Identifying the determinants of carbon emissions of individual airlines around the world

Increasing global demand for flights coupled with a focus on mitigating climate change will soon see the introduction of more stringent policy governing carbon emissions from aviation. Airlines face the challenge of catering to increased demand while achieving carbon reductions. We implement Log-Mean Divisia Index (LMDI) Modelling to identify the most influential factors of contributing to carbon emissions of airlines. We find that changes to capacity account for at least 40% of the changes in emissions for most airlines. We subsequently conduct decoupling analysis to investigate the extent to which individual airlines have been successful in breaking the link between expanding scale and carbon emissions and suggest ways to achieve a desired decoupling state. LMDI at the micro level is more informative in this instance as airlines will be better equipped to achieve the optimal balance of servicing the market while simultaneously reducing emissions to comply with forthcoming policies.