Aviation production adapts to California greenhouse gas regulations

The aviation sector is moving towards carbon neutrality and an increasingly stringent regulatory environment amid concerns over recent aircraft safety failures during flights.

Aerospace manufacturers faced rising costs due to labor shortages, IT investments and the need for higher quality materials. Now they have the added burden of complying with regulations like California’s new greenhouse gas regulations and the Securities and Exchange Commission’s new climate-related disclosure requirements. This combination of factors puts unprecedented pressure on the sector, setting the stage for a period of intense transformation.

Over the past two decades, aircraft safety failures have led to significant changes in Federal Aviation Administration (FAA) safety regulations. These changes included additional training requirements and updated processes and technologies to meet the administrative burdens associated with the new standards, further increasing costs for original equipment manufacturers (OEMs). Currently, the FAA is “finalizing new rules requiring charter operators, commuters, air tour operators and aircraft manufacturers to implement a key safety tool aimed at reducing accidents,” Reuters reports. “Since 2018, U.S. airlines have been required to have SMS (safety management systems), and some aerospace companies already have SMS programs on a voluntary basis.”

The current landscape

Aerospace OEMs have begun to recover from the hit they took at the beginning of the pandemic, and air travel trends returned to pre-pandemic levels last year. According to the International Air Transport Association, the aerospace and defense industry saw a renewed increase in demand for products in 2023, with air travel in the fourth quarter reaching almost 98.2% of 2019 levels. IATA predicts that in 2024 the number of people traveling by plane will reach 4.7 billion, an increase of approximately 9% compared to 2023 and almost double the long-term forecasts compared to the previous year.