Listen in as the head of Cathay Pacific's sustainability initiatives discusses the Hong Kong-based airline’s “greener together” philosophy.
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Rough Transcript
Karen Walker:
Hello, everyone, and thank you for joining us for Window Seat Aviation Week Air Transport Podcast. I'm ATW, an Aviation Week Network Air Transport Editor-in-Chief, Karen Walker. Welcome on board. Now this week I'm absolutely thrilled to be joined by somebody who I think of as a friend in this industry definitely. It's Grace Cheung, who is the general manager of sustainability at Cathay Pacific Airways. Grace, it's great to talk with you again.
Grace Cheung:
Hello, Karen. Hello, everyone.
Karen Walker:
Hi. Hello. Now Cathay Pacific, of course is based in Hong Kong, has a long legacy, one of the world's oldest airlines, and I'm just going to quickly put this in. I must, it's very important. Cathay Pacific has also just been named the Air Transport World 2025 Eco Airline of the Year. So congratulations to you, Grace, and of course the entire Cathay team. Being Eco Airline of course in this day and age is a very, very prestigious title. So well done. Now, sustainability, as I said, it's a very big topic in this industry, and so this is what we're going to be talking about. Grace, can you just kick us off please? Sustainability, we've had this conversation a few times, but it can't be one person, obviously. It can't really even be one airline, of course. We've sometimes talked in terms of looking at sustainability like safety, everybody's got to be involved. But as an airline, can we start off by hearing from you, what does Cathay see as the most important issues to address when it comes to sustainability? What are your priority focus areas?
Grace Cheung:
Thank you, Karen. Our next sustainability really we see as the core DNA of Cathay, because what we said is our brand's purpose is to move people forward in life. And when we talk about people, it's not just customers of today, but also our customers in future. And to ensure we are able to do that, sustainability really is a key component. So from our perspective in terms of environmental sustainability, we see two priority area. First and foremost, it's definitely around climate change, because of the jet field we use. On the other hand, material circularity economy is also very important. This is all the material our customers and our people came along when they fly with us during the customer journey, that they feel most relational and kind of really close to resonate with their own experience.
Karen Walker:
So yeah, I think that's an important part to these days. Everybody of course talks about decarbonization reducing emissions and carbon in the air. That's sort of obvious. It's also very, very difficult. But there's another very important element of this is, as you say, reducing waste and using lighter recycled materials. I've seen at Cathay, this is obviously a very important part of why you won the award, is that you take that holistic view across all parts of Cathay. The cargo side, the low cost carrier, HK Express, obviously the main Cathay Pacific Airline. But you take that very seriously I think in terms of it's got to be the whole deal, the whole package. Does that sound right?
Grace Cheung:
Yes, thank you, Karen, and you understand what we have been doing very well. So thanks for that. So in terms of material circularity, I think first and foremost we put our effort in reducing single-use plastic, because when we talk to our people, our customers, it seems to them that this is the first and foremost items in their mind that they really expect Cathay as a group to do something about, in terms of reducing our single-use plastic usage as well as finding ways to reduce the environmental impact as and when we must still use some of those items. Because to be honest, plastic is good in certain way. It's light, so for climate change perspective, it reduces the weight of aircraft and reduces carbon emissions, and it's versatile. And when we were very concerned about hygiene and the protection of goods, and customer journey is still is of good use.
So the question is can we find good quality replacement where we can, so reduce the use of plastic, as well as replacing those that are originally maybe single-use by replaceable item. So I think we follow along those lines in those direction, both replacing a lot of our single-use plastic. So previously back in 2018, when we first did our baseline research, on a per passenger basis, it was over seven pieces per passenger faces, single-use plastic at that time. After first round of reduction, we brought that down to about half, after the first three years reduction period. And our new latest target is to bring that further down to 1.5 pieces of single-use plastic per passenger by end this year, 2025. And at the same time we are also looking at increasing the ratio of remaining plastic item to use recycled plastic as a source material, as well as improving our own in-house recycling rate as well. So really creating a closed-loop economy model to encourage our upstream and downstream partner to join us in that journey.
Karen Walker:
And that was the other thing that struck me when we were looking at the detail for this award was you also seem to have a really good mindset of goals and targets, and measuring things. You don't just sort of say, "Oh yeah, we're really good at this." You've got numbers and statistics. Measuring this is very important, yes?
Grace Cheung:
Yes. I think I forgot which management guru, but someone has said this wise word of if you can't measure something, you can't manage it. So I think actually sustainability is a lot about data and management. Without a fact we can't move forward. So I think that's part of the groundwork we've been working on very hard to make sure we get the right data, so as to identify weak links and to move on from there.
Karen Walker:
Absolutely. Now can you talk a little bit about the collaboration and partnerships behind everything that you do when it comes to sustainability? That's within Cathay of course, and outside with your partners. What is happening there?
Grace Cheung:
Yes, I think collaboration is one key pillar we see and actually we like to quite greener together, because we believe that no one can really say they are green. I think every decision we make, whether it is for businesses or for individual, every decision will have some impact on the environment. The question is, can we make more conscious choices so that our decision is a greener one? And there's always room for improvement, so we can never be green enough. And this, really sustainability topic is so complex, no single organization or individual can do it alone. So only by working together we can all go greener together. So that really encapsulates our belief and approach in sustainability. So in Cathay we work on various sustainability topic, we truly believe in working with different stakeholders. So we talks a bit about single use plastic earlier, but then I may be able to talking about our main focus, the use of sustainable aviation fuel, which we believe to be the most important lever in decarbonizing aviation in the next few decades, leading all the way up to 2050.
Sustainable aviation field is very challenging, because it's still in very early stage of its industrialization process. It needs lots of investments. So we need to engage the supply chain, all the way from where those sustainable feedstocks coming from, and financial institutions, banks on how and what would make them willing to invest in this important supply chain. And of course our customers as well, whether they see the value of the use of sustainable aviation fuel, or we call it SAF, in terms of their consumer choices. So that when working with airlines and the whole ecosystem, more SAF can be used to decarbonize the whole aviation surfaces. But all this could not happen if a supportive policy is not in place, because all these billions of dollars of investments and investors and the market needs certainty in place and only a long-term stable policy with supporting measures on all these fronts could make it happen. So we have been working very closely with all these parties along supply chain, just take side customers to make sure everyone do their part, so that together we can decarbonize the aviation surfaces according to plan.
Karen Walker:
You raised a couple of very important points there. The government policies and government support, we see that as you know, it differs around the world and it seems to change also, doesn't it? Especially when it comes to SAF. Can you talk a little bit, maybe give us a few specifics of who you think of as key partners, particularly in that SAF, how to get more SAF? Because as we know, as you said, the problem is there isn't enough of it, there's nowhere near enough of it at the moment, and what there is very expensive. And airlines of course are still recovering financially from the effects of the COVID pandemic. So this is all very important and it's all tied together. So who are the key partners for you right now?
Grace Cheung:
So I think one thing as airline we see we could help unlock that supply is to find the demand, and that's why at Cathay we have launched the first major corporate SAF program in Asia, back in 2022. So how it works, our scheme is that we work with our corporate clients, because we know many of them just like us, share the commitment and share the belief that we as corporates need to do something about climate change. So these corporates are usually quite big customers. They would have quite significant carbon footprint from aviation services, whether it is the travel of their employees flying around the world doing businesses or shipping of their cargo through air freight.
So these corporates would have a lot, quite a lot of scope free indirect carbon emissions incurred. And by working with them we basically offer them the opportunity to make financial contribution for the use of SAF, not waiting until 2030, but started right then from 2022 onwards to allow us as the airline to work with SAF supplier to start buying and using, and scaling up the use of SAF. Basically putting our words in action, telling the suppliers that there is real demand there and it's not just an empty talk, but with real money on the table and hopefully by all these collaborations we can help bring more SAF supply online.
Karen Walker:
Right, okay. It's interesting, this is my perception, but when aviation really started to talk very seriously about the decarbonization, setting goals, et cetera, and started to talk about how are we're going to get more SAF, it seemed to me at the beginning of this that it was really Europe that was leading the charge. And then the United States surprised everybody and seemed to really be getting into all of this, and really became a leader. It now seems to be that it shifted, Asia is really coming on strong in this. Now of course Asia was also longer coming out of the COVID pandemic, so there was that. But is that your perception too? It just seems to me like there's a lot of activity all of a sudden going on in Asia on this and is that because people expect it, your customers expect it, what's going on?
Grace Cheung:
So I do agree with your observations. I think a lot is happening in Asia currently around SAF and I observed that coming from different angles as well. First we talked about the importance of supporting policy and as you mentioned, the European Union or UK have already long sets their SAF-related policy and is already started implementing. And on the US side they have also implemented some supportive measure in terms of the research and development, and development of supply chain, et cetera. So in Asia in recent, not even years, but in recent months, we still see a lot of consultation happening in the market that different policymakers, different states looking at different potential ways to increase and encourage domestic SAF development, whether it's from the supply chain front or from usage perspective. So we consider that to be really active and positive sign that the momentum is also moving on in this part of the world. Besides policymakers, we also see quite a lot of actions in the supply side also.
Actually lots of study. He told us that Asia is a very good location for developing future SAF, because loss of the feedstock actually comes from the region, whether it is user cooking oil, I don't know, that may be something to do with Chinese cuisine. We do use a lot of user cooking oil and that could be the very good feedstock, but also other agricultural waste with the land and agricultural activities in the region. There's also lots of good supply for the long term and even for the further down the line, the power to liquid synthetic fuel, renewable energy is also kind of both cheap and in abundance, especially in China. So I think this region is really well positioned to be the future kind of powerhouse in producing SAF and it's great to see a number of those initiatives, and even started by individual investors kind of coming up here and there in Asia.
So that's really good sign. Last but not least is the customer front you mentioned. I think what we see is that since the launch of our corporate SAF program, we do see a lot of customers, not only the launch partners, but since we launched the program that they then came to us proactively, because there are partners looking for partner airline to have their SAF footprint in Asia. So I think that's also another good sign that we are seeing that there is interest, not only about using SAF in other better developed market, but to support specific initiatives taking part in Asia.
Karen Walker:
And that's good, because as you say, there's a lot of potential across Asia, vast area, different, but lots and lots of opportunity there in terms of its resources and people, but it's also of course it's still going to be one of the fastest growing regions in terms of aviation. So these things again need to be glove in hand, working together. So good to see. Let's get to the thorny issue here, which is we've talked about the lack of the supply of SAF in terms of how much is really needed, but also of course the cost of all of this. So as we all know, IATA set the 2050 net-zero carbon goal a few years back, but recently IATA's Director General, Willie Walsh, acknowledged it may not be achievable. IATA's put the cost of this transition to be around $4.7 trillion, huge amounts of money. What are your thoughts on this?
Grace Cheung:
I think definitely there is the economic issues that need to be tackled, but I think the way I see is that the good news is airlines shouldn't be the only one be in the picture, because I think it's through the supply chain and actually through or people taking part as part of this ecosystem, whether it's the user of the aviation service, supply chain, actually we are all in it together to meeting that decarbonization challenge. Of course our discussion have been focusing on SAF, but even other technology or even other upstream R&D to bring down the cost significantly. I think that's also important and that's really beyond what airline can see through as wind control. I remember before electric vehicle becomes so popular nowadays or even when we talk about solar panel, the cost for renewable energy, the estimate not even 10 years ago, the five years ago, I think we have never imagined the price of those cleaner solution can come down so much.
So I think IATA definitely has done their homework and done their study to come up with the cost estimate. And as I understand it, that's the best estimate based on the current day technology. But I think as we can learn from all the examples in front of us to significantly bringing clean technology to be widely scaled up, the true key to unlock that potential is on the new technological development to really able to make an economic case for that transition with those economic breakthrough. I believe that the cause for future SAF production, as well as potentially other technology required to decarbonize aviation would be within reach.
Karen Walker:
So that sounds to me that you feel is still confident that the industry will get there. It sort of has to, but despite the challenges, shall we say. I know that you and Cathay executives now spend quite a lot of time also advocating for this and reaching out wider. You are talking to the other groups and organizations, and other airlines around the world, et cetera, and you're going to conferences, et cetera. Are you still getting that feeling of confidence when you are out and about outside of Hong Kong?
Grace Cheung:
I think to be honest, I think it is not so much about confidence, but I think it's about conviction, or I think it's really about industry players that everyone that I have talked to, I've met with, we really, all of us working very hard to try to get it done. And I think there are lots of things that may not be in our control. For instance, whether it is the policy that we have been talking about or the development of this much needed technology, that's not something we can have control directly, but we know. We can't give up and we know we need to continue to work hard with all these different parties to make sure we all give it our best. If we give up now, there's definitely no way for it to happen. But if we keep trying one day it will be. And I believe one day we'll all be there.
Karen Walker:
Good to hear. I like that word conviction. I think we're going to need a lot of that with this issue. But as I say, fantastic to see what you're doing at Cathay, and congratulations again on being the ATW Eco Airline of the Year. Lovely to talk with you. Thank you for your time.
Grace Cheung:
Thank you again. And that has been a great recognition and a great encouragement to all of us here at Cathay, and thank you again.
Karen Walker:
You're very welcome. Thank you also to our producers Guy Ferneyhough and Corey Hitt, and of course a huge thank you to our listeners. Make sure you don't miss us each week by subscribing to the Window Seat podcast on Apple or wherever you like to listen. This is Karen Walker disembarking from Window Seat.
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