Get 14 Days Free
My mate Steve at financial services consultancy The Lang Cat knows the score. A recent returnee from an early Summer getaway, he tweeted a few weeks back that flying was the single worst customer journey available. I heartily agree. And that’s in the best of times.
Even when it goes well, flying is stressful and physically exhausting. On paper, the process is bizarre: suspend 300-plus human beings in the air at high speed in a sealed metal tube, and attempt to feed and water them for however long it takes for the iron bird to plant its rubbery talons firmly back on the runway of another airport. Again, that’s a good day.
At its worst, flying is a veritable assault on your comfort, dignity, and wallet. Of course, the rip-offs begin before you get to the airport (see my previous column about anti-nudges and airline websites). Then, on the day itself there is the inevitable tension over what time you should leave. Naturally, sod’s law dictates the early birds among us will be met with delays on arrival, emphasising how insane it was to leave that much of a buffer to drop bags and go shopping in W H Smith (no relation of mine) for things you could’ve bought last week at half the price.
And all that assumes you even make it off the tarmac.
God forbid you go through the stress of a cancellation, like the thousands of passengers who, in the past two weeks, have been told they’ll either a) get less time on holiday or b) no holiday at all. Those people are rightly entitled to compensation (more on that below), but swerving that issue for now, I’ll get to my point.
This year has already afforded plenty of opportunities to re-examine ESG. Chief among them was war in Ukraine, which near enough immediately prompted commentators to ask whether it was now an ethical imperative to let ESG funds invest in arms stocks for the sake of national security and broader foreign policy objectives.
As I’ve said, I think that way of looking at it lends power to the arms of greenwashers who neither need nor deserve your money. That said, it’s still interesting to consider ESG from new angles.
If we’d have chatted in January about airlines’ primary ESG liability, I’m sure we would’ve agreed on the major one: the environment, and, specifically, carbon emissions.
Though the rise of carbon reporting is undoubtedly a good thing (it still takes me somewhat aback when I see headline emissions at the top of airline companies financial results), transparency is very different from change.
Around 2.4% of global carbon emissions come from the world of aviation. The commercial aviation world itself acknowledges that its contributions to the problem have been rising: specifically, a 32% rise in emissions between 2013 and 2018. The pandemic very much put all that on a pause, but, as we explored this week, the strain on balance sheets means investors very much appear to be more worried by profits than they are penguins.
Profits and penguins aside, though. What about people?
One angle of looking at airlines’ ESG liability is their behaviour towards the human beings who use their services. In the last month there have been some truly shocking examples of unethical behaviour.
Last month, a wheelchair user was abandoned on a Ryanair flight at Manchester Airport for more than two hours. Daryl Tavernor, who has muscular atrophy, was finally helped off his plane at 4:40am, but then faced an abandoned border control area, which he only managed to clear after, erm, calling the police. Yes, you read that right. One wonders at what point his airline no longer thought he was its problem.
The police have stepped in on other occasions too. Last month, cops at Manchester airport were tasked with informing dozens of TUI passengers that they wouldn’t be going on holiday. For the record, they appear to have done rather well at conveying the message, but that’s hardly the point. It wasn’t their job.
So, after failing in both their duty of care to vulnerable customers (one might argue every passenger is vulnerable in chaos of that kind), and their clear duty to own up to errors without outsourcing the messenger role to an already-under-strain public sector service, one wonders whether a drubbing in front of the parliamentary transport select committee beckons for said airline bosses, who have already faced the wrath of the Department for Transport for over-selling tickets they couldn’t fulfil.
The former will certainly be more painful, given the explosive rhetoric directed by MPs at the boss of P&O ferries, who was asked in March if he was a “shameless criminal” over its sudden sacking of hundreds of workers. No doubt there are similarities in the two cases, and you may well feel some sympathy for a travel industry so embattled as a result of the pandemic. But it’s no real excuse, is it? Not when so much consumer cash lands in their coffers: hundreds, nay thousands of pounds, a pop. Whether they view that as an “S” or a “G” issue (it’s both), it’s bad in my book.
I am now moaning, so I’ll move on. To be clear, the environment will always be airlines’ biggest ESG liability. What’s more, there are plenty of arguments that place the imperative of not flying – or not flying as much – squarely on the shoulders of the people those businesses routinely mistreat: the customers. Don’t book as many flights and supply will start to ebb away. I do buy this argument. I’ve never been guiltier about getting on a plane than I am now. Good!
Is the maltreatment of customers a good thing for the environment, then? It’s a bit of a leap, particularly given the low-carbon travel industry of the future is still going to need customers if it wants to stay commercially viable.
Nevertheless, it says a certain amount that, having watched all this unfold, I would almost rather be an investor in an industry some ESG analysts believe is “stranded”, than a consumer of its services. If you needed another reason to run for the gate and leave, they certainly just handed you one.
Ollie Smith is UK editor at Morningstar
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person’s sole basis for making an investment decision. Please contact your financial professional before making an investment decision.
We may not be anywhere near peak chaos yet
Despite a formidable list of reasons never to get on a plane again, people still have
First the mob came for critical race theory, now it’s come for ESG
Mining companies are operating in a challenging environment but could now be the time to top up o…
THE WEEK: Morningstar columnist Rodney Hobson provides two pieces of advice to George Osborne, an…
Businesses that have competitive advantages within their industry are good candidates for dividen…
Morningstar reveals the top 10 best performers over the last five years
Morningstar OBSR reveals the top funds for investors seeking exposure to European equities
There’s still room for this software to run
From private equity to potential PMs, we’ve got you covered with another news round-up
Tune out the stock shillers and the well-meaning friends and family. Now is the time to define wh…
The undervalued stocks of high-quality companies are compelling investments today
Private investor Laura Cleaver is looking to rebuild her investments to ensure she has both short…
Ollie Smith is editor of Morningstar UK
Connect With Us
The Morningstar Star Rating for Stocks is assigned based on an analyst’s estimate of a stocks fair value. It is projection/opinion and not a statement of fact. Morningstar assigns star ratings based on an analyst’s estimate of a stock’s fair value. Four components drive the Star Rating: (1) our assessment of the firm’s economic moat, (2) our estimate of the stock’s fair value, (3) our uncertainty around that fair value estimate and (4) the current market price. This process culminates in a single-point star rating that is updated daily. A 5-star represents a belief that the stock is a good value at its current price; a 1-star stock isn’t. If our base-case assumptions are true the market price will converge on our fair value estimate over time, generally within three years. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Morningstar Star Rating for Stocks, please visit here
Quantitative Fair Value Estimate represents Morningstar’s estimate of the per share dollar amount that a company’s equity is worth today. The Quantitative Fair Value Estimate is based on a statistical model derived from the Fair Value Estimate Morningstar’s equity analysts assign to companies which includes a financial forecast of the company. The Quantitative Fair Value Estimate is calculated daily. It is a projection/opinion and not a statement of fact. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Quantiative Fair Value Estimate, please visit here