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Airlines industry entities provide air transportation globally to passengers for both leisure and business purposes. This includes commercial full-service, low-cost and regional airlines. Full-service carriers typically use a hub-and-spoke model to design their routes within countries and internationally. Low-cost carriers usually offer a smaller number of routes as well as no-frills service to their customers. Regional carriers typically operate under contract to full-service carriers, expanding the network of the larger carriers. Many airline entities also have a cargo segment in their operations to generate additional revenue. Entities in the industry commonly form partnerships or join alliances to increase network size. Operating as an alliance allows airlines to offer customers access to international or otherwise underserved itineraries on more than one airline under one ticket. At the same time, airlines share some overhead costs and increase their competitive position in the global market without having to operate outside their home country.

Relevant Issues (4 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Airlines

GHG Emissions
  • Greenhouse Gas Emissions

    As a result of a heavy reliance on hydrocarbon fuels, the Airlines industry generates significant emissions, more than 99% of which are in the form of carbon dioxide (CO2). Therefore, the industry is subject to compliance costs and risks associated with climate change mitigation policies. The main sources of greenhouse gas (GHG) emissions for airlines entities are aircraft fuel use and emissions, ground equipment and facility electricity. Aircraft fuel consumption is the largest contributor to total emissions from the industry, and fuel management is a critical part of reducing emissions. Management of fuel-related environmental impacts includes increasing fuel efficiency through fleet upgrades, retrofits, and flight speed and route design optimisation, as well as using alternative and sustainable fuels. These initiatives require capital expenditures, but in the long term, they may reduce fuel costs and decrease exposure to GHG emissions programmes and regulatory risk.
Labor Practices
  • Labour Practices

    Many workers in the Airlines industry are covered under collective bargaining agreements that cover fair wages, safe working conditions, and freedom of association, which are among basic worker rights. Unionisation of key personnel may result in higher labour costs via wage or benefits increase. At the same time, labour practices can impact the long-term profitability of the business. Effective management of, and communication around, issues such as worker pay and working conditions can prevent conflicts with workers that could lead to extended periods of strikes, which can slow or shut down operations and damage an entity’s reputation, potentially reducing revenue and market share.
Competitive Behavior
  • Competitive Behaviour

    The Airlines industry is characterised by competitive margins due to high fixed capital and labour costs and competition with government-subsidised carriers in some markets. This pushes airlines to find economies of scale through alliances or consolidation, leading to concentration of the market. The industry is also characterised by high barriers to entry due to limited landing rights and increasing airport congestion. Together, these characteristics may lead entities to engage in anti-competitive practices that increase prices for consumers. As a result, antitrust authorities have scrutinised certain airline industry practices such as airport slot management, predatory pricing, and alliances and mergers. This creates a material risk to investors stemming from legal fees, reputational risk, costs associated with a delayed merger or acquisition transaction, and limits on growth by acquisition or merger.
Critical Incident Risk Management
  • Accident & Safety Management

    Given the nature of air travel in which accidents can result in significant consequences, passenger safety is paramount in the Airlines industry. Although air travel is one of the safest modes of transport, airlines are held to very high safety standards and consumers expect accident-free operations. Furthermore, as products transported by air tend to be high-value or perishable goods, delivering them safely and in a timely manner is a priority for any carrier. Airline accidents may result in significant environmental and social externalities and require entities to pay for remediation and compensation of victims. Safety incidents or violations of safety regulations can have a chronic impact on an entity’s reputation, increasing its risk profile and cost of capital, and lead to lower demand from passengers as well as cargo shippers, hurting revenues. Larger accidents, even if they occur rarely, can lead to significant and long-term impacts on reputation and revenue growth. Providing adequate safety training and ensuring the health and well-being of crew members is critical to ensuring safety. Equally important is timely and adequate maintenance of aircraft, which can help entities minimise the chances of technical failure and avoid severe regulatory penalties for non-compliance.

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