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Four Airlines: Wheels Up. Shades Down

By William D Alessandro on February 27, 2014 at 2:10pm.

Each airline covered in this review is domiciled on a different continent.  Comair operates local and regional services in southern Africa (partly under a licence agreement with British Airways).  Korean Air, a global carrier, overcame a dubious safety record and is moving forward on several fronts.  Qantas, Australia’s iconic, premium flag carrier, is trying to get their financial house in order and compete internationally.  United Airlines — legally speaking United Continental Holdings following a merger in 2010 — has the world’s most extensive network of routes.  

Content:

Each company has a distinct style of reporting. 

South African law requires exchange-listed companies to address the economic, social, and environmental aspects of operations in their annual financial reports.  Comair’s 146-page “integrated report” confines the discussion of sustainability issues mainly to a section 25 pages long.

Korean Air’s sustainability report lands squarely in the mainstream of triple-bottom-line disclosures.  It is a long one, extending to 102 pages crammed with graphs and tables. 

Qantas serves up a 64-page sustainability report called “The Transformation Continues”.  The title refers to the company’s most significant attempt at a makeover since privatisation in 1995.  Qantas does not follow any international framework or standard.  The report is mostly text stating plain facts about the company’s operations. 

United Airlines offers an online sustainability report only — no PDF or other complete document in any format.  The presentations are posted under various tabs on the company web site beneath the heading “corporate social responsibility”.  The coverage amounts to about 40, perhaps more than 50, printed pages.

The Korean Air report flies above the rest .  The company explains their materiality tests and outcomes more thoroughly than the others.  The management approach is described for each area of concern.  You couldn’t ask for more, at least not for fidelity to the guidelines from the Global Reporting Initiative (GRI).

While the approaches differ, the messages are peculiarly alike.  The four reports say the same thing, sometimes using the exact words:

• Our number-one business priority is to deliver safe, quality, and respectful service.  We score high on customer satisfaction.

[Each airline, however, measures customer satisfaction against quite different benchmarks].

• We are investing more to improve the travel experience.

[When the airlines install pay TV and wifi aboard flights, and refurbish executive club lounges, or charge passengers extra to stretch out with a few more inches of legroom, they define this as “customer service”.  The airlines characterise their orders for new, fuel-efficient aircraft  as “customer service”.  The  rationale is that the planes will control costs.  The airline companies make this assertion even as they raise fares.]

• We don’t know what the financial impact might be on us if the European Commission were to impose a cap on carbon emissions allowed, overall, from flights to and from the EU.  But we don’t like the idea.

[More than likely, they do have estimates but are not willing to share them with us.]

• We support the aspirational targets to control our carbon emissions set by the International Civil Aviation Organisation.  But we do not intend to become the “cash cow” for a global climate protection regime.

[The words are from Comair, but the same thought is implied in the other three reports. 

Industry’s lobby group in the US is Airlines for America (A4A).  Their position on climate policy, mirrored perfectly by United Airlines, is clear as crystal.  Governments should not regulate airlines as a group by themselves.  The right approach should be “collective industry goals”.  That means the carriers should be lumped together with engine and airframe manufacturers, fuel suppliers, and airports — all sharing a common target.  As a last resort, the airlines say they will support a global trading scheme for all of industry if other options fail by 2020.]
 
• We are relying on technology to reduce our environmental impacts.  So we are replacing our fleets with new Boeing and/or Airbus aircraft.

[Environmental concerns are not the driving force behind modernisation.  Improved fuel efficiency and more profitable payloads are .  A penny less for jet fuel saves the carriers hundreds of millions of dollars.  Fuel prices are so crucial to profitability, A4A is campaigning to get regulators to control speculation in oil prices on the energy futures markets.]

• Our new fleets are much quieter, and we favour the “continuous descent approach” as the means to reduce our noise pollution around airports still further.

[You won’t find the word “curfew” in any of these reports, not even used pejoratively. ]

The list of similarities could go on.  A fair statement  is that reading one report (except Korean Air’s) is tantamount to reading them all.
 
Communication:

Each report has bumpy spots. 

United’s online report forces readers to poke around, clicking back and forth to find and remember what  information is where. 

The assortment of styles for graphs, tables, and charts used by Korean Air demands too much scrutiny from the readers.  Whether a particular metric is improving or declining is not clear on first glance.  The accompanying text helps.

Comair’s integrated report is hard to digest.  The contents are made less palatable due to the presence of corny corporate jargon, such as “Our vision is to: “DELIVER AN AWESOME TRAVEL EXPERIENCE IN THE MOST EFFICIENT WAY” (capitalisation as in the original).

Qantas leans heavily on platitudes.  It takes at least two trips from front to back to distil the important information from the superfluous.

To be fair the flaws are not severe, not enough to cripple the reports.

Credibility:

A special report from Corporateregister.com in 2008 titled “Assure View” found that a strong, external assurance conclusion is one hallmark of a good sustainability report.   Korean Air has that. 
The Korean Standards Association provides independent, third-party assurance.  Their conclusions  mention strengths and weaknesses, and includes specific recommendations for improvement.

Comair self-declares to the GRI framework, plus alignment with the AA1000 principles of inclusivity, materiality, and responsiveness.  Both claims are attested to in conclusions from Grant Thornton.  The auditor’s statement is a limited one.  It is expressed in the negative, i.e., we found nothing objectionable.

United Airlines includes an abbreviated version of a GRI index.  The company asserts nothing in terms of conformity, and no assurance, independent or otherwise, is provided.  No wonder.  The company reports fully against only one GRI labour indicator, and partially against only two social metrics.

Qantas makes no remarks about assurance.  At this point in time, investors are pressuring the company to cut billions from its budget.  Workers fear for their jobs.  Competitor Virgin Airlines is publicly criticising government subsidies for the carrier.  Complaints are flying about an unsolicited mailing of debt cards to frequent flyers.  Don’t bother looking for any analysis of these issues in the Qantas sustainability report.

United Airlines has their own issues to contend with.  Not least of all is their decision to abandon a hub in a major city — Cleveland.  The media announced the move before the company informed hundreds of affected workers.  United is also making redundancies at airports across Canada.  Meanwhile, a newspaper revealed that salaries are so low, employees at airports in New York City have to rely on food banks and second jobs.  Don’t look for revelations about these matters on United’s corporate social responsibility pages.

Recommendations:

1. These carriers use at least four different denominators to report intensity levels of their carbon emissions.  Fine.  But can’t you also agree to use one comparable unit amongst you?

2.  Study one another’s approach to reporting.  Steal the best; jettison what’s bad.

3. Scholars and researchers say the planet cannot support an ever-increasing number of air passengers.  What do you have to say about that?  How do you factor that into your prospects?

William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters.  He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.


Note from CorporateRegister.com: This review covers four reports, but we can only link to one directly. If you sign in and search by company name you can easily find the reports reviewed above. The full company names are: Korean Air Lines Co Ltd; Qantas Airways Limited; UAL Corporation; Comair Limited.