How can aviation afford its sustainability aspiration?

To achieve net zero by 2050, the aviation industry should take bold steps to leverage the most cost-effective decarbonization strategies.

In brief

• While operational and technology levers provide a relatively modest green premium or green discount, SAF is a significantly more expensive option.
• The path to net zero will be paved by companies that are capable of successfully aligning climate action with commercial value.
• Civil aviation industry needs to encourage revolutionary breakthroughs in technology, focusing on more fuel-efficient aircraft and radical propulsion technologies.

Aviation sustainability: net zero at risk

The civil aviation industry has set an ambitious target of achieving net-zero emissions by 2050. But with global passenger demand projected to double by 2050, the aviation sector faces a defining challenge: delivering on its commitment to net-zero carbon emissions without compromising growth.

The industry’s net-zero vision rests on a complex, uncertain portfolio ‒ demanding bold innovation, policy alignment and unprecedented investment. Industry leaders have outlined several decarbonization roadmaps and scenarios. All of these require investments, attention and concerted actions across the stakeholder community.

At this time, the path to net zero is under serious threat. Geopolitical instability, rising interest rates, persistent supply chain disruptions, escalating trade barriers and deepening labor shortages are siphoning focus and capital away from long-term sustainability goals. These competing priorities aren’t just short-term headwinds ‒ they’re strategic distractions. Industry will have to address these other issues while working to achieve their decarbonization objectives.

Exhibit 1. Pathways to achieving net zero by 2050

Source: IATA, Aviationbenefits.org, EY analysis

Exhibit 2. Relative green premium or discount across decarbonization levers

Source: IATA, Bloomberg, ICAO, ATAG, EY analysis

Sustainable aviation fuel was once expected to deliver over 50% of the industry’s decarbonization goals ‒ a technology still in early stages of commercialization and a projection rooted in a different era, when near-zero interest rates allowed a more optimistic outlook. The new reality is sobering: feedstock constraints, unresolved technology challenges and fragmented global policies are stalling progress.

Today, SAF still accounts for only 0.3% of jet fuel use globally and industry experts warn it could take 15 years or more before production scales sufficiently ‒ and costs drop low enough ‒ for SAF to be viable without heavy government subsidies. Current trajectories suggest SAF might address just 20% of aviation fuel needs by 2050. Without a dramatic acceleration in production and supportive policy shifts ‒ even low-hanging fruit such as SAF-specific carbon accounting or “book and claim” mechanisms under the GHG Protocol ‒ the dream of SAF delivering the lion’s share of emissions reductions is slipping away. 

Unless the industry confronts the economics head-on and policymakers step in to close the gap, SAF contribution to net zero will be considerably less ‒ it’ll be a luxury fuel with a green premium.

Market-based measures like carbon offsets function in aviation as they do across industries ‒ enabling the purchase of verified carbon reductions through projects such as reforestation or carbon capture. Typically considered a last resort after all other decarbonization strategies are deployed (see Exhibit 2), offsets can be voluntarily bought by airlines, consumers or corporations. Regulatory programs like the EU Emissions Trading Scheme (ETS) and CORSIA may soon require mandatory offset purchases if emissions targets are not met. Despite their role, these market-based solutions will always carry a green premium.

Despite growing climate awareness, only a small fraction of consumers is willing to pay extra to shrink their carbon footprint. Who ultimately bears the cost of green premiums will hinge on regulatory mandates, market pressure and how much companies ‒ and their stakeholders ‒ are prepared to absorb or shift those costs downstream. A carbon price may nudge the balance, but it won’t erase the fundamental economic reality: green still costs more, and someone has to pay.

Operational and infrastructure upgrades can unlock “green discounts” by cutting fuel use, lowering emissions and optimizing flight operations. These range from reduced taxiing times and smarter routing between airports to continuous climb/descent and weather-optimized flight paths. Programs like NextGen in the US and SESAR in Europe aim to deliver such efficiencies. However, legacy systems, budget constraints and the complexity of change management mean emissions reductions from these efforts may likely meet ‒ but not exceed ‒ current projections. While critical for safety and capacity amid growing demand, their role in reaching net zero will be limited.

The technological and business model leap needed for aviation’s net-zero commitment

To achieve the net-zero commitment, industry will likely expect technology advancements to exceed the originally expected 35% contribution – given it is the most economically viable lever that can scale. Over the past six decades, from the Comet-4 powered by Avon turbojets to today’s advanced models, technological innovation has slashed fuel burn by nearly 80% (Exhibit 3). Each new clean-sheet program has historically improved fuel efficiency by 15%, sometimes even 20% ‒ resulting in an ultimate green discount. Yet even as the industry relentlessly pushes the limits of conventional propulsion and Brayton cycle efficiencies, these incremental gains will be insufficient to meet the net-zero aspiration.

Exhibit 3. Historical improvement in emissions from new aircraft & propulsion program

Source: IATA, Airbus, Boeing, EY Analysis

For technology improvements to make a substantially larger contribution to achieving net zero, industry would need to overcome at least three impediments that are intertwined.

Technology readiness and integration

Aviation needs transformative breakthroughs ‒ revolutionary aircraft architectures like blended wing bodies and truss-braced wings offer up to 50% fuel burn reduction through dramatic aerodynamic gains. But realizing their potential comes with steep integration challenges: cabin layout, pressurization, emergency egress and regulatory certification remain unresolved. When paired with innovations in conventional propulsion (e.g., geared turbofans, open rotors) or alternative power systems (e.g., hybrid-electric, hydrogen combustion, fuel cells), next-generation materials (e.g., advanced composites, 3D printing, morphing surfaces) and digital/autonomous systems, the pathway to step-change efficiency becomes viable. Yet, several of these technologies remain largely immature today. The industry must break away from multidecade innovation cycles and embrace faster, bolder development, validation and commercialization pathways.

Development and certification duration

Today’s aircraft development timeline ‒ often 10 years or more from launch to entry into service ‒ is too slow for the scale of transformation needed. Model-based engineering, digital twins and AI-assisted design enable faster iterations and smarter trade-offs. These tools can drastically reduce the time required to design, simulate, test and certify new aircraft. If harnessed effectively, they could enable more frequent introductions of clean-sheet designs and faster replacement of legacy fleets.

Business case viability

The current business model in the industry is rooted in a 40+ year aircraft program lifecycle. Given the high development cost, manufacturers in most aircraft subsystem segments depend on the lucrative aftermarket – which starts around 7+ years and peaks 15+ years post-entry into service of a new program. Unfortunately, this also exacerbates the challenges that systems providers take on, which can reduce the appetite for the risk inherent in a radically new (and potentially more sustainable) design.

Profit pools are unevenly distributed across the value chain ‒ systems providers and component manufacturers often capture more economic profit than airframers or airlines. Airframers desire to capture a larger portion of the value created, while systems OEMs would like to lower risk and improve timing of value realization and payback. Airlines prefer a low acquisition cost of aircraft but also want less ambiguity in lifecycle cost, which is intensified by new technologies and increasing operations in a harsher environment. This confluence of profitability, risk and uncertainty-related challenges across the value chain could open the door for more equitable or disruptive business models with implications.

If airframers were to capture a larger portion of program value and economic profit, they could increase the frequency of new aircraft model introductions with higher fuel efficiency. In which case, systems providers, particularly propulsion system providers, would have to contend with a shorter lifecycle, requiring their business model to rely on initial sale instead of aftermarket revenue. The total cost of ownership would need to remain comparable to current models, while increased upfront cost would be offset by lower fuel and maintenance costs for airlines. The initial sale profitability could balance out the significant long-term risk of the existing model. 

Airlines would, of course, benefit from the lower operational costs related to fuel but will likely seek alternate options to address the higher acquisition cost for propulsion and other major aircraft systems. Financial sponsors may leverage their balance sheet strength to offer availability-based models, providing flexibility for airlines to make operational and capacity decisions.

A question remains of whether airframers and systems providers can remain profitable with a shorter program run, where new technology introductions trigger planes to retire at 20 years rather than 30 years. We have seen this play out effectively in business aviation. Can this transfer to commercial aviation? Achieving net zero may rely on it.

A moment of reinvention to reach net zero

Historically, aviation’s most significant leaps came in response to pressure and constraints ‒ today’s climate imperative is no different. With economic and geopolitical headwinds mounting, the viable path to net zero will be the most cost-effective one. Those who align climate action with commercial value will lead the next era of flight.

Now is the moment for industry to double down ‒ not delay ‒ on climate commitments and use technology to drive a competitive advantage during the next era of flight.

Charles Vinsonhaler, Zachary Oliphant, Anish Panwar and Nishant Bhardwaj also contributed to this article.