The vastness of the airline industry can easily be underestimated. According to Mckinsey & Company, aviation represents 3.4% of global GDP, contributing either directly, through the sale of airline tickets, or indirectly, through the growth of the tourism industry. Last year, 4.5bn passengers took a flight, while there were 100 000 commercial flights a day, according to the Economist. Aviation has progressed to allow coverage of greater distances, spurred by the steadily increasing market size. When COVID-19 started, unprecedented declines in consumer demand impacted the profitability of the airline industry, changing the face of aircraft travel for the foreseeable future. What will the airline industry look like post-COVID-19?

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Aviation has enabled globalisation, described by author Oliver Picton as a ‘world-shrinking process’ with endless implications on tourism and shadow economies, allowing cultures to mix and businesses strategies set up to thrive purely on the certainty that foreigners will visit. As long as these conditions are held, profits are made, as seen below.

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COVID-19 means that people are flying much less than usual, if at all. A once-profitable industry is now struggling to combat fears of uncertainty, border restrictions and close vicinity of passengers; it is predicted that the industry will face a USD$84 billion loss in 2020. Costs per flight varies by aircraft, but one of the most used aircraft currently, the Boeing 737-700, usually costs over $4000 per hour of the flight. This includes crew wages, airport fees, maintenance costs, fuel etc. 

Lower demand has created turbulent conditions for airlines who are unwilling to fly planes with such little passengers on them, hence the flight cancellations. Travel restrictions have essentially limited the movements of 91% of the global population, according to a study by the Pew Research Center. 

A Closer Look at the Industry Structure

Naturally, the airline industry is popular due to the vast amount of people employing its services, which is arguably the fastest form of transportation. However, a large part of the industry is the airport ‘experience’, such as the inflight catering, the free, and online travel shopping companies that support roughly 10 million jobs.

An understanding of the structure of the supply chain in an airport is crucial to predicting the reach of an effect like a global pandemic. Airports will contract out services (usually to the lowest bidder) such as cleaning, catering and aircraft docking facilities. Unfortunately, due to COVID-19, in order to ensure safety and sanitary standards are met, supplementary services have to be included, such as fogging disinfection teams to sweep planes before and after flights. This has increased airlines’ total costs, offsetting the decreasing costs airlines saw due to falling fuel costs. An analysis report by the International American Transport Association details the price of jet fuel, a distilled combination of naphtha, kerosene and gasoline, dropped to USD$44 per barrel as of August 21, down 42.1% from a year ago when it averaged $77 per barrel. While the fixed costs for airlines should drop due to access to cheaper fuel, contracts with airline manufacturers – the largest of which are Airbus and Boeing – continue to create turbulent conditions for many airlines.

According to Cirium Consulting, ‘approximately 64% out of the 26 000 strong’ global fleet of aircraft are now inactive. While some of these figures will be offset by easing travel restrictions, when new waves of the virus sweeps into other countries, these planes will remain grounded, requiring maintenance over time of inactivity. In order for a plane to take off at any time, the aircraft engines have to be sealed and interior reviewed, a state called ‘active parking’. Every ten days after this, covers will be taken off again to run the engine and exercise the hydraulics. The Financial Times estimates that costs can reach $30 000 per plane. However, pre-determined airline contracts with manufacturers are exacerbating the existing problem of airline profitability.

Pre-COVID-19, the economic climate of the industry was buoyed by growing consumer demand, increasing with ‘metronomic regularity since 1988’. Airlines were certain they would require more planes to satisfy consumers. Thus, contracts for orders of batches of planes were drawn up, and the future date for the planes to be paid for were set.

While COVID-19 has unsettled the global economy, the airline industry has taken one of the biggest blows. Speculators report that coronavirus has pushed the industry into a climate similar to that of 9/11 and the 2008 financial crash, (see Figure 4) with air transport revenue falling by 50%. Plane manufacturer contracts became realised, and airlines struggled to pay for pre-ordered planes with crumbling balance sheets. Croatia Airlines tried to cancel its order of A320s, negotiating with Airbus their contract which would deliver the planes in 2022. Having already deposited 8.5 million euros, the attempted cancellation is just one example of airlines trying to cut their losses early.

Analysts from Citigroup have already predicted excess capacity of 4 000 aircraft globally, even if traffic recovers 80% of the aircraft from last year, lending to a decline in profits for the industry. According to Oliver Wyman Consultants, the result upon the industry will be a change in organisational strategy, restructuring which aircraft to fly, and deferring future contracts if possible. Unfortunately, in many of the clauses of these contracts, it is not possible to defer payment.

In many ways, it seems that the consistent growth of the airline industry is its own worst enemy, as shown by the impact of COVID-19 on it. The certainty of growing consumer demand and then the sudden removal of it has left many airlines struggling with balance sheets, selling off planes and restructuring journeys to short-haul instead of long-haul flights. Further, companies such as Turkish Airlines have made 90% more revenue from cargo, utilising the increasing demand for international commodities. For the time being, this restructuring seems to be the way forward, with data science expected to play a huge factor in coordinating multiple flights around the world to complete a longer trip.

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The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity is an international agreement created by the United Nations (UN) that equitably shares the benefits of genetically modified organisms. The Nagoya Protocol is related to biodiversity protection and is one of two protocols that allow ambitious biodiversity goals to be efficiently achieved.

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Nagoya Protocol Summary

The Nagoya Protocol is an international agreement that acts as a legally binding instrument to set regulations on access and benefit sharing (ABS) in biological diversity. As a supplementary agreement to the Convention on Biological Diversity (CBD), it provides a legal framework to effectively implement CBD’s aim of “fair and equitable sharing of benefits arising out of the utilisation of genetic resources.” The Nagoya Protocol specifically focuses on building greater legal certainty and transparency for those who provide and use genetic resources. The protocol was adopted in October 2010 and entered into force in October 2014, aiming to create an equitable distribution of the benefits of utilising genetic resources.

How Many Parties are There in the Nagoya Protocol?

The countries part of the Nagoya Protocol can be seen below. There are currently 131 ratified parties (132 ratifications) of the Nagoya Protocol. Parties to the protocol include Afghanistan, Botswana, China, South Africa and the UK. The countries in dark green represent those that were among the first to ratify it, while the later dates of ratification are shown in darkening shades of red. According to the CBD Convention on Biological Diversity ‘ratification’ signifies ‘the consent of a State to be bound by a treaty’.

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Nagoya Protocol Ratification Dates

However, in order to fully understand the extent of the work that has been created by the United Nations, the existing framework, that most are not aware of, must be discussed. 

Convention on Biological Diversity and the Strategic Plan for 2011-2020

The Nagoya Protocol is headed up by the Convention on Biological Diversity, an international legal instrument, facing penalties from the UN if the rules of compliance are broken. The agreement expects to cover “all possible domains that are directly or indirectly related to biodiversity and its role in development.” The convention acts as a multilateral treaty that has three aims: 

• The conservation of biological diversity
• The sustainable use of components of biological diversity
• The equitable sharing of the benefits of using genetic resources

In order to achieve these broad aims, the Convention created the Strategic Plan for the years 2011-2020. The plan includes a shared vision among parties and national targets to be implemented as policy instruments for greater effectiveness. 

This vision says, “By 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people.”

The vision itself contains a large focus on reintroducing an affinity or connection to nature that has been lost. In a study conducted by Kals, Schumacher and Montada, an emotional connection towards nature has an impact on behaviour. One of the study’s conclusions was that affinity is a powerful indicator of nature-protective behaviour, which the Strategic Plan vision aims to improve. 

In order to achieve these ambitious goals, the Convention on Biological Diversity created two protocols that enabled the Convention to administrate the increase in biodiversity internationally in a formal agreement. 

Framework and Scope of the Nagoya Protocol

The first is the Nagoya Protocol. Entering into force in 2014, the Nagoya Protocol allows a transparent legal structure to ensure that the benefits from using genetic resources are shared. Its importance stretches beyond sharing modified products but allows the benefits of resources to be distributed with confidence and transparency. The protocol promotes conditions that encourage research on the sustainable use of genetic products. These resources may improve future food security or agricultural efficiency.

Perhaps most importantly, the protocol allows researchers to pool knowledge and allow technological transfer. This alone is invaluable, in a world where maximising limited resources is quickly becoming the name of the game. 

Any sharing of biological resources is monitored by researchers who overlook the protocol ensuring that, for example, if a new plant was introduced into a new country, it would not take over and destroy the native plants. The protocol would ensure that the potential impact would be researched before. 

Further, if any profits are made by, for example, selling a traditional medicine, it will be split between those who distributed the medicine and those indigenous people who created it. 

The protocol may prove influential in ensuring progress towards at least the seventh and eighth Millennium Development Goals: improving environmental sustainability and developing a global partnership for development. 

Its obligations include taking measures to ensure that genetic resources utilised within jurisdictions are accessed with prior consent, cooperation in cases of alleged violation of another party’s requirements and taking measures to monitor the utilisation of genetic resources after they leave a country including by designating effective checkpoints at any stage of the value-chain: research, development, innovation, pre-commercialisation or commercialisation

Convention on Biological Diversity and the Cartagena Protocol

The second protocol created from the Strategic Plans for the years 2011-2020 is the Cartagena Protocol, which focuses on biosafety, including the safe handling and use of ‘living modified organisms resulting from modern biotechnology that may have adverse effects on biological diversity, taking also into account risks to human health’.

The CBD defines a modified organism as one which contains a “novel combination of genetic material obtained through the use of modern biotechnology,” surveying the transboundary movement of genetically modified products.

The scale of the effort in achieving these Millennium Development Goals is incredibly large, with each step vital to combat each goal. For the Millennium Development Goals to be remotely achievable, both the Nagoya Protocol and the Aichi Biodiversity targets should be prioritised.

Effectiveness of the Nagoya Protocol

The effectiveness of the Nagoya Protocol was showcased with the International Cooperative Biodiversity Group working on the Sustainable use of Biodiversity in Papua New Guinea Project. The task completed scientific research which focused on the biological chemical and medicinal properties of the biodiversity within Papua New Guinea. The research resulted in over 500 species of herbarium species being deposited in local herbariums. Additional projects using these species led to the creation of a new antivenom by the Australian Venom Research Unit. The commercialisation of this product meant that the benefits were shared with all parties, including the people who designed the traditional medicine. 

Thus, the Nagoya Protocol holds undeniable importance in attempting to achieve the Millennium Development Goals, ensuring that the benefits of genetically modified products are distributed equitably between all parties.

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A new survey from the US Energy Information Administration has found a decrease in both current and future expectations of coal power generation. The decline is a result of a diminishing number of new coal power plants and divestment of coal from insurers who wish to avoid the environmental and social ramifications of backing the dirty energy source.

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In 2018, while addressing supporters at a rally in West Virginia, President Trump assured them that he would put an end to Obama’s so-called ‘war on coal’ and ensure jobs for approximately 33 000 American coal miners who had lost work since Obama took office in 2009. The reality seems to have inadvertently been the opposite, escaping President Trump’s goals. 

Ironically, Trump’s administration has done more for the abolition of the US coal industry than Obama’s Clean Energy Act. According to the US Department of Energy, ‘over the first three years of the Trump administration, coal retirements have continued at an even faster rate than during the Obama years’. 

Records reveal that the average annual coal capacity retirements during Obama’s terms were 4.2 Gigawatts from 2009-12 and 9.2 Gigawatts from 2013-2016, respectively. Yet, President Trump’s first term saw a retirement of 11.7 Gigawatts, higher than either of Obama’s terms, while pledging to do the opposite. This shows no signs of faltering either, with a record breaking 14 Gigawatts of coal capacity expected to be retired in 2019.

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Between 2008 and 2016, 17% of US coal capacity retired. Yet what the Trump administration perhaps fails to realise is how the industry downfall is being driven by market economics rather than any previous President’s policy. 

Coal burning worldwide reached its peak production in 2013, and 2019 saw the biggest decline in global coal burning- 3%- a ‘trend unlikely to change’ according to author Fred Pearce. Further, the number of new coal plants that began construction worldwide fell by 84% between 2015 and 2018. 

In the US, 24% of electricity is now produced by coal; this was at 45% 12 years ago. Trump may assure his supporters in public that ‘the coal industry is back’ but in reality, no coal-burning power plants have been commissioned since he entered the White House. 

Coal is becoming a toxic commodity. This is due to a number of reasons, partly because there has been a surge in the growth of alternatives that are both cheaper and cleaner. 

Burning coal emits a mixture of mercury, sulfur dioxide and minute particulates that are known to cause a range of respiratory problems and cancer. Limits in coal production set by the Environmental Protection Agency have helped prevent some of these emissions, but many plants don’t have the necessary pollution controls installed. 

Pressure from non-governmental health organisations also has a part to play, with the coal capacity retirement between 2008 and 2016 resulting in 80% less sulfur dioxide and 34% less carbon dioxide.  

Market forces are also a contributing factor, with the US-China tariffs stifling much of the US’s safety valve in the face of shrinking domestic demand for coal. In such an instance, the coal would be exported abroad, yet the expense and rising tensions have put off foreign buyers of US coal. 

Insurers have been gradually turning their backs on coal production, starting in Europe, then the US. Once the European Investment Bank committed to phasing out the financing of fossil fuel projects by 2021, the potential demise of coal spread quickly among insurers. Pressured by organisations like UnfriendCoal, insurers were most likely dissuaded by the thought of facing public backlash by covering the construction of a coal plant. Insurance is vital in the construction of a coal-fired power plant to allow investors and share-holders to gain confidence in its construction with lower risk. Additionally, Axis, a large US insurer, has pledged not to ‘provide new insurance or facultative reinsurance for the construction of new thermal coal plants or mines and their dedicated infrastructure or oil sands extraction and pipeline projects and their dedicated infrastructure’. 

This decline in confidence for coal makes it all the more unlikely that any insurers will provide insurance for the construction of new coal power plants, as it would mean a reputational and financial risk in a turbulent, uncertain economic and political climate. Murray Energy in the US declared bankruptcy last month, one of eight coal companies in 2019 to do so. 

It seems as though earlier calls for companies to back out of coal have succeeded. Mark Carney, the governor of the Bank of England, warned that unless firms woke up to the climate crisis, many of their assets would become worthless. 

The COVID-19 pandemic has seen dramatic declines in coal consumption in China, with the coal throughput of Qinhuangdao, the main coal port, falling to the lowest level in four years in the four weeks to March 1. However, this will most likely return to normal levels once the virus abates. 

It looks as though coal may be completely phased out in the US and Europe, a vital part of reducing our pollutants. One of the most effective ways this is possible is by reducing the energy produced by the oil and gas industry, the largest emitter of greenhouse gas emissions (42%), to make way for cleaner energy production in an effort to decarbonise the future. 

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