Johannesburg — AIRLINES are fast waking up to the fact that cutting carbon emissions is not just about saving the planet but is central to their future profitability.

With the implementation of the European Union's (EU's) Environmental Trading Scheme for the aviation industry just two years away, carriers are realising that there is a real cost to not cutting emissions.

In the next few years it will become central to the management of an airline and will affect everything from route and network planning to flight operations and duty-free sales.

From 2012, all carriers flying into the EU, with a few exceptions, will have to cut their emissions to 85% of 2004-06 levels. Any emissions above that threshold will have to be paid for by acquiring carbon credits.

That won't come cheaply. Environmental aviation group Sustainavia estimates that, on average, an airline operating an Airbus A340 from London to Johannesburg will incur carbon credit costs of about 6600 euros a flight. "That is based on the use of about 70 tons of fuel and carbon credits at about 30 euros a ton," says Sustainavia MD Julien Dufour. Factor in a return flight, and the annual cost easily reaches 50m euros.

Dufour says while the average cost of a carbon credit last year was 8-14 euros a ton, he believes the demand for carbon credits from all sectors will push up the average price in the next few years to "anywhere between 20 and 40 euros".

With the threat of suspension from the EU, airlines around the world spent the best part of last year scrambling to put in place plans to meet the new EU requirements.

At South African Airways (SAA) it was no different.

"There was no shortage of consultants offering to assist us to meet the requirements of the EU Environmental Trading Scheme," says Capt Johnny Woods, SAA's head of flight operations. "But after few meeting with various groups it became clear that we could do this ourselves."

But, says Fanus Meyer, acting head of flight technical and maintenance standards at SAA: "While we are doing it ourselves, we have kept in touch with the rest of the industry. We have already attended several Star Alliance workshops where we compared notes with other airlines to see how they were doing things.

"So far SAA is doing very well, but we cannot afford to relax, otherwise we run the risk of falling behind."

The first deadline to full implementation of the scheme has already passed, with airlines required to submit their monitoring, reporting and verification plans to the EU authorities late last year. Each airline's plan is to be monitored by one EU country, with SAA reporting to the UK.

From this year airlines will have to put their plans into action. Meyer says SAA cannot afford to make a mistake in the recording and reporting of its carbon emissions data. "There are huge penalties for inaccurately recording your data," he says.

The emissions will be measured predominantly by monitoring the fuel used by the airlines, with each kilogram of fuel used creating 3,16kg of emissions. SAA has put the infrastructure in place to do so.

Measuring the emissions is probably the easiest part of meeting the EU regulations. The more difficult part is cutting emissions.

The next major milestone will be March next year, when airlines are due to report their recorded annual carbon emissions in tons and their annual revenue ton kilometres (a ton of revenue traffic transported 1km) to the relevant EU authority. Based on this data, each airline will be allocated its free emission allowance, with anything above this paid for in carbon credits.

It must be borne in mind that even though airlines will be able to buy additional emissions through the carbon trading scheme, the EU has capped the industry's overall footprint to 97% of 2004-06 emission in 2012, falling to 95% from 2013.

That means any growth in traffic to the EU will have huge cost implications, as that growth will have to be paid for in additional carbon credits.

Therefore the pressure is to cut carbon emissions by as much as possible. But how will this be achieved?

"We look at every aspect of the business, from acquiring new, fuel-efficient aircraft, to reducing weight on board and shortening the track distances flown," says Woods.

He points out that SAA is in the fortunate position that it has a relatively new fleet.

"Remember, in 2004-06 we were still using the Boeing 747- 400s on some of our European routes. We have since replaced those with the Airbus A340- 600. We are also in the process of replacing the older Airbus A340-200s with new A330s. This already will give us a substantial saving."

Woods also points out that SAA is busy with a project in Cape Town using new navigational procedures, known as required navigational performance (RNP) approaches. The system uses onboard global position systems and is accurate to within one nautical mile.

"RNP 1 allows us to fly curved flight paths through congested airspace or difficult terrain and has proven that we are able to shave off 18 nautical miles of our track distances on any flight into the city.

"It means in cloudy conditions we no longer have to fly around the Tygerberg on approach to Cape Town."

Apart from a fuel saving, the system is vital to ensure safe operations on the continent where, in many destinations, ground-based navigational aids can be extremely unreliable.

Then there is a focus on trimming weight on board.

"That is why we began weighing passengers late last year - to give us a better idea of the total weight on board. This allows the airline to more accurately predict the fuel requirement for each flight, which, in turn, could potentially save an enormous amount of fuel," says Woods.

"We are even considering whether we need an in-flight magazine, or what form it should take. Each one weighs 0,9kg. Times that by 300 passengers and you have almost 300kg of extra weight."

Meyer says the airline is even considering electronic duty-free sales where the transaction is completed in the air but the merchandise kept on the ground. "It simply means we don't have to carry unnecessary weight on the aircraft."

Meyer says that while SAA has met the immediate EU deadline, the pressure remains on airlines to continue cutting emissions. This, in turn, puts pressure on aircraft manufacturers to keep building more efficient aircraft.

"Both Boeing and Airbus are producing aircraft that are 20% more fuel-efficient, including Airbus's A380 and A350 and Boeing's 787 Dreamliner.

"But the manufacturers have done as much as they can to improve efficiency and future improvements, in the next 10 to 20 years, will provide fewer improvements to efficiency," Woods says.

"The onus is now on engine manufacturers to produce more efficient jet engines."

He is also sceptical about the carbon reduction of alternative fuels. "The jury is still out on these fuels and a truly green fuel is still 10 years away."

Woods stresses that SAA is not cutting emissions only to meet the EU requirements. "There is real pressure to cut emissions around the globe. While the US under the Bush administration shunned the EU model, it is clear that under President Barack Obama a similar scheme is not far away. In time there will be pressure from other parts of the world.

"Some may criticise the EU scheme as just another new tax but they are missing the point. It is a mechanism to put pressure on the airline industry to reduce their carbon footprint," he says.

SAA, as a member of the International Air Transport Association, has also committed itself to becoming carbon- neutral by 2020, as well as to reducing its emissions by 15% from its 2005 levels by 2050.

While there are many aspects to making an airline profitable, including containing costs, a strong focus on yield and revenue management, safety and great customer service, in the next few years environmental issues will be another vital ingredient in the profit mix.