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KLM Faces Increased Pressure to Reduce Emissions at Schiphol

Edward Russell
April 5th, 2023 at 12:47 PM EDT

A KLM aircraft being refueled with a SAF mix

KLM got some good and bad news this week that, in sum, show the airline and industry writ large can waste no time in making good on their commitments to reduce carbon emissions. The alternative is strict, some would even say draconian, restrictions on flights that could arrest the industry’s future.

First, the bad news: Amsterdam’s Schiphol airport on Tuesday outlined plans to bar flight movements at night — no takeoffs from midnight to 6 a.m., and no landings from midnight to 5 a.m. — in order to cut emissions and reduce noise. While the plan does not appear to be final yet, Schiphol made it clear that it wants a concrete plan to reduce aviation emissions within the next two years, or by 2025-26.

“We have thought about growth but too little about its impact for too long,” Royal Schiphol Group CEO Ruud Sondag said. “We need to be sustainable for our employees, the local environment, and the world. I realize that our choices may have significant implications for the aviation industry, but they are necessary. This shows we mean business.”

KLM, in a statement, said it was “astonished” by the news from Schiphol, and that it would “revisit” the move amid ongoing discussions with the Netherlands’ Ministry of Infrastructure and Water Management.

And, the good news: KLM, and a consortium of other carriers including Delta Air Lines, won their court case challenging the Dutch government’s plan to restrict aircraft movements at Schiphol beginning this October. That plan, like the night flight ban proposed by Schiphol, also focused on reducing emissions and noise at the European mega hub by cutting annual movements to 460,000 initially from 500,000, and to 440,000 from November 2024.

“With our measures we see a better alternative for achieving less noise and [carbon] while meeting travelers’ need to fly,” KLM said Wednesday, referring to the European Union’s so-called “balanced approach” to cutting aviation emissions. “The balanced approach is about the best way to reduce the number of people affected by aircraft noise.”

A spokesperson for the Dutch Ministry of Infrastructure and Water Management said they were “committed” to finding a balance between the economic importance of Schiphol and emissions and noise complaints. The ministry was evaluating possible follow-up actions to the decision, they added.

In November, KLM CEO Marjan Rintel told Airline Weekly that the airline could meet emissions and noise reduction targets through a “balanced approach” without restricting flights at Schiphol. Efforts underway include the modernization of the airline’s fleet with new more fuel efficient and quieter Airbus A320neo-family aircraft. She also called for the streamlining of air traffic control in Europe and more direct flight routings to reduce emissions; air traffic control reform is a rallying cry among European airlines but, given the strength of national unions, a third rail for many politicians.

Air France-KLM, which owns Air France, KLM, and budget airline Transavia, has committed to reduce carbon emissions per revenue ton kilometer 30 percent from 2019 levels by the end of the decade. The group is so confident in its ability to do this that it has even issued bonds benchmarked against meeting these targets. And, like most of the rest of the global airline industry, Air France-KLM is committed to achieving net-zero emissions by 2050.

The Dutch court’s ruling, coupled with Schiphol’s plan to ban night flights make clear that KLM cannot sit on its laurels and slowly wind down emissions to net zero by 2050. New aircraft and more direct flight routes will help but, as is increasingly clear, are not enough.

In a 2022 report, McKinsey & Company wrote that traditional ways for airlines to reduce emissions — new aircraft, fuel-efficiency programs, increasing seat density, and higher load factors — were “starting to bump up against the natural limit.” Sustainable aviation fuels, or SAFs, were the “most impactful short- and medium-term lever in the decarbonization pathway of the industry,” the adviser wrote in a follow-up report later that year.

SAF development is one area where KLM and the Dutch government could cooperate. The fuels, which generate at least 50 percent less carbon than traditional aviation fuel, are several times more expensive than their petroleum counterparts. The airline industry has made a strong case for government support to at least jump start the industry that has taken the shape of minimum SAF usage requirements in Europe under the still pending ReFuelEU Aviation emissions reduction scheme, and tax credits in the U.S.

Air France-KLM, which owns KLM, met 0.6 percent of its global fuel needs with SAF from suppliers like Neste in 2022, according to company data. That is more SAF than at most airlines but still well below the 2 percent usage by 2025 mandate under the EU’s pending rules. Closing that gap, and meeting the EU’s requirement that airlines use 6 percent SAF for their fuel needs by the end of the decade, will require significant investment in new production facilities.

However the widespread production and adoption of SAF occurs, the transition will cost KLM. The airline will have to pay the cost differential for the low-emissions fuels until prices of SAF come down, something that is unlikely to occur until production reaches something near scale. Some programs, including allowing passengers to add a SAF surcharge to their tickets, could alleviate some of these added costs.

But the alternative — a potentially successful limit on flights at Schiphol — could be even more costly for KLM. Flight restrictions could arrest the carrier’s growth, aside from flying larger planes on existing routes. And an airline unable to grow is an airline destined to incur higher non-fuel unit costs.

Edward Russell
April 5th, 2023 at 12:47 PM EDT

Tags: Europe

Photo credit: A KLM aircraft being refueled with a SAF mix KLM

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