The Green Takeoff (Part 1 of 2): Challenges and Opportunities for Aviation's Alternative Propulsion Technologies

The aviation industry is actively pursuing solutions to achieve the net zero goal by 2050. In this first of a two-part series, we explore the challenges and opportunities of alternative propulsion technologies and their potential impact on airlines and airport operators. We will look at the use of sustainable aviation fuel in the second part of the series.

Key highlights include:

-- The shift to alternative propulsion technologies is important for the sector’s long-term decarbonization goals as historical fuel/emissions efficiencies have not been able to keep pace with the rising demand for air travel.

-- New technologies will come with a high price tag. Despite the magnitude of the investments required from airport operators, they should be manageable.

-- Adoption of alternative propulsion technologies is likely to take decades as the technology is still in the early stages and airline fleet upgradation is usually a slow process.

“The transition to alternative propulsion technologies will take decades because it requires a collaborative approach across different industries to plan and develop the infrastructure, and to fully secure the required green energy to power the new-generation aircraft,” said Valiant Ip, Vice President of Infrastructure Finance. “Therefore, we believe the credit ratings of airports will not be materially affected by the transition in the near to medium term. Over the longer term, the financial capacity of airports, the size of their investments and borrowing needs, and forecast future passenger demand will shed light on the financial metrics of airport operators that may or may not be in line with their current credit ratings.”
“Similarly, we do not expect the credit ratings of airlines will be materially affected in the near to medium term,” said Rohit Kumar, Assistant Vice President, Diversified Industries. “But airlines’ credit ratings might be affected in the long term. The sector will likely need to transform to new-generation aircraft to cut emissions and to meet regulatory requirements, which may require additional investments. In addition, airlines that fail to transition might be affected by regulatory costs.”