This paper reviews the challenges facing the aviation industry and what is it doing about reducing its environmental footprint. The paper concludes that aviation industry needs to look past their traditional business model and move to a model that allows them to operate in a new global business environment which puts emphasis on environmental alignment of business goals. In the interim, the aviation industry continues to explore the issues related to alternative fuels, more efficient engine technology, better traffic management and policy mechanisms (such as emissions trading and carbon offsets) with some degree of success. The paper strongly recommends the involvement of governments in establishing ground rules to help global aviation industry to mitigate climate change risks.