PLC no more singing, right? No more singing. Good morning, can you hear me? Yeah. Alan asked me to speak briefly about sustainability. It might sound a bit of a boring subject, but it is something that will affect us and is affecting us now in the future. If you look at our corporate risk register, the three biggest risks are: number one, a catastrophic accident – i.e., a crash; number two, a massive cyber incident that can wipe a company out; and number three, which is a slow burn and never-ending risk, sustainability. Now, what is sustainability? If you look at the UN Charter, they have a sustainability charter that consists of 17 categories, including no poverty, action to preserve life below water, quality education – all these are things that travel companies are supposed to do. In addition to that, they have one of the actions, and that's climate action, and that's the one I'm going to talk about today.
Now, when you hear about sustainability, the narrative is getting increasingly more hysterical. I'm not a climate change denier, by the way, but I'm hopefully going to give what I think is a balanced view of what's going on. The narrative is now reaching fever pitch. The issue I'm going to talk about used to be called global warming, then it got renamed to climate change, then it got renamed to climate crisis, and now it's called climate emergency. That's what people are talking about, and this is what the governments are tapping into. I'll go on what governments are doing in a little while. It's got to the stage where the only cause of climate change that's discussed is anthropogenic, which means human-induced action resulting in climate change. The IPCC – International Committee on Climate Change – do not allow discussion on other potential causes of climate change, i.e., solar. It's been proven by many, many scientists that the sun has a massive impact on the climate on Earth. Has anyone heard of Milankovitch cycles? Good, you're not as sad as me. Milankovitch cycles – it's cycles of the sun that impact the Earth's climate, and there's a 23-year cycle, a 100-year cycle, a 10,000-year cycle, million-year cycles, and the Earth warms and cools on a regular basis. People have drilled into rocks and measured CO2 levels, they've drilled into the Greenland ice cores, and CO2 levels have been much higher in the past than they are today, which shows that the climate does change naturally and carbon dioxide levels rise and fall.
Unfortunately, today the narrative is that the increasing levels of carbon dioxide are caused by humans, and this is what governments are tapping into. Governments following the narrative are putting in place policies that are very punitive on the airline industry. We did a survey and we asked our customers: what percentage of carbon dioxide emissions do you think the airline industry is responsible for? The answer came back as 22%. That's what people think we're responsible for. The airline industry is actually responsible for 2.4% of carbon dioxide emissions. So the narrative is people think we are 10 times worse than we are as an industry. Governments read all the research, etc., they think we're a lot worse than we are, and they're putting in place very punitive policies. If you look at some other industries and their carbon dioxide emissions, they are far worse than us. Cement industry responsible for 3.5% of carbon dioxide emissions, livestock farming 14%, fast fashion – that's people buying cheap clothes – 3.5%, crop burning 3.2%, server farms 3.3%, Bitcoin mining about 2% – the carbon dioxide produced by Bitcoin mining is equivalent to that produced by the whole of Denmark. So you look at these industries and they're a lot worse, but have you ever heard of a cement tax, a livestock tax, a red meat tax, a T-shirt tax, a crop burning tax, a server farm tax, a Bitcoin tax? No. But what you have heard of is taxation on air travel, and this is what governments are doing more and more.
As I said, I'm not a climate change denier, but when you see pictures on the news of ice shelves falling into the sea in Antarctica and people saying 'oh, it's terrible, look at all this ice melting,' well, first of all, glaciers move at a slow pace and eventually glaciers snap off and fall into the sea – that happens naturally. The ice in Antarctica is actually thickening, not melting. It's getting thicker. So there's a lot of narratives out there that feed into the picture that people want to present. Universities receive funding for writing papers on anthropogenic climate change, so it's a bit of a self-perpetuating industry. So governments readily follow the advice that they are given by bodies. The UK government has a body that they are legally obliged to listen to, and that's the Committee on Climate Change. The primary recommendation from the Committee on Climate Change is that the UK government must continue to adopt demand management policies in order to reduce the amount of air travel that's undertaken. That's the primary recommendation that the government is obliged to listen to. So what is the government doing? Throughout Europe, whatever side of the political fence, all governments employ the same policy, and that is to put an ever-increasing tax burden on flying on the population. It's called demand management. If you put taxes on something, it reduces demand. Governments say 'no, we're not undertaking a program of demand management, that's not our intention.' Well, politicians, however clever they think they are, cannot rewrite the fundamental laws of economics. Demand management is designed to reduce demand for something. Increase taxes – look at the sugar tax. They said there's too many fat people, let's put a tax on sugar and everyone will become thin. Didn't work. Tobacco – let's tax tobacco, less people smoke because they won't be able to afford it. So it's the same principle with air travel, and the objective is to price people out of the market and to stop them flying, which is an existential threat to all of us.
If you look at the types of taxes that are being put in, some are obvious taxes and some are discrete taxes that not many people know about. The obvious one is APD. That was implemented by Gordon Brown about 20 years ago, and it was originally classed as a green tax. It seems to have lost that name now, it's not regarded as a green tax even though it was. That no doubt over the next few years will continue to rise. It went up by 2% in the budget – doesn't sound a lot, but when you add all the taxes up, the government is charging and all the restrictions on air travel, it ends up being quite a lot. So we've got APD – that is a tax that is here to stay. The carbon tax – when you are an airline, for every ton of carbon dioxide you emit, you have to buy a permit. We emit over 2 million tons of carbon dioxide, which is quite low. We have to buy a permit for every ton. Five years ago, a permit for a ton of carbon dioxide was £5, so that's £10 million we spent. Right now, a permit for a ton of carbon dioxide is about £60, so that's gone up by a factor of 12 over the last five years. So work that out: 2 million tons times £60 – that's what we have to pay for carbon dioxide. That's what we have to include in the price, and that's what you have to charge your customers. So that's another tax that's putting the cost of air travel up. Has anyone heard of sustainable aviation fuel? That's a hot topic, and that's what we are mandated to put into our aircraft. The government has said we have to put 2% of our fuel has to be SAF, 2%, and that increases by 1.6% each year over the next few years. So in 2025, 2%; the year after, 3.6%; then 5.2%, 6.8%, then 8.4%, 10% by 2030. However, what is SAF? First of all, it's made from agricultural and household waste. They get all the waste, they put it into a big hopper, and then it feeds into something and it goes through what's called the Fischer-Tropsch process, and that produces sustainable aviation fuel, which is less carbon intensive. Sounds great. The only trouble is that sustainable aviation fuel at the moment is about four times more expensive than jet fuel. So we need 2% of our fuel – normally we'd pay £16 million for that, but because it's four times more expensive, instead of paying £60 million for the 2%, we're going to pay £64 million for the 2%. Again, that's passed on to customers, that's another £3 per customer on top of APD, on top of the carbon charge. It might sound reasonable that we do put SAF in, and we're not against it, but the price is very high. Why is that? The government have not yet legislated for what's called a revenue certainty mechanism, so companies won't invest in the UK until this is in place. So ironically, when we buy our SAF, we can't buy it from the UK; we have to buy it from overseas. We buy it from some far-flung place and it's sent across the sea in a big, bloody polluting oil tanker and then loaded to the airports. That's how ridiculous the situation is, and that's adding to the overall cost to customers.
Other things that governments are doing: noise limits. Many of you might not be aware, noise limits are in place at many airports. Every flight carries what's called a QC rating, and it's measured for the amount of noise. During the year, all the noise is added up by the airport, and once it's reached its limit, there's no more flying. That's it. Once it's reached the limit of noise, no more flying. If you want to go to that airport, you have to divert. Noise limits have been put in place in airports in the UK and overseas, and guess what's happening? Are they staying the same? Are they being increased? No, they've been reduced. So bit by bit, noise limits are being reduced in airports, which again will mean less flying. Another thing that's happening is night movements. Airports have a limit on the number of night movements that take place, and once you reach that level, there's no more. If you want to go to that airport in the night – say you're arriving late – and you're outside the hours, you can't land there, you've got to divert. One of our airports, Leeds Bradford, has reached its night limit and there's no more flying that can go in before 7:00 in the morning and after half past one at night. So that is reducing the ability of airlines to put more flights in. Airport developments: the government is responsible for signing off developments to airports – that's terminal extensions, new stands, new runways, etc. We'll see what happens, but how willing is the government to allow airport expansion? I think in the current climate, it's unlikely that much major airport expansion will take place. So that is another way in which people are going to be prevented from flying. There was another tax that hit us quite hard a few months ago. The Canary Islands and Madeira used to be classed as exempt from tax because they were classed as outermost regions. The EU, at the stroke of a pen, decided we're not going to classify the Canary Islands and Madeira now as outermost regions, so they must pay a tax. That cost us many tens of millions of pounds, and the industry many hundreds of millions of pounds just at the stroke of a pen. Again, that put the cost up for air travelers; we have to pass that cost on. So bit by bit, costs are being increased.
Now, there's a couple of things we need the government to do. The first is price stability mechanism so that SAF plants are built in the UK, so we don't have to import it on big polluting oil tankers. The other thing is airspace modernization. When airlines fly, they don't fly in a straight line. The air traffic control system, believe it or not, was designed in the 1950s, and that's pretty much what we follow. When an airline flies somewhere, it flies through waypoints in the sky, in a sort of zigzaggy way. It's a bit like driving from one town to another on A-roads and B-roads rather than a motorway. That's how airlines fly at the moment. What we need is for airspace to be modernized so you can just fly in a straight line. If that happens, it will reduce carbon dioxide emissions by between 12 and 14%. The UK government has been talking about this for years and done nothing. The EU has been talking about this for 23 years and done nothing. Every time they talk about it, the French air traffic controllers go on strike, and then they lose interest and don't do it. But they can reduce emissions by between 10 and 14%, and they've been talking about it for 23 years. Can you imagine if you had someone working for you and you said to them, 'that thing I asked you to do 23 years ago, have you done it yet?' That's a conversation I have regularly with Alan, to be honest. But that's where we are with the European Union. So every time we talk about this, we call on the government to pull the finger out and modernize airspace, because that will reduce carbon dioxide emissions, and that will allow the price to stay lower, not be passed on to the customer, and reduce demand for air travel. Remember, we are in a situation where the governments throughout Europe are implementing a policy of demand management.
Now, what are we doing about it, besides standing on stage moaning about it? Well, quite a lot. You may or may not have seen our new sustainability policy, version two of our sustainability policy. This has tougher targets than version one because we met all the targets in version one. There are various things we're doing to reduce our carbon dioxide emissions. First of all, our new aircraft order. What aircraft did you come on? Was it an 800 or a 321? I don't know. Any idea? I think it was an 800. We've ordered 146 brand new Airbus A321neo aircraft, the greenest, cleanest, quietest aircraft in its class. 146 ordered, total transaction value $8.1 billion. That's what we are investing into our fleet. Those will be coming into our fleet over the next 10 years; we have a guaranteed delivery from Airbus between now and 2035. What else are we doing? We are fitting winglets to our aircraft. A winglet is where the end of the wing goes up, that reduces the vortex produced by the end of the wing, and that reduces fuel burn by 5 to 6%. The other thing we're doing, where we've got winglets, we fit split scimitar winglets, so that's where you also have a bit that goes down, and that reduces fuel burn by another 1.7%. Those have been retrofitted to our aircraft. To fit them, I thought you just sort of glued them on the end, but it's slightly more complicated than that. It's about a million dollars to fit them, and about another $600,000 to fit the bit that goes down. I thought you just got two tubes of Evo-Stick and put it on, but you have to strengthen the wing and everything. So that reduces carbon dioxide emissions. Weight reduction – we're doing a lot for that. We pioneered lightweight seats, we have lightweight carts on board our aircraft, we have carbon wheels and brakes, much lighter than steel wheels and brakes. We've implemented millions of pounds of new navigation equipment to enable us to chop off a few kilometers of every flight we do, again to save fuel. We have – I don't know if any of you have ever tried painting an aircraft, but if you do, it takes a lot of paint. What we have done is pioneered lightweight paint, so all our aircraft now get painted in lightweight paint, that saves several tens of kilograms of weight, and again we save that off every flight and produce less carbon dioxide. Alan is doing his bit; he's promised to lose some weight, so every time he flies we burn a bit less fuel. You're not making much progress, Alan, I think you need to take it a bit more seriously. Every kilogram of weight results in more fuel and more carbon dioxide.
Sustainable aviation fuel – we've invested in a sustainable aviation plant in the northwest of England, several million pounds invested, and it will produce SAF for us by 2027. And of course, we've got our range of sustainable hotels on sale. This is where we work with our hotels, help them to get accredited so that they can promote themselves as a sustainable hotel. Why are we doing this? Because demand is increasing. I was in San Francisco a few weeks ago at the Google headquarters, and they were talking about trends. One of the trends is searches for sustainable travel things like green travel, guilt-free travel, low-carbon travel. Those sorts of search terms are on the increase. They've grown slowly over the last few years, and now the curve is turning exponential; it's going like that. More and more people are searching for these types of hotels, so we've put that on our website to enable people to find them if they want them. It is changing; people are looking for that, and we have to be in tune with the trends in air travel at the moment. So if anyone does come and ask you for a sustainable hotel, you can find those on our websites. So that's our sustainability policy, pretty comprehensive. If you get time, you should try and bear in mind what we are doing. It's costing many many billions of pounds to try and become greener, to protect the industry and protect customers from ever-increasing prices. Because if prices increase, that means some people won't be able to afford going on holiday. Who will that be? Probably no one in this room; it will be the least affluent members of society. The people in society with the least amount of cash will be the ones that are prevented from going on holiday. That's wrong. We're supposed to be a classless society, and we shouldn't be pricing ordinary hardworking people out of their ability to go on a flight or a holiday. So we all have to do our bit to fight this. What can you do as travel agents? The most obvious thing is to compare our sustainability policy with other airlines. It is the most ambitious sustainability policy. We are platinum rated for sustainability, we're in the top 10 airlines in the world for sustainability, and we are on a journey to becoming more sustainable. We have a target to reduce our carbon dioxide emissions by 35% by 2035, and of course we will be net zero by 2050. It can't be done overnight because technology isn't around. We are unfortunately reliant on still jet propulsion. The jet engine was built – well, released in the 1950s – and that's still the primary method of propulsion. People have talked about other things. They've said battery power – won't work, not for big airlines. Why? First of all, batteries are very heavy. Secondly, the power-to-weight ratio is too low. If you wanted batteries to power an aircraft, you'd have to have that many batteries on that you wouldn't be able to get off the ground. Thirdly, batteries rely on rare earth minerals, and who owns 90% of the Earth's reserves for rare earth minerals? The Chinese. They bought up countries in South America, they bought up countries in Africa, they own 90% of the reserves, and they're probably not going to share those with the West. So it's going to be hard to get those, increasingly hard over the next few years. So battery doesn't work. People have talked about hydrogen. There may be a future in hydrogen, but it's a long, long way away. Hydrogen is something that is possible to manufacture in large volumes, but you have to be very careful with it. Hydrogen's been used before for air travel – I don't know if anyone said the Hindenburg and the R101 weren't too successful. In the modern era, hydrogen has to be stored at a certain temperature, about minus 260 degrees, which is in itself a challenge. You have to use an enormous amount of energy to get the hydrogen to that temperature. So that is a long, long way. The third thing that may happen are called open rotor engines. At the moment you've got a jet engine, you've got the cowling, sucks air in, puts it through a low-pressure turbine, high-pressure turbine, and propels the aircraft forward – it's basic Newtonian physics, that's how it works. One thing that's supposed to be more efficient is an open rotor engine. This is where, if you go back to war films and you see a propeller blade, an open rotor is basically what is supposed to be more efficient. But these rotors are massive, they'll be like that, so you can't just stick one of those on an existing aircraft. You've got to redesign the aircraft, you'd have to put the wing on top of the aircraft, have a big long undercarriage so the propeller didn't hit the ground. That technology is a long, long way away. So it's unlikely that anything's going to be coming into the market in the next 15 to 20 years. If someone designed an aircraft now, it'd be 15 years before it was in production and made available. So we've got what we've got. The other thing that hopefully will happen is that the US and UK governments will declassify some of their top-secret black technologies that probably exist and make that available to the public, and that will help. I'm sure there is some technology around that probably is kept within the military at the moment. But that's where we are. So we're doing what we can. Back to travel agents: what can you do? First of all, book with the most sustainable airline and tour operator in the UK – that's Jet2. Use our search tools on the website to look for sustainable hotels. Thirdly, if you speak to your MPs, please lobby your MPs. Find out what is their stance on sustainability. Are they in favor of demand management? Are they in favor of taxing air travel? If they are, maybe you should say to them, 'Okay, if you're in favor of that, how do you reconcile that with the fact that the people prevented from going on holiday will be the poorest members of society? That's not very fair that those with the least money will be prevented from going on holiday.' Lobbying MPs is important; they do listen from time to time. We have to as an industry make ourselves heard. I meet quite a lot of MPs and put our case forward, individually as part of Jet2 and as part of two bodies: we're in Airlines for Europe and Airlines UK. The more voices that lobby MPs will make a stronger message, and they may sit up and listen. Their policies are one of demand management, and they will prevent people from going on holiday.
So that's sustainability. There's another topic I want to talk about briefly, and this is something that's affecting an increasing number of destinations. This is the protests abroad about tourism. They've happened in Majorca, Menorca, a couple of the Canary Islands, and they're spreading throughout Europe. When the press report this, very often they do again in a hysterical manner, they say 'protests against tourism.' That's not really the case. It's not against tourism per se, it is against their incompetent and impotent governments that have failed to regulate unlicensed tourism – that is people staying in Airbnb properties. We operate licensed tourism, where we send people to hotels. It's easy to work out how many people there'll be: how many people are on the plane, how many hotels, multiply the number of hotels by the number of rooms by two people, that's the number of people that will be staying in resort. That model worked very well for decades, you could predict what the demand for tourism would be. However, since the dawn of Airbnb, that's become more difficult. You have people renting properties out, and people staying in unlicensed tourism. This has caused a massive increase in the amount of tourists into some destinations and put strain on local communities. Also, many of these properties aren't safe. When we put a hotel on sale, we have to see its tourism license, we have to have it health and safety checked. Every one of our hotels has to have a health and safety audit. The hotels are licensed businesses and pay tax to their local and national governments, which is invested in infrastructure. Airbnb properties don't have any of that. If you stay in one of them, the vast majority don't have a tourism license, they've not been health and safety checked, and many of the owners don't pay tax on their earnings, and therefore no tax goes back into the community to benefit infrastructure projects. So when we see these protests in resort, it is against the politicians that have failed to regulate against Airbnb. I meet politicians from various other countries, and it's an easy thing to do. When I say, 'Why don't you regulate it?' they say, 'Oh, it's very hard to do.' It's not very hard at all. Book a property on Airbnb, find out who owns the property, go and knock on the door and say, 'Hi, I'm from the government, I'd like to see your tourism license, I'd like to see your health and safety certificate. Oh, and can I see your tax return as well?' If they can't give you them, fine them €200,000, and the number of properties will drop by 95% overnight. That will mean that the protests will stop. These protests will get bigger and bigger, and they will start to affect our destinations, they will start to put people off traveling. In Palma, Majorca, a few weeks ago, tourists were innocently eating on a café on the side of the pavement, enjoying a meal. Protesters came down, squirted them with water, disrupted the meal, and started protesting outside bars and restaurants. Things daubed on walls, 'Tourists go home.' People are preventing people going on beaches. This will get worse and worse unless the unlicensed tourism problem is solved. So again, what can we do about that? Well, promote licensed tourism, which you do, and put people in licensed properties. These are package holidays. We only sell package holidays in licensed properties; we don't sell Airbnb, we only sell hotels and apartments, things that are licensed. So that's one way we can try and prevent some of these protests happening, to put people in licensed tourist accommodation. We have to be aware that it's coming; what's coming down the track, this problem is going to get worse. So please bear that in mind when people come asking for a holiday.
So Alan asked me to speak briefly about those two things, and I think now we're going to go to questions. Does anyone have a question they'd like to ask? No questions? Yes, we've got a microphone. There's one coming, Steve. It's Phil Nuttall from the Travel Village in Blackpool. Where are you? Sorry, I'm over here. Hey, taking in the P? Oh, there you go. Yeah, yeah, stand up.
