Virgin Atlantic Environment Policy

Virgin Atlantic
Environment Policy

A message from Virgin Atlantic’s CEO, Steve Ridgway:
Virgin Atlantic is embedding sustainability at the core of our business.
We recognise the growing impact air travel has on the environment,
and are seeking to address this as best as we can. There are many
projects in place across the business to make this a reality, both in the
air and on the ground.

Our recent commitment to invest up to $8bn in the most efficient
aircraft available for our routes, is a move that will help us to achieve an improvement in
our fuel efficiency by 30% by 2020. We have also forged a dynamic partnership with Boeing
to help explore sustainability opportunities and, in 2008, this partnership will allow us to
commit to the first ever biofuels demonstration in a commercial aircraft.

This is all supported by Sir Richard Branson’s commitment to invest his profits and
proceeds from the Virgin transport companies, including Virgin Atlantic, in biofuels
research and development and projects to tackle global warming.

We want our customers to feel sure that we are making every effort to become the most
sustainable airline in the world and to reduce the impacts of aviation on our environment.

regards

Steve

The aim of this policy is to communicate our key environmental policies and
targets. We will provide twice yearly updates on our progress against these
targets, fixed on a 2007 baseline, and they will be verified by third parties.
We believe that a sustainable business is one which can continue to satisfy the
needs of its shareholders and customers while acting responsibly toward the
environment and the communities in which it operates.

While this policy deals solely with the environmental impacts of our business,
our journey to becoming a more sustainable company is also closely linked with
our social and ethical responsibilities. These will be detailed in a separate policy
that is currently being reviewed.

1   Climate Change and aviation
    Aviation is a relatively small but growing contributor to man-made carbon greenhouse gas emissions.
    The Stern Review, published by the UK Government in 2006, predicts that aviation’s contribution to
    global greenhouse gas emissions will rise from 1.6% to 2.5% by 2050. These emissions are produced
    by the burning of fossil fuels, which power our aircraft jet engines. There are also suggestions
    that because the majority of these emissions are released at a high altitude during a flight, these
    emissions may have a bigger impact than if they’d been released on the ground. Climate change
    scientists are still debating this issue. As an airline, we take the any environmental impact of our
    operations very seriously. Given there is widespread scientific consensus that carbon dioxide emissions
    are a key contributor to climate change, we have chosen to address this as a key priority in this policy.

2   Our Aircraft
    The fuel burnt by our aircraft is the main contributor to our emissions, so this is the area where we are
    currently focussing most of our efforts. As a growing airline, we won’t be able to achieve an absolute
    reduction in our overall emissions in the near future, but we are committed to growing our fleet in the
    most sustainable way possible by investing in the least polluting aircraft available and flying them as
    efficiently as we can.

    We already have a young and fuel efficient fleet and operate these to best practice standards, which
    means we’re already starting from a strong position in terms of our fuel efficiency. We have set 2007 as
    our baseline so that we don’t take advantage of incremental improvements over the past decade that
    would have happened anyway. This gives us an even more ambitious goal within a tight timescale.

    We have worked with an independent emissions verification specialist to audit the carbon footprint of
    our aircraft operations and will be publishing this and a report on progress against our emissions
    efficiency targets twice yearly, on our website.

    Target: To achieve a 30% improvement in fuel efficiency per revenue tonne kilometre
    between 2007 and 2020
    Revenue tonne kilometre (or RTK) is a standard aviation industry measure of efficiency. In simple terms,
    we want to achieve a 30% reduction in the amount of fuel needed - and therefore emissions
    generated - to carry each tonne of passengers and cargo one kilometre. This will be made possible
    through:

    a. A fleet renewal programme. We are investing in fuel efficient aircraft best suited to our
        operational model. We recently ordered 15 Boeing 787-9 Dreamliners, which burn around 27% less
        fuel per flight than the A340-300s they will replace. http://www.boeing.com/commercial/787family/

    b. Focussing on fuel efficiency, our internal Fuel Panel has a target of saving 7000 tonnes of fuel
        (that’s more than 21,000 tonnes of CO2) in 2007/2008. This is equivalent to the emissions produced
        by 7119 cars in the UK each year. The Fuel Panel, which meets monthly, is made up of pilots,
        engineers and other technical experts from our Flight Operations team. They will achieve their goal
        through initiatives such as engine compressor washing (which allows the aircraft engines to
        operate more efficiently), and educating pilots on more fuel efficient procedures for take off
        and landing.

    c. Reducing unnecessary weight from our aircraft. We have a cross-company group of experts who
        meet monthly to identify where we can make weight savings across the business. They have a
        target to remove one tonne per aircraft for 2007/2008, and this will be achieved by removing
        unnecessary items, using lighter-weight alternatives and new materials for onboard products. Each
        tonne of weight removed from just one of our aircraft saves over 420 tonnes of carbon dioxide
        emissions per year. Key to this challenge is working with the aircraft interior manufacturers to
        deliver lightweight high quality products that have a good maintenance life cycle on all our
        new aircraft.

    d. Encouraging and engaging with all relevant stakeholders (national governments, air traffic
        management service providers, international organisations) to take forward opportunities for air
        traffic management efficiency gains - e.g. Single European Sky.

3   Localised environmental impacts
    As well as the climate change impacts of aviation, we also have a responsibility to communities living
    around our airports to operate as quietly as possible and to improve local air quality.

    In recent years, there have been major advances to make aircraft quieter and through the Sustainable
    Aviation Strategy, the industry has committed to a further 50% reduction in total noise energy for
    aircraft entering into service in 2020, compared with 2000 equivalents.

    Nationally, the number of people adversely affected by aircraft noise has fallen by 60,000 since 2000.
    Virgin Atlantic’s own fleet substantially improves on international noise certification standards. In fact
    our current fleet of 37 aircraft produces less noise energy in a full year’s operation than it did in
    2001/2002, when there were 10% fewer aircraft.

    The landing and take-off cycle (LTO) has the most immediate impact on communities who live near
    airports. This is the stage where most fuel is consumed proportionate to the distance travelled.

    Since 2001/02, Virgin Atlantic has seen a downward trend in CO2 emissions and Unburned Hydrocarbons
    (UHCs) in the LTO cycle, a trend that is expected to continue through 2007 and 2008. This is largely the
    result of our pilots operating to industry best practice, including idle power descents, minimising fuel
    used and the strain on the engine.

    Unfortunately, as we introduce more modern aircraft, we have seen a reduction in CO2 emissions at the
    expense of NOx. Current technology does not allow CO2 emissions to be reduced without increasing
    NOx and the immediate objective of the industry has been to concentrate on reducing CO2. We are
    confident that with the Sustainable Aviation Strategy commitment of improving NOx efficiency in new
    aircraft by 80% between 2000 and 2020, this issue will be fully addressed.

    One of the ways we improve fuel efficiency is by regularly washing our aircraft. This has a real impact on
    their weight and aerodynamics. Pollutants and contaminants removed from the aircraft during washing
    are not simply flushed into the local water table. With the BAA we have established a water treatment
    plant at our Heathrow Hangar, into which the water used for cleaning aircraft is drained and the
    contaminants removed. During 2008 we’ll be looking at facilities we used at other airports to make sure
    any adverse impact on local ground water quality is minimised.

4   Energy
    Although most of Virgin Atlantic’s impact on the environment is caused by aircraft operations, we’re not
    forgetting what happens on the ground. Therefore, in partnership with the Carbon Trust, we are
    undertaking an energy review to establish the carbon footprint of the day-to-day activities in our
    offices, aircraft maintenance facilities and airports, and to help us identify opportunities to reduce it.
    These results will be published on our website.

    Target: By 2020, we will generate all the electricity required for our main UK sites. By
    2012, we will reduce our consumption by 10% and by 2020 we will reduce it by 20% at
    all Virgin Atlantic-controlled sites around the world.

    At all of our main UK sites we currently buy electricity from renewable sources, but even so we are
    committed to reduce our usage through;

    a. Staff education on energy saving initiatives
    b. Investing in cost effective energy saving devices and appliances
    c. Identifying opportunities for efficiency gains in key areas such as heating, cooling, lighting
        and engineering processes

5   Natural resources
    Target: To make a 10% reduction in our water use by 2012 at Virgin Atlantic-controlled
    sites around the world.

    This target will be achieved through:

    a. Identifying and implementing cost effective ‘quick wins’ including retro fitting water saving devices
        to taps and toilet cisterns, and staff education programmes to help save water.

    b. Investigating the possibility of reusing grey water within our existing building portfolio and making
        this a key factor in future construction or major refurbishment projects.

    Target: 25% reduction in paper consumption for each full time member of staff
    by 2012.

        We already use recycled paper throughout our offices and so our focus is on reduction.
        We aim to do this through:

    a. Staff education
    b. Duplex printing as standard
    c. Reusing waste paper, etc
    d. In the long term, working towards being a paperless office.
    e. Reviewing our marketing materials to ensure we are using the most environmentally friendly
        materials and moving toward more electronic means of communication.

6   Waste
    Our main priority is to reduce the amount of waste we generate in the first place. This is being
    addressed through a series of internal campaigns and initiatives to secure staff buy-in. We’re also
    addressing this issue by taking a closer look at the materials we use. By sourcing products which use
    fewer materials, or which can be reused or recycled and by choosing materials that are recyclable,
    biodegradable or renewable, we will have a significant impact on the amount and type of waste we
    currently produce.

    Target : 50% of the waste generated by the end of a flight will either be recycled or
    reused by 2012

    Target : 50% of waste from our ground operations will be recycled or reused by 2012

    We’re working very closely with airport operators around the world to make sure we can recycle as
    much waste as possible from our aircraft. We already have in place a comprehensive recycling scheme
    at all our main UK office and maintenance sites, and this will be reviewed continually to ensure we’re
    constantly cutting down on the amount of waste we send to landfill.

7   Our business travel
     Like most large companies (and as an airline in particular) our staff spend a lot of time travelling around
     the world on business. As part of our carbon footprinting exercise, we are measuring carbon emissions
     generated by travel (surface and air) on company business. We’ll also be identifying opportunities to
     reduce these emissions through communication technologies, cleaner vehicles, alternative means of
     transport and agreeing a company-wide policy on the least polluting transport for all business travel.
     In 2007, some of our Heathrow staff trialled the G-Wiz electric car and we’ll be looking at other
     opportunities to use renewable fuels for vehicles on the ground, particularly at our airports where
     improving local air quality is a priority.

 8   How we get to work
     Virgin Atlantic already has in place a travel-to-work plan, which provides discounted alternatives to
     driving. We are keen to improve on this initiative and to set robust targets for reducing single car
     occupancy journeys to work. Opportunities such as piloting a remote working initiative, car-sharing
     schemes, further discounts on public transport and other incentives are currently under review.

 9   Emissions Trading Scheme (ETS)
     Virgin Atlantic supports the overall objectives of ETS. These are to use a market-based mechanism to
     achieve cost effective carbon emission reductions and encourage businesses to invest in newer, cleaner
     technologies. Therefore, we will continue to push for an international emissions trading scheme, based
     on the EU ETS model proposed by the Commission with a robust cap on emissions; prepare the airline
     for participation in emissions trading; and build the external cost of carbon into future business
     decisions. Unlike environmental taxes and revenues generated through auctioning carbon permits, this
     market-based solution will achieve guaranteed environmental benefits.

     As part of our preparations for emissions trading we have carried out a carbon baseline verification
     pilot with independent specialists CICS and we make sure the potential price of carbon emissions under
     ETS is taken into account in all future business decisions.

10   Air passenger duty
     We believe our passengers have the right to know how their additional air passenger duty charge is
     being spent and we urge the government to release details of the environmental projects supported by
     this duty. This is particularly in light of the recently announced consultation on changing the way that
     this duty is levied and linking it more closely to the environmental performance of airlines.

11   Catalyst for industry innovation
     Our aim is to challenge key suppliers and other industry stakeholders to develop innovative solutions to
     address aviation’s impact on climate change and other aspects of our environmental footprint. In 2008,
     in partnership with Boeing, Virgin Green Fund and engine maker GE Aviation we will be carrying out a bio-
     jetfuel demonstration. This will be a worldwide first for a commercial airline.

     We’re also working closely with industry and Virgin Green Fund to understand how biofuels can become
     an environmentally sound and truly sustainable long-term option for aviation.

We will maintain pressure on the UK government as well as other countries around the world to play
     their part by improving air traffic management systems, which have an effect on fuel efficiency. A good
     example of how successful this could be is through the potential efficiency gains achievable through the
     Single European Sky initiative, which could result in a 12% fuel efficiency improvement for the industry.
     We will continue to work with our partners in air navigation services and other industry stakeholders to
     take forward interim initiatives (e.g. collaborative decision making) that will provide shorter-term air
     traffic management efficiency gains.

12   Sustainable procurement
     Target - To map the key supply chain of our major products and embed sustainable
     procurement practices during 2008.

     For all UK staff with a key responsibility for procurement, we will be providing in depth training on
     sustainable procurement practices and will be including sustainability criteria into our internal briefing
     and prioritisation documents and tools.

     We will also be communicating our environment policies and sustainable procurement practises with our
     supply chain, and plan to audit our key suppliers on these principles. This will help us to ensure all of our
     new onboard products are more sustainable than those they replace.

     For example, we will be requesting that where possible our suppliers:

     * use re-usable, recyclable, or biodegradable materials and products
       minimise their use of natural resources and where they do use them ensure they are from sustainable
     * or renewable sources
       use materials and products which use minimal energy to produce, and have minimal impact on the
     * environment on their extraction
       provide us with products which are durable and long lasting, so they will not need to be replaced
     * as often
     * minimise   the transportation of our products to us
     * reduce   the amount of packaging on our products
       ensure the people who make our products have good working conditions, are fairly treated and are
     * paid a living wage

     Virgin Atlantic currently serves Fairtrade tea and coffee onboard all flights and in our Clubhouses, and
     we hope to extend this to other Fairtrade products in the future.

13   Customers
     Target: 100% of our marketing materials will be printed on recycled paper or paper
     from sustainable sources by 2008

     We already use recycled and/or sustainably sourced paper for most of our marketing materials, and we
     have also been experimenting with biodegradable laminates and other innovative products. Our target is
     to ensure we can achieve this standard in all of our offices globally and of course keep reducing our use
     of paper where possible. One example of this is our switch to eticketing, which we now use for about
     99% of our passengers who book directly with us.

     Target: Our aim is to inspire and empower our customers on the issue of climate
     change.

     We will do this by providing information, offering the most sustainable service possible, and supporting
     customers to reduce their own environmental impact.

One way we are engaging our customers on climate change is through our Gold Standard carbon offset
     scheme, where passengers can offset the carbon produced during their flight, online when they buy
     their ticket, or onboard when they buy their duty free. We have calculated the exact emissions each
     passenger is responsible for, in each class, on each of our flights and had this verified by an independent
     body. We are working with a charity called myclimate to ensure our passengers money goes towards
     supporting Gold Standard renewable energy projects, which not only guarantee the carbon is offset but
     also that the local community and local environment benefit too.

     Our scheme will ensure the majority of our customer’s financial contribution will reach the projects
     Another way we engage our customers is through our website, where we aim to provide the latest
     information on climate change and what we are doing to reduce our footprint.

     In the future, we’ll also be adding tips for customers on how they can reduce their own carbon
     footprints, and have fun at the same time.

14   Staff
     At Virgin Atlantic we’re always keen to involve our staff and we recognise they are pivotal in achieving
     our environmental targets. So to engage and inspire them about all things environmental, we’ve been
     undertaking a number of key initiatives.

     We currently produce regular staff communications on the activities outlined in this policy and on key
     environmental issues. We also provide employees with lots of information about how they can actively
     reduce their own footprint both at home and in the office. Plus, we will be recruiting champions from
     each business area to help us get staff interested and excited and achieve our targets on the ground.

     We’ve also been asking people for their ideas on how they think we can best reduce our footprint in their
     area of the business…some have been slightly off the wall, many have been great, but all of them have
     been very insightful!

15   With a little help from our friends
     We are delighted that our approach to environmental issues is being supported across the whole range
     of Virgin Atlantic services. Not only does Sir Richard Branson agree with the focus and pace of our
     environmental initiatives, but our programme of change is supported by our Chief Executive,
     Chief Financial Officer and Chief Operating Officer. This policy and our targets have been agreed
     between Senior Managers and Directors, and it is now the responsibility of all business areas to take up
     the challenge and play their part in improving Virgin Atlantic’s environmental performance.

     With the support of passengers and staff, we’re confident that the ambitious targets we’ve set can be
     met, and that Virgin Atlantic will become the most sustainable airline in the world.