Airlines Try Going Green To Shrink Fuel Costs
Airlines around the world are going green as they push to cut their fuel costs -- one of their biggest expenses -- in a struggle to widen margins.
There will likely be an alternative to traditional kerosene on the market within the coming three to five years, said Billy Glover, Boeing's director of environmental strategy for commercial aircraft, at the ITB travel fair on Friday.
"At that time, volumes will of course be small," he said.
Airlines would gradually start mixing biofuel with kerosene to lessen their dependence on fossil fuels. The global aviation industry uses around 75-80 billion gallons of fuel a year, accounting for around 6 percent of fossil fuel consumption.
"Given the extent of rising fuel costs in the two years to mid-2008, it is surprising that any of our legacy airlines managed to announce profits in 2008," said Howard Wheeldon, senior strategist at BGC Partners.
Oil prices last year reached a record level of more than USD$145 per barrel, although they have dropped since.
"I do not expect a recovery in oil prices in coming months. In the longer term, I would see increasing oil prices again," Lufthansa's Chief Financial Officer Stephan Gemkow said on Wednesday.
The German flag carrier's fuel costs in 2008 came to EUR5.4 billion euros (USD$6.95 billion), more than one fifth of its EUR24.9 billion of revenue.
Another way that airlines already try to cut their fuel-related costs is by rejuvenating their fleets. Newer planes have more advanced technology that cuts down on fuel consumption.
For example, Lufthansa has said it aimed to cut the average age of its fleet by 7 percent to around 10.5 years by 2011. Dubai-based Emirates' fleet has an average age of 5.5 years and low-cost carrier Ryanair's 2.5 years.
POLAR ROUTE
Paul Steele, director of aviation environment at IATA, said at the ITB on Friday that besides newer planes and alternative fuels, a third factor needed to cut fuel consumption was international air traffic management.
"The situation that we have right now is totally unacceptable," he said during a panel discussion.
Even if airlines planned their flight schedules to arrive in the shortest time possible, they were still often held up by delays at the destination because there is no international linking of air traffic control.
Exploring ways to cut fuel consumption by choosing more direct routes, Emirates in December launched the world's first cross-polar flight, sending a plane on the shortest route from Dubai to San Francisco.
Taking this route rather than one across Asia to the east saves about 2,000 gallons of fuel, the company said.
Aviation accounts for about 2 percent of global carbon dioxide emissions, according to the International Air Transport Association (IATA).
IATA said in January it expected the aviation industry's emissions to fall by 4.5 percent in 2009. Of that decline, 2.5 percent would be due to capacity cuts airlines are implementing in response to falling demand amid the global economic crisis.
