sub-$200 one way tickets from Stockholm to San Francisco. Many of my travel itineraries around Europe were inspired by $2 to $50 Ryanair and Wizz Air tickets rather than using ground transportation to stay in the specific region where I arrived in Europe from the USA.

I made a sudden trip to Greece last February due to low ticket prices and the pursuit of elite frequent flyer status with Aegean Miles+Bonus.

All in all, I use frequent flyer miles for a very minor portion of my air travel since 2005. I have no airline brand mileage credit cards. I have never had any. A significant portion of my travel was fueled by frequent flyer miles in the 1990s up to 2005. I burned through millions of frequent flyer miles.

1999 is when I really started to focus on collecting frequent flyer miles while living in Eureka, California. When I told two close colleagues at elementary schools about the great deals to buy frequent flyer miles tickets for around $100 to $200 in shopping online, they told me that they could not qualify for credit cards due to financial problems. That always stuck with me as a reminder that credit cards are not an egalitarian product, even if frequent flyer miles opened access to travel for many credit-worthy consumers on a budget. Many of the ways to earn loads of cheap frequent flyer miles through internet shopping portals were inaccessible to my friends at the same time I racked up tens of thousands of airline miles inexpensively through shopping website loyalty programs.

I earned even more miles by flying, primarily for ten years from 1997-2006. I am somewhere over one million miles flow. Probably closer to 1.5 million miles flown and maybe even two million miles. I have not kept track. At one time around 2001, I had in excess of 4 million frequent flyer miles.

A weekend to Amsterdam? Why not?

A month in summer flying 40,000 miles globetrotting in First Class across four continents fueled by 300,000 frequent flyer miles? Why not?

Fly back from Europe on New Year’s Eve to earn the elite miles I needed for higher frequent flyer elite status? Why not?

A couple weeks ago I was a bit shocked when I thought carefully about how many nights I was in Europe for New Year’s Eve parties over the past 20 years to realize that it amounts to fewer than half the years I flew from Europe to the USA on December 31. I am sure that some of those December 31 flights were due primarily to elite status qualification for United 1K, while other years were likely due to a cheaper ticket price or frequent flyer award availability.

Yet, my attitudes about air travel have changed over the past 20 years. I have only flown international business class one time since 2007. I try to make trips requiring air travel longer than a week so I am not traveling primarily to fly. I rode buses across Poland last July, despite it being much faster and less expensive to simply fly across the country. I reduced my air miles traveled in 2019 by 20% from 2018 to under 60,000 flight miles.

Cutting out all travel is unlikely to happen for me without a financial hurdle placed in my way. My plan is to relocate my residence to Europe in a few years, but that simply means flying back to the USA to visit family at regular intervals.

Adapting my behavior for frequent flying to my outsized contribution to carbon emissions is a quandary I have taken baby steps to reduce. Not sure when or if I will make the giant leap into an entirely different way of living without air travel.

60% of low cost carrier demand incentivized by low ticket prices.

 

 

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

More articles by Ric Garrido »

Pingbacks

Comments

  1. I fly in business or first internationally 2 to 3 times a year, strictly for pleasure. Churning credit card sign-up bonuses is the only way I can afford it, I could never pay the cash prices. I’ll be going on my first round the world trip via ANA in May.

    You of course have every right to curtail your travel for whatever reasons you wish. I have no intention of doing so, nor do I anticipate being forced to do so by government restrictions on such travel.

  2. “There is a finite budget of carbon emissions allowable if global warming is to be held below 1.5 degrees”

    ??? Not a chance in Hades that is possible with Chindia et al hell-bent on growth, much of it powered by high-sulfur thermal coal. So why are we even talking about such ridiculous notions?

  3. The best thing the IPCC could do is to disband itself, stop flying to luxury private jets and die.
    After all, that would mean no more “polluting” the environment, eating meat and exhaling carbon.

    I won’t hold my breath though that these elitists actually gonna follow their own advise. Because that’s for the little people.

  4. Ric – I really appreciate your honest, self-aware reflection on this. Not easy to do, given the entrenchment, interests, and guilt involved. Glad that you’re one of the few people in the FF community providing this perspective with a level head and clear rationale.

  5. I comment rarely but I think this post deserves a sincere “thank you” for actually delving into the facts of the report. It’s why your blog is one of my two favorite on Boarding Area.

  6. Definitely some food for thought. Interesting that every blogger with credit card links came out on the opposite side on the subject. I do think that if rich, fairly densely populated countries such as most of Western Europe would incentivize rail travel rather than disincentivize flying, making needed changes both socially and economically would be less painful. Make rail travel cheap and brag about how environmentally friendly it is, then more people will choose that route.

  7. Ric, thanks for being the first blogger to look at this issue seriously. I will take the time to read your post in details. Air travel is a tricky one, and I am sure we will see a lot of push back against curtailing flights. Frequent flyers certainly have a sense of entitlement and cognitive bias on this issue, myself included. As the global population grows and becomes wealthier there is going to be a continuing increase in flyer numbers. It is going to be challenging to reduce numbers meaningfully. Europeans and Asians have some advantage over Americans with their better integrated rail transport. To start we can cut out some of those unnecessary flights and offset our emissions for the others. (Those who don’t offset their flight emissions are freeloading SOBs – just saying). It may be that meaningful reductions will have to come from other places in the economy given the importance of travel, but there is far to be trimmed from here for sure.

  8. Thanks for a realistic take on the report that acknowledges climate change is a problem.

    Since I haven’t read the whole report, I don’t know if this is answered, but what are the numbers for business travel vs private? I assume that the vast majority of travel is business-related, those travelers get FF status and then try to keep it to make their miserable work travel more bearable. In addition to incentivizing rail travel, it seems like more companies could cut business travel by using technology: video conferencing, telework, etc. But you’re right, there probably needs to be a tax stick as well as a discount rail travel carrot.

  9. More elitist do as I say not as I do. Why even bother analyzing the statement when you personally aren’t willing to do anything about it?

  10. @Lisa – from page 36 report:

    Work-related flying Business travel accounts for approximately 19% of flights and has declined as a proportion of flights, mostly due to growth in flights for leisure (DfT, 2017). A separate scheme to the Air Miles Levy will also be needed for business travel in order to avoid loopholes or gaming the system. Also, over a third of business passengers travel first or business class, compared with only 1 in 17 leisure (POST, 2000) and these classes of tickets are associated with much higher emissions due to the larger space taken up onboard and more unfilled seats.

Comments are closed.