A Sustainable Future
David Morgan, easyJet COO, on Aviation's Sustainability Revolution

 

What does it mean to be an innovator and early adopter in sustainable aviation? Listen to Jason Mitchell discuss with David Morgan, easyJet COO, about how aviation is undergoing its own energy transition; the factors driving easyJet’s decarbonisation ambitions; and why it’s vital that airlines like easyJet keep pushing the envelope on technological innovation.

Recording date: 21 May 2024

David Morgan

David Morgan has been Chief Operating Officer of easyJet since 2022. Before that, he filled a number of roles including Chief Pilot, Director of flights, Head of Operations, and Director of Flight Operations. His previous experience includes Pilot instructor for BAE systems in Saudi Arabia, a Pilot for the Royal Flying Doctor Service of Australia, Chief Pilot and COO at Wizz Air, and a position on the Board at Air Ambulance Charity Kent Surrey Sussex.

easyJet is a multinational, low-cost airline group headquartered in London Luton Airport. It operates domestic and international scheduled services on 927 routes in more than 34 countries.

 

Episode Transcript

Note: This transcription was generated using a combination of speech recognition software and human transcribers and may contain errors. As a part of this process, this transcript has also been edited for clarity.

Jason Mitchell:

I'm Jason Mitchell, head of responsible investment research at Man Group. You're listening to A Sustainable Future, a podcast about what we're doing today to build a more sustainable world tomorrow. Hi, everyone. Welcome back to the podcast, and I hope everyone is staying well.

So this episode deserves a bit of backstory for a couple of reasons. First, I've been thinking about an easyJet episode for almost two years now. Specifically it was when easyJet first announced it was phasing out its use of carbon offsets and doing the more difficult work of cutting real world emissions. I was actually at a carbon policy conference the day this hit the headlines and it clearly struck a chord with the academics and NGOs I was with. And the questions then were obvious, why low cost short haul flights? And more to the point, why easyJet? After all, the aviation industry hasn't necessarily been the fastest adopter in terms of decarbonization.

And second, I feel like I've got a personal stake in this. My dad was a fighter pilot. My grandfather was a barnstormer in the early 1930s who broke both his legs testing a parachute he'd made. And they both liked to say they could identify a propeller plane simply by the drone of its engine. And so I like to think they'd both be awestruck at the idea of hydrogen powered planes, which is why it's great to have David Morgan, easyJet chief operating officer on the podcast to record this at easyJet's Hangar 89 at Luton Airport.

We talk about how aviation is undergoing its own energy transition, the factors driving easyJet's decarbonization ambitions, and why it's vital that airlines like easyJet keep pushing the envelope on technological innovation. In other words, it's a pretty frank discussion about the challenges to sustainable aviation and what it takes to be an early adopter in the industry.

David has been COO of easyJet since 2022. Before that, he filled a number of roles including chief pilot, director of flights, head of operations, and director of flight operations. His previous experience includes pilot instructor for BAE Systems in Saudi Arabia, a pilot for the Royal Flying Doctor Service of Australia, chief pilot and COO at Wizz Air, and a position on the board at Air Ambulance Charity Kent Surrey Sussex. easyJet is a multinational low cost airline group headquartered in London Luton Airport. It operates domestic and international scheduled services on 927 routes in more than 34 countries.

Welcome to the podcast, David Morgan. It's great to have you here and thank you for taking the time today.

David Morgan:

Thanks, Jason. It's great to be here.

Jason Mitchell:

It's great to do this live. So David, we have a lot of questions to chew on, but I'd like to start with some scene setting. It's well known that easyJet transitioned away from carbon offsetting at the end of 2022 to focus instead on driving real world emissions reductions within its net-zero roadmap. I guess my question is what's behind easyJet's ambitions that often raise the bar in an industry that has been frankly relatively slow to decarbonize? I'm also wondering what easyJet-specific factors are driving this. Is it culture? Is it shareholders? Is it stakeholders or something else?

David Morgan:

Yeah, it's a great question. I think actually it's a combination of factors, but when you look back over the years in easyJet, we've always been very passionate about doing the right thing, and clearly climate change requires significant action. We certainly didn't bury our heads in the sand when it was becoming apparent that we needed to make some significant changes. So we tackled the issue ahead on said, "What can we do?" And initially the only thing we could do was to do some offsetting because frankly we had nothing else within our capability to do that.

And I guess me personally as a pilot, I've been flying for nearly 40 years now and I guess I've seen the climate change from when I began flying even in that relatively short period of time. So it became almost quite personal to me that we've got to get on and make some changes here for the better. So it began with offsetting and then as you say, in 2022, we realised that we'd be better off and we had the opportunity to actually directly invest in some of the technology that will help drive down our emissions rather than getting somebody else to do them on a different part of the world.

Jason Mitchell:

Talk more about that. Was it the culture of easyJet? What kind of pressures did you experience in that run up to that decision?

David Morgan:

I think, well, initially we've been talking about things like electric planes for a long time, probably for the last 10, 15 years, and you might see some archives of some very futuristic looking planes with easyJet livery on. So this is not something which has just happened in the last couple of years.

We've always been passionate about trying to do something different, but in terms of the offsetting, that change from, okay, we need to stop doing our offsetting and use that money that we would otherwise invest in offsetting into something directly tangible to reduce the carbon emissions on our flights. And that's when we started having discussions with people like Rolls-Royce on the future of zero emissions aircraft with potentially hydrogen powered.

Jason Mitchell:

So it's often observed that short haul flights are frankly the worst offenders in terms of carbon emissions in aviation. Aircraft on routes of 700 kilometres or less emit more carbon dioxide per person per kilometre travelled than long haul flights, obviously due to the fact that takeoff and landing are the most fuel-intensive elements of flight. So let's level set here. How does easyJet and indeed the industry get around this fundamental issue around the phases of flight?

David Morgan:

So small correction, first of all, that during landing, actually it doesn't use more because you're effectively gliding the aeroplane down from height. So it's the takeoff phase, which is the most fuel intensive if you like, in terms of the actual emissions. And I've read the same article that you quote on there, our actual intensity per passenger is significantly lower than is quoted on the article. And the reason for that is we're using much more modern fuel efficient aircraft.

So very short haul flights, yes, it doesn't make sense to fly them with an aeroplane. And frankly where there is a better train alternative, we recognise and we encourage that. So we don't try and compete with train journeys that are the obvious choice between two places. We tend to use connections which are not served by trains. There might be water in between the two destinations. So to the islands, if you fly between here and Northern Ireland, you've got to cross the water. So you've got a choice, you go on a ferry or you get a plane. So we're driven by customer demand really. We're not trying to say, "No, you'd be far better off taking a plane than a train." If there's a suitable alternative on train, then we wouldn't generally compete with it.

Jason Mitchell:

There's a lot of talk about decoupling growth in carbon emissions from economic growth. What evidence have you seen to suggest that aviation, specifically short haul is capable at least of decoupling growth in carbon emissions from growth in flight count?

David Morgan:

Well, I guess that's the reason behind the net-zero roadmap, that's what you're trying to do, isn't it? You're trying to reduce those carbon emissions to zero whilst at the same time still have a viable airline which is still running. And that's the challenging bit, how do you get from where you are now through to the 2050s where you have no carbon emissions or net-zero carbon emissions and yet you still have an airline which is growing and thriving?

And the key behind that is having a very clear roadmap with realistic trajectory on the roadmap, something that's been validated by say, the science-based target initiative, which is what we are using, and that you have an ability to flex between the different levers of that roadmap, sustainable fuel, zero emissions technologies, air traffic management, other fuel efficiencies. And you've got to be able to flex in order to stay on that roadmap but still growing at the same time. You can't have an airline where you just reduce economically and you don't have an airline. Clearly that's not going to benefit anybody, so you've got to manage the two aspects of it.

Jason Mitchell:

Can we talk about some of that flex a little bit? easyJet obviously backs hydrogen as the most likely future fuel. I guess I'm wondering particularly in the context of what was initially laid out in that net-zero roadmap, what was behind the decision to move away from the idea of an all electric short haul aircraft? Was it about technological feasibility? Was it time to market, cost economics, or some other factor?

David Morgan:

It's a great question and it's probably one of the most commonly asked questions that I get is why not battery powered aircraft? And I guess that when we were first talking about electric aircraft, there was a big boom in electrification of cars. Tesla was just coming on the scene and there was enormous interest and the power of batteries was getting better and better. But really, realistically, we're up against the laws of physics for aircraft, and I'll give you an example.

If you take an easyJet plane now and you were to take off from our headquarters here in Luton and you fill it full of kerosene, which is the fuel we use today, you can put 18 tonnes of kerosene on that plane and you can go about as far as Dubai before you would run out of fuel. If you were to take 18 tonnes of the best quality lithium-ion batteries, the kind of Tesla quality batteries, and you put them on the same plane you can get as far as the South Coast of England before you'd have to land because you'd run out of energy.

Now interestingly, if you were to put 18 tonnes of liquid hydrogen on board, and there's a reason why you can't do that, but in terms of the theory, if you put 18 tonnes of liquid hydrogen, you can go to Australia nonstop. So that just shows you the difference in energy density that you get per weight per kilogramme of batteries versus kerosene versus hydrogen.

Now hydrogen occupies more volume, so to get 18 tonnes of volume in, you'd need an aeroplane the size of an A380 rather than A320, but it shows you why we're up against this problem, the energy density for batteries. And hydrogen will serve us for short haul routes quite comfortably with the size of aircraft we have right now.

Jason Mitchell:

I don't mean this to be a naive question, but in the way that we've seen this with cars and hybrid technology, why haven't we seen that transitionary hybrid technology within planes or is it a technological cycle not worth the effort?

David Morgan:

So I think for really small vehicles that require relatively low amounts of energy, then batteries are great. And that's why for a personal car, we're seeing the number of electric vehicles that you see today. Interesting, if you look at the bigger vehicles like the big trucks, you don't see too many battery powered big trucks, and the reason is the same. They can't get their energy density for those longer routes for those heavier weights.

And you get some companies like JCB that produce bigger machinery type vehicles, they are considering, in fact, I think they are moving to hydrogen because they can get that extra power from hydrogen. We see some buses being powered by hydrogen. In fact, if you drive down to our Gatwick Airport, there are some buses around Gatwick which are moving passengers between Crawley and the airport and they're running on hydrogen. So hydrogen's a great source of energy if you can use it correctly on the vehicle.

Jason Mitchell:

Maybe can you peel apart the planes from the ground infrastructure and the technology choices around that?

David Morgan:

Yeah. So I think we will see energy being used in a different way than it is today. So currently one size fits all, kerosene petrol is used for everything really and certainly for aircraft from a small two-seater plane to the biggest A380, 500 seater uses the same kind of fuel. But I think in the future we will see different energy being used for the size of aircraft and we will definitely see battery powered small planes. In fact, I could go out today and buy a two-seater battery powered plane and fly it around for about an hour, no problem at all.

And I think in the next few years, we'll see bigger and bigger planes on batteries, potentially 10, 20-seaters, who knows? But I don't think it will get a lot bigger than that. And then you've got this intermediate size of aircraft which will be using hydrogen fuel cells. You might see a 50 seater, 100 seater, maybe even a bit more on hydrogen fuel cells.

At the very bigger end of the range, at the moment, hydrogen combustion using a gas turbine engine similar to what we have today is probably the only thing that's going to do it. But who knows what's going to be around the corner from technology. There may be some other zero emissions technology and that's really the goal here, zero emissions technology that could serve us really well.

Jason Mitchell:

Airbus has talked about seeing a 100 seat hydrogen powered aircraft in the air by 2035, while easyJet has talked about 2040. I guess my question is the five-year gap mainly the difference between testing and at-scale commercialisation? And I guess a follow on would be what are the big unanswered questions standing in the way of the possibility of mass hydrogen-based aviation?

David Morgan:

I think I'm super delighted that Airbus announced that they were launching the ZEROe programme and they are confident about delivering a commercial size aircraft in 2035. Now to be clear, they haven't actually said what size aircraft yet they will be going for in 2035. It's quite probably the 100 seater, but it could be something bigger. We don't know.

The reason why we've chosen 2040 rather than 2035 is actually we're looking for something bigger than 100 seater, frankly with our current business model. So we would expect that the size will get bigger over time. Now whether that's 2040, 2042, whatever, we don't know yet of course, but we think it's unlikely it's going to be the earlier end of the scale.

Jason Mitchell:

And those big unanswered questions, again standing in the way of mass travel for hydrogen.

David Morgan:

I think the single biggest challenge for hydrogen aviation is not actually the aeroplane itself, it's not the engine, it's the infrastructure needed to supply large amounts of green hydrogen to the airports in order for us to have those flights.

Jason Mitchell:

Can you pull back the curtains and maybe give a sense for what the rate of innovation looks like in the sustainable aviation space from a technological perspective? What new technologies does the aviation industry need to be able to transition? What's the role of airlines to invest in the technology and how much are easyJet investing? Can you give me a sense of that scale?

David Morgan:

Yeah, sure. So what's super exciting about this is the speed at which things are changing. And I began talking about this subject maybe five, six years ago, something like that. And really we were looking at just a handful of different innovations that were being looked at, whether it's cryogenic fuel tanks or hydrogen fuel cell engines and so on. Now you cannot keep up with it. There is so much effort and research being put into zero emissions technology that it is super exciting.

And for me, the even more exciting bit is, particularly on hydrogen, it's not just aviation. This is now a multi, multi-industry challenge. Obviously decarbonization and hydrogen is proving to be a very interesting proposition for many hard to abate sectors. So the power of it really comes into when you get multiple industries all trying to achieve the same thing and they all need the same basic fuel, liquid hydrogen and it needs to be green hydrogen from renewable sources.

So once you start to see that coming together, you see, well, there is a real possibility that we could actually get the quantities we need at the price which is viable. And the engineering side, the planes, we got some really clever people out there with Rolls-Royce and Airbus and so on. They're working on that problem and I'm confident that they'll be able to actually to build these machines, but we've got to get the network in place to be able to fly them.

Jason Mitchell:

I guess on this point, can you talk a little bit about the significance of last year's launch of the first aero engine on 100% green hydrogen? That seemed like a pretty important milestone.

David Morgan:

It was a huge milestone and I had the pleasure of being stood on a cold airfield in November seeing the demonstration of this engine. And it was significant because it was the world's first of a modern aero engine being tested on green hydrogen and it was completely uneventful and that's what you want when you're testing an aero engine. And so it was the beginning of what will become a journey of development. And that engine already has now been superseded by a bigger engine which will be run at higher and higher powers using cryogenic liquid hydrogen and so on.

So there is a very clear roadmap of design of these engines and we are delighted that Rolls-Royce has taken up the challenge. We are working with them, we are investing in them to do that. We're talking multi-millions of investment, but we think it's important that an airline gets on board and shows that, look, we're serious about this. This is not just a PR stunt here. We're actually trying to change the course of aviation here, which is significant.

And why are we trying to change the course? Why don't we like many airlines just sit back and say, "Well, it is what it is and we'll just wait and see what comes around the corner"? We have almost a helicopter view of the whole ecosystem. We sit at the centre of many things. We're talking to fuel suppliers. We're talking to engine manufacturers, airframe manufacturers. We're talking to the government. So we have a unique position in aviation to be able to not only to support but also to influence the direction of travel of that.

Jason Mitchell:

I guess your comments bring me back to that first question I asked, which is these are claims that other airlines potentially could make. So what makes easyJet so different in this regard? Why are you so adamant at driving forward this innovation?

David Morgan:

I guess you've got individuals, characters, you've got a unique set of circumstances where you've got like-minded people will come together that believe that we really have a chance to change the future for the better. Also, we operate one of the biggest airlines in Europe and we see the challenges associated with the decarbonization journey.

Now, we haven't talked about SAF. We are absolutely needing SAF and we're going to be using SAF. We're using SAF today actually. Every day that quantity increases of SAF and we're going to need to keep doing that. In fact, there's more SAF on our net-zero roadmap than there is hydrogen on there of course. But we do believe that that has long-term challenges and there's an opportunity for us here to switch to a true zero-carbon fuel at a suitable point in our roadmap.

We're not suggesting it's going to happen overnight with the entire fleet, it's not going to happen tomorrow, but at some point in the future we see a real potential to change to something which is zero carbon and the time to act is now. It takes so long to get these things done that you've got to start acting now.

Jason Mitchell:

Talk a little bit more about the challenges around SAF. Obviously cost is a major issue as is supply. I think it's important to note that mandates, at least in the UK start in 2025 when SAF needs to represent 2% of total UK jet fuel going linearly to 10% by 2030 and then 22% by 2040.

David Morgan:

Well, I mean you named a couple of the big ones. At the moment the supply is pitifully small frankly, and that even if we wanted to go out tomorrow and say let's fly 10% SAF for the easyJet fleet, we couldn't. There isn't enough SAF available out there. So the supply is currently not keeping up pace with the future demand. Now that needs to change and we need government support to be able to keep the momentum on that going, like we've seen support in other parts of the world, like in North America.

I think there's also a fundamental problem with bio SAF, which is currently this only SAF which is available today in that you get to a point where there isn't enough landmass on the Earth to be able to produce the bio SAF to meet the mandates which are coming in, in later years. So you would be forced to switch to a E-fuel, a power-to-liquid SAF, so synthetically made not relying on biomass. The energy needed for that is enormous, much more than just making hydrogen because you have to make hydrogen as one component of E-fuel.

So it's not as straightforward as you might imagine. And frankly, I think there are some even politicians who perhaps treat SAF as a nice easy solution for the future. It's a drop-in fuel, yeah, it's great. You can drop it into the aircraft without modifying too much, but actually the making of that E-fuel in the quantities we need, it requires an eye-watering amount of energy. So is there an alternative for short haul airlines, something like hydrogen, which is going to mean we don't need to be cutting into that huge amount of energy that would be needed for the E-fuel.

Jason Mitchell:

Do you worry about a potential misalignment or gap emerging, some would argue one already has, between government expectations and policy setting around the use of SAF and the market's ability to produce enough?

David Morgan:

Yeah, we do worry about that and I think one of the reasons why in our net-zero roadmap we have not over-indexed on SAF, we have kept it to the mandates which are currently published, is that we are not confident that we will be able to deliver more than the basic mandates that are laid out right now. I think any airline that's saying that, "Yeah, by 2030 we're going to be using 15% SAF or whatever," well, let's hope that's true, but at the moment there's no clear indication that that is the case.

Jason Mitchell:

We often talk about a first mover green advantage, but is there such a thing as a first mover disadvantage when it comes to decarbonizing aviation, especially from 2035 to 2050 when I guess the big technological innovations really need to start appearing at scale? I don't know. It's interesting to me, I feel like there's some kind of parallel to the movie Moneyball when there's this quote that the first one through the wall gets bloodied. Now easyJet is obviously working with great partners like Rolls-Royce and Airbus, but how do you think about the risks with being an early adopter or innovator in the aviation industry? In other words, how do you not get bloodied in this technological transition?

David Morgan:

It's a great question and if I were just to look at new innovation from a COO's perspective, you don't want to be the first mover in anything. If there's a new plane come out, you don't want to be the first person to buy it. You want someone else to buy it, find all the problems with it and then step in when you need to. The problem with this challenge is that someone needs to show leadership because otherwise nobody moves first. And the key here is that you cannot be put at a disadvantage by doing so. It would be unthinkable for easyJet to try to do the right thing and be alongside a competitor who sat back and did nothing and is at a bigger advantage than easyJet.

So this is where we believe that government can support in terms of things like incentives for first movers, to take that pressure off that transition from where we are right now to a zero carbon future. Now we're not suggesting that that should be propped up for forever, but there is going to be a transitionary period where it's going to be more challenging to move from one fuel type to another and we're going to need some support in doing so.

Jason Mitchell:

This is a really interesting topic. I mean take hydrogen because it isn't commercially used currently, regulatory guidance for it doesn't really exist. To what degree is the lack of regulatory frameworks specifically for hydrogen for instance, to what degree are they a gating factor to more innovation?

David Morgan:

It's a really interesting challenge and something that we did recently was to launch a hydrogen for ground vehicles in Bristol Airport in the air-side environment. So up until now, nobody in the world had ever refuelled a hydrogen bit of equipment near an aeroplane. It all had to be done land-side, a long way away from an aeroplane. And we knew that it was going to be critical to start writing that regulation, that safety regulation to be able to do that.

And I remember when we first approached the authorities about doing so, they said, "Well, there isn't any current rules on that. We'd have to start from scratch." So that's exactly what happened. They wrote the rule book from scratch and we just only a month or so ago refuelled the first piece of hydrogen ground equipment right next to an easyJet plane at an international airport. So that was a baby step. We didn't do it because we thought that was the best fuel for that particular ground vehicle. We did it because we knew we're going to have to start writing regulations from scratch.

And I think we will see the need more and more for regulations to be written around developing a hydrogen aviation ecosystem, be it on the ground at airports or in terms of what incentives would an airline get for operating a zero carbon flight? Is there reduced on-route navigation charges, reduced airport fees? What is it that can tangibly support the airline while they make this brave move of changing the direction of the fuel for aviation?

Jason Mitchell:

It's been reported that the COVID rebound in travel and expansion growth will mean absolute emissions increase between 2019 and 2023. It's something the UK government tried to limit in its Jet Zero Strategy. What role do you see government playing in establishing roadmaps like Jet Zero and capacity building around green aviation fuel and technologies? We've talked a little bit about it, but can you also talk about the Hydrogen in Aviation Alliance, which easyJet chairs that includes Airbus and Rolls-Royce? The alliance has certainly made some calls for more public funding to scale hydrogen technologies and infrastructure.

David Morgan:

So the Jet Zero Council we fully supported. This was a government initiative looking at everything from the technology of zero emissions aircraft through to the infrastructure and the policy and regulation around it. So various working groups have been set up. We are part of that along with other industry colleagues. So that's absolutely needed.

I think that for us, the reason why we set up the Hydrogen in Aviation Alliance was that we felt there was insufficient collaboration from like-minded stakeholders on some of the bigger policy issues. So we partnered together with Rolls-Royce, Airbus, GKN, ITM Power, a number of other organisations that are involved with hydrogen so that we could collectively inform government and suggest ways that we should be moving forward in terms of the regulatory landscape in order to support aviation going forward.

It's been highly successful. We've had great engagement from government and I think it's not so much about saying you're not doing enough, it's about saying this is what we need you to do to support the introduction of hydrogen into aviation.

Jason Mitchell:

How international would you say the alliance is? Do you find that many other airlines or other partners are working in the United States out of Asia, et cetera, or is it generally probably for a lot of factors, regulation, the ETS regulations, is it very European -centric?

David Morgan:

I think it's becoming more international and some of our more international stakeholders like Airbus are having conversations all around the world as are Rolls-Royce. This is a global challenge, let's be clear, and so we need a global solution in many cases and we can support leadership in areas that we know we can do well. The UK has a fantastic rich history with aviation. Let's face it, we were at the forefront of building aircraft for over 100 years.

And I think we've got some of the best academic institutes in the world. We have colleagues in universities here who are at the cutting edge of zero emissions technology science, and we need to lean on that and we need to develop our understanding so that we can broaden this capability and build it where it makes sense to build it. And hopefully we'll see the UK showing some leadership in this area through the fantastic organisations that we have.

Jason Mitchell:

When you think about the UK though, how would you frame the government's support and leadership in aviation?

David Morgan:

I think that over the years it's been mixed if we're really honest. And as governments come and go over the years, we've had less or more support in terms of being a global leader in aviation. What I am absolutely convinced about is that we have some of the best minds in the world when it comes to the technology behind aviation, and I'm super proud to be working alongside colleagues who are really at the cutting edge of this. So we need to take advantage of that. There are signs that that is happening in the alliances that we're seeing coming together and some of which we've supported, as I've mentioned with Hydrogen Aviation Alliance.

But really the next few years is about putting those words into actions. We need to see some clear steps to show that we are moving in the right direction. We've started that journey with some of the hydrogen testing that we've been doing together with our partners on that, but we need to see much more tangible milestones being achieved in organisations supported by things like the ATI and other institutions that demonstrate that the UK is at the forefront of zero emissions technology and our efforts to decarbonize aviation.

Jason Mitchell:

For the EU to reach its targets under the Paris Agreement and obviously make the European Green Deal a reality, it needs to cut transport emissions by 90% by 2050 compared to 1990 levels. With EU direct emissions from aviation accounting for, I think I recall around 3.7%, the climate ambitions of aviation are crucial. What more are the airlines looking for from policymakers in terms of visibility, in terms of roadmap, in terms of incentives?

David Morgan:

The airline industry is without doubt one of the hardest sectors to decarbonize. That's widely accepted, and we will need support in order to be able to do this successfully so that we can still provide affordable travel for society. Now, let's not forget that society has had enormous benefits from being able to travel affordably.

If you think back to the days of the '50s, it really was only for the rich and famous. Since the days of relatively low cost travel, then that has changed completely and it would be a great shame for us to go backwards where travel was only again affordable for the rich. So in order for us to be able to decarbonize at the same time keeping this fantastic opportunity for so many people alive, then we're going to need government support to do that.

I think the mechanism of that support really needs to come together in the next few years for us to be able to have a clear pathway as to how this transition is going to take place. I think there are lots of ideas out there with different fuels, different mechanisms, but it's going to be really important that over the next couple of years, this is where it will all happen, is what is that going to look like? What is the support going to look like? So when we look across the pond and we see that the significant investment that's been made there by the government through the IRA, then we'd love to see something like that being introduced into the UK.

Jason Mitchell:

Absolutely. Where are the other areas of low hanging fruit for aviation? In other words, what are the non-competitive areas where the industry can make real world carbon reductions? I'm thinking areas like flight route optimization.

David Morgan:

Look, it's a great question Jason, and I'm lucky enough to be a current commercial pilot. I've been flying for nearly 40 years now, and I'm still lucky enough to fly our easyJet passengers today. And what frustrates the hell out of me every time I go flying is how inefficient the airspace is as particularly when you are arriving at an airport. We waste an enormous amount of fuel because the way that the airspace is structured.

There's some really easy low hanging fruit to be had by modernising our airspace. You're talking a relatively small investment to get an enormous return. You could reduce the emissions across Europe by circa 10% by modernising airspace. This is a figure that's been quoted a number of times. And in fact, in some parts like the London area, it's even more than that.

Now you imagine how many SAF places you'd have to build to have 10% reduction in your carbon output, you'd be talking thousands of them. So I think that airspace modernization, we need to get on with that. That is within our gift. It is entirely possible. It needs coordinated support, and frankly, it's the lowest hanging fruit we have out there right now.

There are other things, of course, replacement of aircraft. easyJet has replaced its fleet with more modern aircraft, our newer fuel efficient aircraft, our NEOs. Even a like-for-like replacement of an older Airbus A320 with its NEO equivalent is about 13% more fuel efficient. And on a per seat basis, when you take one of our small A319s, 156 seats and you replace it with our A321 NEOs, there's about a 30% efficiency on a per seat basis there of carbon reduction.

So doing that is having a significant benefit to our net-zero roadmap, but you need all the levers pulled. You need the SAF, you need the airspace, you need the fleet replacement. You can't take anything in isolation. You need every lever and you need to pull it as hard as you can.

Jason Mitchell:

What's the life cycle of a plane? Can you talk about that replacement cycle? And again, how much more is there to squeeze in current technology before we move on to the next technological cycle?

David Morgan:

I think the current modern generation of aircraft are going to be around for some time. We've placed orders of hundreds of aircraft over the next 10 years or so, and we're replacing our aircraft pretty much as fast as we can get them. I mean, part of the constraint at the moment is the supply of new aircraft. If you wanted to go out and buy a new Boeing or a new Airbus today, you wouldn't be able to get one this decade. You'd be talking about the next decade. So there is a constraint on that, but we're replacing those as fast as we can.

The older aircraft you keep in the fleet, you're only keeping there to manage the capacity that you have to fly. But as soon as you have the opportunity to replace it, you're going to do that, which is exactly what we're doing.

Jason Mitchell:

Final question, what kind of behaviour change or behavioural patterns have you observed from customers as a low cost airline? I remember a paper from Finnish academics published in 2022 that found a linkage between an airline's perceived environmental responsibility and customer loyalty. So I guess, what's your sense of the level a customer's willing to absorb on an environmental pricing premium on airfares? Does one exist? Are customers willing to pay a sustainable premium for flights? Is there price elasticity?

David Morgan:

So the short answer is no, they're not. Customers want you to do the right thing and they expect you to do the right thing, but they want it at an affordable price. We've seen time and time again that charging a green premium, and it might be in the form of voluntary carbon offsetting simply does not get an uptake. I think there are less than 1% of people, I think for organisations that charge or offer voluntary carbon offsetting actually uptake that.

And we get it. People want to get the best price out there, but they also want the airline they're flying with to be doing the right thing. So in easyJet, we believe we are trying to do the right thing. We're investing millions in green technology. We're not slapping that price onto the ticket price and saying, "You've got to pay for this." But we are determined to keep flying affordable, and our flying is very affordable for the vast majority of people, and we intend to keep that going during this journey of decarbonization.

Jason Mitchell:

It's interesting. I remember several years ago this notion of [foreign language 00:40:51]. I don't know if I'm pronouncing it right, this idea-

David Morgan:

Flight shame.

Jason Mitchell:

... of flight shame. I mean post COVID with the rebound in travel, the greater emphasis in sustainability, does a term like that exist anymore?

David Morgan:

It's interesting. I think the term we saw particularly reach a bit of a crescendo over the COVID period there. We hear less of that term now, but frankly, we're not letting ourselves getting distracted by the latest fad or whatever that's out there. We know we have a job to do. We know we have to decarbonize and we have a clear pathway towards that. Now it's not without its challenges, but we know we've got to get on with it, and we've got to do everything in our power to get to that net-zero.

Jason Mitchell:

Great. Look, so it's been fascinating to talk about how aviation is undergoing its own energy transition, what factors are driving easyJet's decarbonization ambitions, and why it's vital that airlines like easyJet keep pushing the envelope on technological innovation. So I'd like to really thank you for your time and thoughts. I'm Jason Mitchell, head of responsible investment research at Man Group here today with David Morgan, COO of easyJet. Many thanks for joining us on A Sustainable Future, and I hope you'll join us on our next podcast episode. David, thank you so much for this conversation.

David Morgan:

Thanks for inviting me, Jason.

Jason Mitchell:

Fantastic. I'm Jason Mitchell. Thanks for joining us. Special thanks to our guests and of course everyone that helped produce this show. To check out more episodes of this podcast, please visit us at man.com/ri-podcast.