In an analysts' note, CitiBank said this week that airlines could be on the hook for billions of dollars due to 'flight shaming.'
And we're not talking about somebody taking their shoes off and showing their bare feet on a flight.
We're talking about consumers' carbon footprint.
As consumers become more and more diligent about their carbon footprint, they are eschewing airlines and finding alternate ways to travel. And Citi says that over the next five years the cost of carbon offsetting economy flights will grow to $3.8 billion per year.
Citi defined 'flight shaming' as "the inherent guilt that an individual feels as a result of one's aviation-related carbon footprint."
That $3.8 billion cost will either be absorbed by the consumer or the airline, according to Citi. But the airline gets hit either way even if the price is absorbed by passengers, in that the higher cost could lead to an overall slowdown in air travel.
"If this burden were to be fully absorbed by the consumer, our price elasticity analysis shows that there would be a shortfall in volume growth of -0.4 percent per annum vs. current forecasts. And while this does not sound detrimental, if this onus were to fall on the (largely fixed cost base) airlines, the cost of carbon offsetting all leisure consumption could be as much as 27 percent of airlines' profits by 2025," the analysts' note read.
And that's just for leisure travel. Corporate travel could cost another $2.4 billion. That would reduce airline profits by an additional 17 percent.
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