Virgin Atlantic improves fuel efficiency through behavioural economics
Virgin Atlantic has found that providing pilots with personal performance targets and telling them that their fuel performance was being monitored, significantly improved fuel efficiency. Behaviour changes resulted in a 21,500 metric ton reduction in emissions, and a saving of $5.4m, over eight months. The majority of changes resulted from the so-called Hawthorne effect, the consciousness of being monitored.

An estimated 21% of carbon emissions in the United States are attributable to companies, and yet to date there is scant research on how to make firm operations more efficient in terms of reducing pollution. However, the numbers suggest that getting employees to change their behavior could significantly impact climate change. So we partnered with Virgin Atlantic Airways on a field experiment to understand how the behavior of employees—in this case, airline captains—influences fuel efficiency, and how low-cost company interventions can influence their behavior.

Studying 335 captains across 40,000 flights, we found that informing captains that their fuel performance was being monitored and giving them personalized performance targets dramatically increased their fuel efficiency—in other words, they made flying decisions that made the operations more efficient. Changes in their behavior led to both lower carbon dioxide emissions (by 21,500 metric tons) and an estimated $5.4 million reduction in fuel costs for the firm over the eight-month study period. Clearly, positive environmental impact can be quite profitable.

For many years, teams at Virgin Atlantic have been testing ways to motivate efficient decision-making in the cockpit. They had identified three important and measurable behaviors that capture captains’ fuel-related decision making during pre-flight, in-flight, and post-flight phases: (1) calculating and implementing the correct amount of fuel needed for the flight prior to takeoff (this was called “Efficient Fuel Load”); (2) using fuel efficiently during flight, for example by flying at optimal speeds and altitudes (“Efficient Flight”); and (3) turning off at least one engine when taxiing to the gate after landing—an action that is not mandated but saves fuel (“Efficient Taxi-In”).

At the end of 2013, we randomly allocated the captains to three treatment groups and one control group, and in January 2014, all captains were told that their flight and fuel behavior would be monitored for the next eight months. From February to October 2014, each captain in the first treatment group was given a monthly summary of his or her flight performance, which included the percentage of flights flown in the prior month in which they completed the aforementioned three behaviors—this was the feedback group.

Captains in the second treatment group received this performance information, as well as a personalized monthly performance target that was 25% above their pre-experiment baseline performance. (For example, a captain achieving Efficient Fuel Load on 20% of flights prior to the experiment would receive a target for achieving 45%. These targets were capped at 90% to allow captains some psychological flexibility.) This was the targets group.

The third treatment group received monthly performance information, targets, and an incentive for achieving their targets (£10 donated to the charity of choice per target achieved)—this was the prosocial incentives group. These interventions were sent to the home address of each captain in the middle of every month for eight months.

We analyzed how captains responded to these interventions by looking at data from more than 40,000 flights during 2013 and 2014, and comparing the behavior of each captain before and after the study began. We found that:

The vast majority of captains, from all groups, engaged in more fuel-efficient decision-making, such as optimizing in-flight procedure and fueling precision. This suggests that informing captains that their behavior was being monitored significantly improved their performance. This is consistent with a well-documented social science phenomenon called the Hawthorne effect, whereby people change their behavior as a result of knowing they are being observed.

Challenging captains to meet higher performance targets proved to be the most cost-effective intervention. Those in this group demonstrated improved fueling precision, in-flight efficiency measures, and efficient taxiing practices by 9% to 20%, at an extremely low cost to the study administrators. We attribute this strong effect to a challenging of the captains’ status quo: by changing the expectation for satisfactory job performance, captains successfully adjusted their habits to meet it.

Contrary to prior studies that have suggested that prosocial incentives can lead to increased effort, our intervention of offering charitable contributions for meeting targets did not lead to more behavior change; the fuel efficiency improvement in this group was very similar to that in the targets group. Importantly, however, captains in this group reported 6.5% higher job satisfaction than captains in the control group in a post-study questionnaire.

Most of the gains came from what we identified as the Hawthorne effect – the sheer awareness of being monitored influenced captains’ fuel efficiency dramatically, whether in the control group or in any of the treatment groups. In fact, a vast majority of captains improved on those three fuel-relevant behaviors immediately once the study began. Receiving targets for achieving them provided additional motivation above and beyond the observed Hawthorne effect, leading to increased implementation of the pre-flight, in-flight, and post-flight behaviors of 4, 18, and 22 percentage points, respectively.

We estimate a fuel cost savings of $5.4 million for Virgin Atlantic, resulting in reduced emissions of more than 21,500 metric tons of carbon dioxide (CO 2 ) over the course of the study. Moreover, our study appeared to induce a longer-term change in habits, as the captains continued to demonstrate these fuel-efficient behaviors after the study ended (for at least six months).

As these behavioral interventions were practically costless and still resulted in large value savings, we estimate that Virgin Atlantic saved about $250 for each metric ton of CO 2 abated. For comparison, the lowest-cost technology aimed at reducing carbon emissions—efficient residential lighting—saves the economy approximately $180 per metric ton of CO 2 abatement. As policymakers and firms are grappling to introduce policies to combat climate change, this study clearly demonstrates the potential of influencing employees to make subtle behavioral changes that can improve energy efficiency. The study did not increase captain absenteeism, nor did it increase flight times, which provides further support for the position that such behavioral interventions can provide gains on a number of workplace dimensions without producing negative effects.

Academics, companies, and policymakers should look for similar partnership opportunities as they can provide low-cost solutions to issues such as air pollution and climate change. Capitalizing on the knowledge and methods emanating from the burgeoning field of behavioral science, these partnerships can achieve a private sector trifecta: increased profits, heightened employee well-being, and beneficial environmental impact.