Signs of Real Action over Climate Change

The Doha Climate Talks have proved to be as useless and toothless as was expected. I will leave other commentators to analyse what was, and was not, achieved; I would prefer to look for signs of real action. Two business stories grabbed my attention as possible indicators of real progress. The first is about AIG’s attempt to sell its aircraft-leasing division to a consortium of Chinese bidders. The second story is about Richard Branson’s efforts to offload his ownership in Virgin Atlantic after talks this weekend. These could indicate that change is finally on the way in aviation, the bête noir of environmentalists hoping to see progress with climate change.

In the book Fly and be Damned I present aviation as the Litmus test of when world leaders finally grasp the nettle and take action to limit the damage of excess carbon dioxide emissions.  The required action is simple for the politicians, and will transform the industry for the better and a much improved passenger experience — but the current industry will suffer. Aircraft leasing companies will be hit particularly hard, as the book value of aircraft is slashed for all but the newest most efficient aircraft immediately it becomes clear that action is likely.

Richard Branson and the management of IAG are shrewd business people (and may have read my book). They can see that to sell now before their peers reach the same conclusion is a sensible business decision. For those who are looking to buy these stakes, they can look forward to fame in cases studied in business schools showing how you can get caught through failing to read correctly the winds of change. In hindsight, it will seem so obvious but it will not be the first time investors have been stung by buying in just before the collapse.

I wish Richard Branson and Bob Benmosche, CEO and AIG the best of luck; they deserve to profit from making the first move towards a sustainable aviation industry. For the prospective investors, ‘buyer beware’.