BTN's annual answer book for business travel managers.
Loews Santa Monica Beach Hotel - March 21, 2019
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Virgin Atlantic's Craig Kreeger talks:
Virgin Atlantic on Tuesday had its first flight using a sustainable fuel. It hopes its partner LanzaTech eventually will produce enough fuel that all the carrier's outbound flights from the U.K. will run on a 50-50 mix of sustainable and traditional fuel.
LanzaTech's jet fuel is based on ethanol created from industrial waste gases, such as those made during steel production. Barbara Bramble, VP of international conservation and corporate strategies for the National Wildlife Federation, called it "the poster child for the fuel we would like to see," as opposed to certain biofuels that have lower emissions but require deforestation and other harmful environmental side effects.
Virgin Atlantic also is pushing the U.K. government to incentivize that approach, similar to what it does for biofuels, Virgin Atlantic CEO Craig Kreeger said. With such incentives, LanzaTech could establish three plants in the U.K. by 2025, which would provide sufficient fuel for all Virgin Atlantic's U.K. outbound flights.
The corporate travel sector has played a role in the development and use of LanzaTech's fuel. LanzaTech CEO Jennifer Holmgren said HSBC, which provided funding to LanzaTech, did so in part because the bank uses Virgin Atlantic for a significant portion of its travel.
Hours before the first flight that used the fuel took off from Orlando, Kreeger spoke with BTN transportation editor Michael B. Baker.
BTN: How are Virgin Atlantic's sustainability initiatives progressing?
Kreeger: If we think about sustainability in a dispassionate, objective way, the very biggest thing that we do that could affect our environmental footprint is all about emissions, and that's all about fuel efficiency of your aircraft to start with. Over the course of the period from 2007 to 2022, we will have replaced all of our four-engine, older-generation aircraft with two-engine, newer-generation aircraft, and in doing so, we'll have reduced our emissions by over 30 percent. We're most of the way through that journey, and our emissions are down 24 percent since 2007. There are lots of other things that we have done that improve things on the margins—single-engine taxiing, better flight-planning systems to optimize for fuel, more recycling of onboard materials and a number of things that reduce emissions—but the biggest thing we do is fly airplanes and the most important thing we can do is find ways to do that more efficiently. There will continue to be incremental improvements in engine and aircraft technology. The 787 is a great example, with the lower weight of the airplane. Between engines and airframes, I have no doubt we will continue to see improvement in the years to come.
BTN: What role will sustainable fuel have in meeting those goals?
Kreeger: Turning our attention to finding ways to source fuel more environmentally efficiently becomes a really logical next step. We became intrigued with LanzaTech about 10 years ago, before I was a part of Virgin Atlantic. We were intrigued because fundamentally, it's the easiest thing to explain to anybody who doesn't understand airframe and aircraft technology. We're simply taking carbon that was about to be put into the atmosphere as waste [and instead putting it] through a manufacturing process and converting it to be able to power an aircraft engine. That is cool recycling. If your house is anything like mine, over the years we've gotten more and more religious about recycling the things we can recycle, and as an airline, this feels like a nice step in that ecoconsciousness that many of us had made a part of our lives.
BTN: Do you think these initiatives will ever drive travel buyer decisions as they choose which carriers to partner with?
Kreeger: There's already a little of that. Most corporate travel buyers do ask a number of questions about sustainability efforts as a part of their research into airlines they would partner with. I don't know where people get refined to the point where you start grading one approach with another approach. We're very happy to share with any corporation the activities we do both in sustainability and community. If they're interested in getting involved, that's great. We're not going to go out there and try to recruit our partners to do stuff they wouldn't otherwise do. Fortunately, every corporation now asks for a sustainability report as part of their buying process, and we have conversations with them about that. That's probably about as far as we'll go proactively. The last thing we want to do as someone who is trying to be a good partner of a corporate account is be heavy handed. We're doing these things for the right reasons, not for commercial reasons.
BTN: How are your partners factoring into these initiatives?
Kreeger: The simple answer is: We're sharing the things we're doing with them. Delta is working on an alternative that is a very interesting technology. I haven't focused on Air France-KLM yet because we haven't completed that transaction, but we will share what we're doing with them and they'll share what they're doing with us and we can develop a combination of solutions that can make the industry better. In almost everything we do at Virgin Atlantic—not with regards to Delta but otherwise—we think about things competitively. Sustainability is not one of those. It falls into category like safety, where I want other airlines to find great solutions too and we'll share them.
The biggest thing we do is fly airplanes and the most important thing we can do is find ways to do that more efficiently."
BTN: And there is a global initiative underway, correct?
Kreeger:Less than two years ago, IATA and the airlines agreed on a standard called CORSIA [Carbon Offsetting and Reduction Scheme for International Aviation], which motivates airlines to pursue strategies to reduce their carbon footprint and ultimately purchase carbon if they're unsuccessful at reducing their footprint fast enough. Collectively, we feel that will drive the right behavior, and we will be pursuing things and it will demonstrate to the public and politicians that we take our role in sustainability very seriously.
BTN: Is your partnership with Air France-KLM still on track to happen early next year?
Kreeger: The Delta partnership has been a huge part of our business for the last few years. The fundamental way I would describe the expanded joint venture with Air France-KLM from Virgin's perspective is to give us the opportunity to take more customers to more places and build a stronger frequent-flier proposition for our U.K. customers. Those are the big elements of value. Where we are in the process is waiting for approval from the antitrust authority in the U.S. government. As soon as we have that, which we anticipate will be the first half of next year, we will be up and running.
BTN: You're retiring at the end of the year. How is the leadership transition progressing?
Kreeger: It was announced in June that our chief commercial officer, Shai Weiss, would be taking on the CEO role in the first of 2019, and I'm really pleased with that. It's a succession plan that the board and I have worked on for the last couple of years, and it positions the company to carry on the momentum that we've built over the last couple of years. Shai has been with Virgin Atlantic for four years. He ran our finance function for two of those years and has run the commercial function for the last two, and I'm thrilled to see him take over. I will not have any role with Virgin Atlantic except as an occasional free consultant, if anyone asks me questions. My plans otherwise are to retire from Virgin Atlantic, take some time off. And my intention is to consider what would come next in more detail after that time. It's more likely to be in the space of teaching rather than an executive position.
BTN: What were your proudest achievements during your time with Virgin Atlantic?
Kreeger: I began at Virgin Atlantic six years ago with a pretty simple mission statement: To create a stronger financial foundation for the company while retaining the magic that Virgin Atlantic is known for from a customer service and culture perspective. In those six years, we have fundamentally accomplished that. Many of the Virgin Atlantic team were a little nervous about the Delta partnership and an American CEO and what would the changes feel like and be like and would it impact what they're so proud of to work at Virgin Atlantic? We demonstrated that what they're proud of is what [each Delta and I are] proud of, too, and Virgin Atlantic remains as red as ever, which is our metaphor for describing ourselves.
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