The Flight Path: What’s next for aviation?
Airlines can focus on fuel efficiency today, whilst accelerating the development of the airplanes of the future
🌎 TL;DR
Aviation is an important part of the global economy. The volumes of passengers and freight rise year-on-year and each aviation job supports 24 more. However the industry is also responsible for 3% of total global carbon dioxide emissions. Given the industry also runs on notoriously thin margins, here are changes airlines can make to reduce both operating costs and environmental impacts, and keep customers loyal in the process.
🛫 A pre-take off briefing about the industry
Commercial airlines tend to lease about 80% of their aircrafts. This provides flexibility to build fleets that match customer needs, and to take advantage of new technologies coming to the market.
Of the many ‘levers’ that airlines can prioritise, reducing fuel consumption is one which can save on both operational costs and environmental impact. Reduced costs can translate to lower prices for customers, something that every airline is aiming for.
Fuel can be between 16-30% of airline costs. It is possible to buy futures contracts to lock in costs, although some prefer to take advantage of fluctuations. Those remaining flexible have seen prices more than doubled over the past year, much due to Russia's invasion of Ukraine.
Climate change is also increasing fuel consumption as increased air temperatures reduce the air density and require planes to work harder.
And some mandatory carbon offsetting might come into play next year if the UN gets its way.
🛢️ So what are the actions that airlines can take to reduce fuel consumption in the short-term?
💺 1. Choosing more energy efficient aircrafts for their fleets
Energy efficiency is best seen by comparing fuel burn per seat: the more efficient the aircraft, the less fuel consumption per flight. Some of the ways to increase aircraft efficiency include:
Improved aerodynamics: Aircraft designs can reduce the drag of an aircraft such as reshaped wings, the addition of winglets (the curves on the end of wings), adding low-drag tires and improved wheel designs.
Using advanced materials: Using planes with advanced composite materials such as carbon fiber and titanium to reduce aircraft weight
Improving engine efficiency: Engine manufacturers like General Electric Aerospace have achieved 10% lower fuel consumption and 50% nitrous oxide on previous engines, through design improvements like reduced fan blade thickness
An example of comparing fuel efficiency on 2017 transatlantic operations,
Source: The International Council on Clean Transportation
🎛️ 2. Optimizing fleet operations
Operational inefficiencies lead to delayed departures (and increased fuel consumption), and costs for customer disruptions or airport fines. To reduce these, airlines can double down on:
Fleet optimization: selecting the best mix of aircraft types and sizes for an airlines routes and demand to ensure full capacity
Optimizing flight paths: Using data analytics to find shorter or more direct routes
Using new technologies: Ensuring optimal performance with minimal fuel burn such as using Automatic Dependent Surveillance-Broadcast (ADS-B) equipment to help automate decision-making.
🛂 3. Pushing for more streamlined airport operations
It’s not just for airlines, airports also have a role to play to ensure airlines can maximise their work.
Optimizing air traffic management: Airports like Heathrow in the UK and JFK in New York can often reach their airspace limit. Optimizing airspace capacity reduces time planes spend circling in the air. The Single European Sky ATM Research (SESAR) project is an example of a public-private partnership to completely overhaul European airspace and its air traffic management (ATM)
Improving airfield operations: This decreases the time aircrafts spend on the ground waiting to load and unload. SmartKargo is an example company helping airlines to optimally manage their cargo supply chains.
💸 4. Taking advantage of green premiums
Airlines are big spenders, needing aircraft leases, operating costs, and insurance. Banks are catching on to the opportunity to finance the fleets of the future.
Green financing: This can help with buying and leasing more efficient aircrafts. In December 2019, Singapore-based lessor Avation acquired three ATR 72-600s to replace aging planes on the basis of financing by Deutsche Bank which was stated to be the first ever commercial aircraft financed with a Green Loan.
Sustainability-linked loans: In February 2020, JetBlue Airways was added a loan to their existing revolving credit facility with BNP Paribas, which includes a two-way interest rate ratchet depending on whether ESG targets are achieved.
Green insurance premiums: These provide lower premiums and risk coverage for newer, greener aircraft and engine technology
⏱️ And what about the [slightly] longer-term options for airlines?
🔋 5. No-fuel aircrafts
Hydrogen, electric and hybrid-electric planes are in development, but will take some years to commercialise. Innovations to look out for include:
Boeing has pre-purchased 2,100 metric tons of "carbon-negative" hydrogen from seawater electrolysis company Equatic for its cleaner jetfuel.
ZeroAvia completed a successful test flight of the largest aircraft to be powered by a hydrogen-electric engine
Dutch company Maeve Aerospace promises to fly 450+ kilometres on a single charge, whilst Swedish Heart Aerospace is developing a regional electric airplane
Even Easyjet is betting on hydrogen planes for its future rides
🌽 6. Developing alternative fuels aka Sustainable Aviation Fuels (SAFs):
This is a tricky topic.
SAFs are made by converting organic materials such as agricultural waste, industrial by-products and biogas into a form of fuel that can be used by aircraft. Although SAFs still produce carbon emissions, these are much lower than traditional jet fuels.
Ryanair boss Michael O’Leary stated this wouldn’t be a thing ‘in my lifetime’ whereas Delta wants it to make up 95% of fuel consumption by 2050.
Today SAFs can cost two to five times more than conventional jet fuels so needs significant progress to be available at volume and cost the industry demands.
Luckily there is a lot of interest in the space:
United Airlines has a $100 million fund for start-ups producing SAFs, and created the Eco-Skies Alliance where companies like Meta, Microsoft, and Visa can forward purchase SAFs to prove market demand
Boeing is planning to debut commercial aircraft capable of using 100% biofuel by 2030. Commercial planes at present can only use blends of up to 50%.
Lanzatech - which takes waste, carbon-rich gases from industrial processes and turns them into ethanol for fuel- recently listed on the US Stock Market having demonstrated transatlantic flights with Virgin airlines. (Check out their CEO Dr Jennifer Holgren who spent 17 years getting Lanzatech to this point!)
Netflix has been a co-founder of the Sustainable Aviation Buyers Alliance (SABA) where demonstrate market demand to catalyze more industry investment
🚆 7. And what about not using planes at all?
France has bought in a ban on short-haul flights for journeys which are possible in two-and-a-half hours by train between major cities like Paris, Nantes and Lyon
The expanding use of drones for cargo delivery, medical supply delivery, and other uses, with reduce the need for aircrafts, and thus reduce emissions. Whilst regulation will inevitably be needed, it may reduce the number of flights needed.
🌆 Airlines will need a combination of all the above to make meaningful progress. Luckily, the industry is optimistic.
Sustainable Aviation, a UK membership group of almost all aviation-related bodies in the country, believes the aviation sector in the UK can accommodate a 70% increase in passengers by 2050 while reducing carbon emissions from more than 30 million tonnes a year to net-zero. The sky’s the limit!
Source: Sustainable Aviation Carbon Report 2020
☀️ Thanks for being a reader of hot damn. This was the last in a series about changes across the transportation sector. Stay tuned for more articles this summer! ☀️