How Sustainable Development affects the Aviation Industry. A Case Study of the Lufthansa Group


Thèse de Bachelor, 2020

32 Pages, Note: 1,5


Extrait

Table of Contents:

1. INTRODUCTION

2. LITERATURE REVIEW
2.1 Sustainability and Sustainable Development
2.3 The Paris Agreement on Climate Change and its Implementation
2.4 Sustainable Tourism
2.5 Sustainability in Aviation

3. THEORY
3.1 The Triple Bottom Line Model
3.2 The Development of the TBL Model

4. METHODOLOGY
4.1 Research design
4.2 Sampling
4.3 Introduction of Case Study Background

5. ANALYSIS AND FINDINGS
5.1 The Lufthansa Group and Sustainability
5.2 The Environmental Aspect
5.2 The Social Aspect
5.3 The Economic Aspect

6. DISCUSSION
6.1 Theoretical and Practical Implementation
6.2 Limitations and future Outlook

7. CONCLUSION

8. REFERENCES

Table of Figures:

Fig. 1: Triple Bottom Line Model

Fig. 2: Maslow ’ s Pyramid of Needs

Fig. 3: Lufthansa ’ s financial performance of the last ten years

1. Introduction

Already in the late 20th century sustainability has become a very important topic in this world’s society affecting all industries on the globe. Particularly in recent years, a strong sustainable change has been noticeable. Some industries are less, others are more affected by it. Without doubt, this great change of sustainability creates challenges which the businesses and the world’s society must cope with. This transformation consists among other of the Paris Agreement on Climate Change, which influences legal stipulations, and also of the overall mindset of each individual. When thinking about unsustainable businesses one of the first industries that comes to mind is the aviation industry, due to its high fuel consumption and enormous greenhouse gas pollution (Statista, 2020). It appears to be unsustainable by nature, but does being sustainable only mean affecting the natural environment positively or are there other components which can be influenced by businesses that lead to a sustainable future? This bachelor thesis will firstly define the term sustainability and explain what it consists of according to the Triple Bottom Line Model by John Elkington (Elkington, 1998) by doing a systematic literature review. Furthermore, a closer look into the airline industry will be taken to analyse which challenges and possible opportunities carriers have to face during this significant transformation. While focusing on the research question ‘to what extent is the Lufthansa Group adapting to the sustainable change?’, the Lufthansa Group will serve as the case study of this thesis to gain a deeper understanding of not only the theoretical elaboration but also the practical implementation of the Paris Agreement of Climate Change.

This analysis will firstly work out existing definitions of sustainability and sustainable development, which will be presented in the first chapter. Moreover, a small digression into sustainable tourism as a whole will be made, which serves as a transition to the main topic of this bachelor thesis: sustainability in the airline industry. The theoretical framework of this paper will be the Triple Bottom Line Model by John Elkington (Elkington, 1998). This model defines sustainability depending on three main pillars, which form the components of the term. Moreover, based on different political statements and reports, such as the Paris Agreement of Climate Change, as well as on statistics that prove not only the existence of global warming but also its consequences, the importance of this elaboration will be once more underlined. In the end, balance and annual reports, which are placed at the disposal of the Lufthansa Group, will serve as the relevant data for analysing the application of the theory to the case study with the focus on the economic and social components.

The methodological approach of this work, as aforementioned, will be a systematic literature review combined with a case study analysis. In order to receive the needed literature and data the classical desk research of secondary data will be sufficient, since more than adequately detailed information can be found in libraries or online. Consequently, books and online resources are being evaluated to gain quantitative and qualitative data.

By the end of this bachelor thesis the reader will gain basic knowledge about sustainability in general and specific information for different segments in the business world. Furthermore, the problem of climate change and social inequalities will be clarified in order to understand the necessity of sustainable development and its goals. The Lufthansa Group will form a practical example which can either serve as a best practice example or as basis for improvement for businesses and especially for other airlines. Finally, this analysis will be an evaluation of the operations of the carrier in lights of the background of sustainability and will present a concluded judgement of the extent of sustainability in order to answer the research question.

2. Literature Review

2.1 Sustainability and Sustainable Development

To implement a thorough understanding of the problem of the topic of this bachelor thesis, firstly the term sustainability has to be defined. Many scientists try to define sustainability in different manners, but it is rather hard to find one general definition of it (Patlins, 2017). However, after extensive research this might not be entirely true. Sustainability can simply be adopted to the models the scientists and writers like to prove, since it is easy to understand the term in an abstract manner (Pater & Cristea, 2016). This makes it difficult to identify the priorities for actions which result in sustainability (Ibid). It is still unclear which strategy is the correct one in order to reach sustainability, because to each organization suits a different strategy (Laasch & Conaway, 2015). However, most definitions move in the same direction. To give an example, Chabowski, Mena and Gonzalez stated in 2011: “Sustainability is an approach that is adopted to meet current requirements while developing capabilities that can help focus on the future” (Rao & Deshmukh, n.d., p. 48). In other words, current and future generations should have equal opportunities to meet their own needs. But how can current generations know what the needs of future generations are? This cannot be known for sure, but the pyramid of Maslow gives a great idea that nutrition, shelter and belonging are the basic needs and the foundation of human existence (Laasch & Conaway, 2015). To dive deeper in understanding sustainability, it has to be pointed out that there is a model that forms a foundation for defining the term. This model is the Triple Bottom Line Model (Elkington, 1998). It is a framework that measures the degree of sustainability (within a business) based on the three pillars social, environment and economic (Barbier, 1987).

While researching the term sustainability, another important term is very present: Sustainable development. The creator of the terminology of sustainable development is the Brundtland report (Keeble, 1988). It is a report that was written from the Brundtland commission with the title ‘Our common future’ in 1988 and is well known for its definition of the term ‘sustainable development’ (Ibid). Extensive research concerning sustainability and sustainable development raises the question how far these two terms can be distinguished. The terms go hand in hand and are very similar in their definitions (Ibid). They can be defined and compared as followed:

Sustainability is the degree to which a situation will maintain the three types of capital (social, environmental, and economic). Sustainable Development is a development that meets the needs of the present, without compromising the needs of future generations” (Laasch & Conaway, 2015, p. 61). Both concepts focus on maintaining or improving economic, social and environmental situations, whereas sustainability is rather focused on measuring present circumstances and sustainable development more on describing strategies how to achieve sustainable states in the future (Ibid).

Therefore, the concept worked out 17 sustainable development goals (SDG) that bring clarity while developing strategies towards a sustainable future. These goals include among others e. g. SDG 8 to promote a sustained and inclusive economic growth while decent work for all is established, and SDG 13 to counter the climate crisis with every action made (UNWTO, 2017). The aim of these goals is to give enterprises a guideline for sustainable transformation of their operations. Furthermore, they can serve as an evaluation template which makes it easy to judge and compare the extent of sustainability of different companies.

2.2 Consequences of Unsustainability

The question that appears while examining this topic is why sustainability is of such great importance. When focusing on the environmental pillar, climate change and global warming are very present problems. Nevertheless, it becomes clear that climate change is not only affect the environmental pillar, but also affects social and economic situations. In order to understand global warming, a closer look has to be given to the greenhouse effect. Greenhouse gases are not fundamentally bad. In fact, in the right quantity they even support the cycle of life on earth (Lashof & Ahuja, 1990). Methane, carbon dioxide and nitrous dioxide are some examples of these greenhouse gases, which form a layer that surrounds the earth. When the sun rays hit the earth, some of them are being absorbed by land and water, but most of them are reflected back into the atmosphere (Schneider, 1988). The layer of greenhouse gases traps most of the heat of the sun rays, which warms up the globe. Without this layer of gases, the average temperature on this planet would be -18 Cº which would make the earth unhabitable for humans, plants and animals (Lashof & Ahuja, 1990). However, some of those rays still pass through the layer back into open space. Moreover, in the past decades the quantity of greenhouse gases in the atmosphere has increased (Schneider, 1988) through factory farming, running businesses or transportation systems. Since the layer is becoming increasingly bigger, less sun rays are able to be freed back into space and are consequently trapped in the atmosphere. The result is that the world increasingly heats up i.e. global warming (Lashof & Ahuja, 1990). This paragraph will focus on the consequences of climate change and point out what is waiting ahead in a +2 Cº warmer earth. One thing is very clear: Global warming is a long-term challenge that is affecting every part of the globe and will continue to do so in the foreseen future (Barbier, 1987). Teske makes very clear that if businesses continue to operate as they do now, sooner or later the impact on the natural environment, animals and human beings will be immeasurable (Teske, 2019). Due to higher temperatures, extreme weather conditions are part of the daily routine. More substantial damages to biodiversity and ecosystems will result in even greater species loss and extinction (Ibid). Greta Thunberg, the world’s youngest famous climate activist, stated in a press conference at the Climate Action Summit 2019 that “we are in the beginning of a mass extinction” (Saavedra, 2019). This includes not only animals and the world’s ecosystems, but as well the human race, because “where ecosystems collapse, societies collapse too” (Teske, 2019, p. viii). This shows, that the three components are overlapping and influence each other to different extents. Moreover, only half of the humanitarian carbon dioxide emissions can be absorbed by the world’s ecosystems (Teske, 2019), which means that the greenhouse gas layer around the planet gets increasingly thicker which traps the heat of the sun more and more in the atmosphere (Schneider, 1988). In fact, due to humans, the world’s ability to adapt to climate change is being fully extinguished, because forests are cut down and the emissions are rising, which forces the earth into a much greater imbalance year by year (Teske, 2019). Water supplies will become more insecure because of the rising temperatures, while the sea level rises because of the great melting of the poles. When the sea level rises, low-lying coastal areas and islands are negatively impacted and might disappear entirely, resulting in massive escape movements of humans and animals to safer regions. Fatal floods and hurricanes are increasingly affecting areas on the globe (Ibid). Furthermore, the water scarcity brings droughts and wildfires become normal, like the ones in Australia in the end of 2019, beginning 2020 (Yeung, 2020).

Not only the natural environments are threatened, also social situations change and face greater challenges. These natural emergency conditions promote the problem of inequalities and increase the gap between the rich and the poor (Keeble, 1988). Additionally, it drags away the attention from social problems such as poverty and hunger and even fosters them with extreme weather conditions such as droughts. The first people affected are usually the poor, who are unable to complain effectively and normally live in more vulnerable areas compared to the rich, who in general live in more fortunate neighborhoods (Keeble, 1988). Additionally, the high level of air pollution increasingly threatens the public health across the globe and is nowadays, according to Teske, the fourth highest cause of death, measured by strokes, heart attacks and lung cancer (Teske, 2019).

In summary, climate change poses a major threat for the natural and social environment of this world and can cause mass extinction for humans and animals, while ecosystems collapse. One symbolic depiction of the seriousness of these threats, is the US Pentagon declaring climate change as a national security threat (Teske, 2019).

2.3 The Paris Agreement on Climate Change and its Implementation

Against this background, the Paris Agreement on Climate Change was concluded in December 2015 (United Nations, 2015). The agreement addresses all countries’ governments in the world to keep global warming “well below” 2 ºC, while still striving for 1.5 ºC (Teske, 2019, p. viii). It is appealed to minimize emissions, especially greenhouse gas emissions and to foster and support the sustainable development goals, which include the improvement of the conditions of all three pillars economic, environmental and social (United Nations, 2015). That means that all economic activities have to be adapted to keep their greenhouse gas emissions to a minimum. If the world’s economy continues operating at the status quo, it is very likely to reach the limit of 1.5ºC by 2030, argues Teske (2019). In 2018, 179 countries have signed and approved the agreement including all European Union countries and for the time being the United States of America. Three major emitting countries that still have to formally approve and sign the Paris Agreement are Turkey, Russia and Iran (Denchak, 2018). In 2017, right at the beginning of Donald Trump’s inauguration as president, he announced that the United States of America will withdraw from the agreement due to unfair negotiation and contribution. In his opinion, the US would disadvantage, in terms of lost jobs, shattered factories, specific grants et cetera, while other countries financially and integrally benefit from it (Climate Analytics, 2017). Denchak argues in her article, that the withdrawal is rather difficult since the agreement has to be in force at least three years before any country can revoke from the accord. After that, one year has to pass before the country is definitively exempted from the agreement (Denchak, 2018), which means that the United States of America are still a member of the accord for now.

How does the implementation of the Parisian accord look like? Every five years the Conference of the Parties (COP) takes place to negotiate and define climate protection measures. In December of 2018, the 24th COP (COP24) took place in Katowice, Poland, where the Katowice Climate Package was concluded (UN.org, 2018). The package includes concrete steps for the implementation, guidelines and rules for the transposition of the Paris Agreement, which apply to all member states (Bundesregierung.de, 2018). These rules include firstly, transparency and unified standards in order to be able to measure progresses and disregards (Ibid). Secondly, industrial countries like Germany, France or the USA provide financial support for emerging economies and developing countries like China, Egypt or Greece. Furthermore, they committed to deliver financial reports every two years to give these countries supporting planning security (Ibid).

Additionally, the third guideline states that minimum standards will be established, in regard to how to measure greenhouse gas emissions and national financial contributions to reducing them, which should be reviewed and in the best case improved every five years (Ibid). From 2022 onwards, these minimum standards will apply to all industrial countries, while emerging economies and developing countries have two additional years to implement them (Ibid). Finally, the fourth guideline says that a global review is conducted, which dictates that every two years before updating the national measures it has to be evaluated whether the goals of the agreement are being achieved. In Katowice it was decided what information would be included in this report to ensure that the picture was as complete and realistic as possible. Thus, damage and losses caused by climate change will now also be recorded, which will be of particular benefit to island states threatened by rising sea levels (Ibid). Against this background and with this knowledge, Donald Trump's statements about the Paris Agreement become more comprehensible when he was talking about unfair contribution and disadvantages compared to other countries (Denchak, 2018; UN.org, 2018). The US, just like most EU countries, is considered as an industrial country which is pleased to financially support emerging economies and developing countries, which Trump does not see and want for the United States of America (Denchak, 2018). Germany, in comparison, decided to support the Global Partnership for the Implementation of National Climate Contributions (NDC) with a further 68 million euro, thereby helping developing and emerging countries by financing on-site innovative and effective projects (Bundesregierung.de, 2018). The NDC consist of 107 members including emerging economies, industrial countries and international organizations. Its aim is on the one hand to (financially) support each other, but on the other hand to create a platform for the exchange of experience and mutual encouragement in the fight against climate change (Ibid).

Overall, the international Paris Agreement of Climate Change is very important. Carlson argues: “as we enter a new era of climate change because the agreement demonstrates that countries all around the world with very different interests can come together to address shared concerns that will affect us all” (Carlson, 2016).

2.4 Sustainable Tourism

In the following it will be shown how sustainability and sustainable development can be examined for conceptual aspects in the field of tourism. The World Tourism Organisation (WTO) defines sustainable tourism as “tourism that takes fully account of its current and future economic, social and environmental impacts addressing the needs of visitors, the industry, the environment and host communities” (UNWTO, 2017, p. 15). Sustainable tourism is a huge topic in the 21st century. Since the amount of people travelling long and short distance each year raises, also the greenhouse gas emissions, economic leakages, resource management and local communities are increasingly impacted (UNWTO, 2017). Garrett Hardin (1968) argues that the problem is in the human nature. Even though it is clear that while operating in businesses the humankind moves towards a collapse of their own vital environment, as long as their action support any economic activity there is no end in sight (Hardin, 1968). Jared Diamond (2005) examined the factors which lead to the collapse of the environment on the Easter Islands in Chile. He names many contributing factors, which include water management problems, overfishing, soil problems, deforestation and habitat loss, introduced species and overpopulation (Logan, 2019). Diamond revises the list by supplementing four more recent contributing factors which are “climate change, the build-up of toxins, energy shortages and overuse of the Earth’s photosynthetic capability” (Logan, 2019, p. 117). Not all factors are created (only) by tourism but are supported by it to a certain degree. For example, the fact that introduced species are found on Easter Islands shows that tourists bring living creatures or other biological organisms in their carry-ons via plane on the islands, which is disrupting the biodiversity on site (Diamond, 2005). Sustainable tourism faces exactly this challenge, to influence the natural and social environment negatively as little as possible while operating for profit.

Moreover, all these influences make it difficult to implement the necessary means to achieve the sustainable development goals in tourism as this industry is partly inherently unsustainable. To examine this hypothesis, a closer look is taken on the two examples of goals from above. The first goal focuses on creating jobs in order to ensure a secure income for everyone and support steady economic growth. Regarding this point the tourism industry scores very well. Tourism creates one in ten workplaces which makes it one of the four greatest export earners worldwide (UNWTO, 2017). Furthermore, the second goal examines to what extent every action made (in the means of tourism) either counters or promotes the climate crisis. In theory, sustainable tourism is relatively simple to implement in business operations, but in practice it presents a great difficulty (Logan, 2019). As aforementioned in chapter 2.1, while the tourism industry is booming and increasingly more people start traveling in both means, leisure and business, at the same time the greenhouse gas emissions, resource consumption and pollution are increasing as well (UNWTO, 2017). “It is impossible to imagine any type of tourism activity that is developed and operated without reducing the quantity or quality of natural resources in that location” (Welford et al., 1999). Reaching all 17 goals of the concept of sustainable development surely presents a very difficult task for the tourism industry, but is it impossible as Welford states above? As already mentioned before, one efficient solution for this challenge would be that the operations no longer support economic growth. Then there would be no reason for humankind to operate with such a negative and unsustainable impact (Hardin, 1968). However, this is a rather unrealistic solution when looking at the increasing growth of the tourism industry (Statista, 2019).

2.5 Sustainability in Aviation

An important part of tourism is the aviation industry, since it forms an indispensable part of the transportation systems (Bonser, 2019). Aviation is inherently international because it is the main connectivity of the majority of the countries worldwide. It made even the smallest corners on earth reachable in the quickest way. In many countries this industry is a prime example of and still has many perspectives for advanced technology, management and communication (Ibid). Furthermore, aviation brings many benefits to communities and economies and supports economic growth around the world (Mrazova, 2014). In regards of the SDG 8 of the 17 sustainable development goals mentioned above, aviation shines with outstanding performance since it creates 56 million jobs worldwide and creates over $2.2 trillion of the global gross domestic product (Ibid). On the other hand, even though “the aviation is a relatively small industry, it has a disproportionately large impact on the climate system” (Ibid). To examine the SDG 13 under this behalf, the environmental impact of aviation is marked by negativity. This is because greenhouse gases are released in huge quantities which contribute to climate change and global warming (Ibid).

In the following the connection between greenhouse gases, climate change and aviation is being examined. The aviation industry is responsible for an estimated amount of 2.5 – 3.75% of global carbon dioxide emissions, which makes air transport tourism’s main contributor to climate change (UNWTO, 2017). Stephen Williams also states in 2009, that since tourism is depending upon travel and transportation, the chemical pollution of the atmosphere by vehicle exhaust fumes is increasingly distributed (Williams, 2009) while the general tourism industry is growing as well (Statista, 2019). The general growth of tourism worldwide is also a great contributor to the rising levels of air travel, which has been identified as one of the main activities that produces greenhouse gases, in particular carbon dioxide, in this industry (Williams, 2009).

[...]

Fin de l'extrait de 32 pages

Résumé des informations

Titre
How Sustainable Development affects the Aviation Industry. A Case Study of the Lufthansa Group
Université
Cologne Business School Köln
Note
1,5
Auteur
Année
2020
Pages
32
N° de catalogue
V900844
ISBN (ebook)
9783346190826
Langue
Anglais
mots-clé
Aviation, Sustainability, Airline, Lufthansa, Sustainable Development, Emission
Citation du texte
Ida Maria Richter (Auteur), 2020, How Sustainable Development affects the Aviation Industry. A Case Study of the Lufthansa Group, Munich, GRIN Verlag, https://www.grin.com/document/900844

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