Energy
is at the center of human life and the harnessing of electricity is probably of
the same magnitude as the harnessing of fire: there would be no modern life
without electricity.
Since
the 19th century’s industrial revolution, fossil fuels together with innovation
have been the main drivers of development. Much has been said about climate
change, and other side effects on health or how much energy prices can weight
on the purchasing power of citizens and hamper economic development.
The
airline industry is a point in case where kerosene represents 30+% of all
costs, making it hardly profitable. A lot of efforts are made to move as much
as possible towards electricity (for example for taxing) by engine suppliers (Safran,
GE, Rolls Royce, Mitsubishi Heavy Industries to name the largest players).
1. The airline industry: a few metrics
Air
Cargo transported over USD5.3 trillion worth of goods in 2010 or 35% of world trade
in value. The air freight industry has grown 3 times quicker than the
international trade and 4 times the world GDP for the past 30 years.
Passenger’s
traffic has doubled during the past 15 years and will again double in the next
15 years to transport 9 billion customers.
The
world airline industry generated USD 637 billion revenues in 2012 and is
forecasted to grow 5% a year to 2050.
Boeing
and Airbus are projecting the delivery of 28,000-34,000 new airplanes by 2031.
Engines
represent c. 20% of the cost of an airplane.
Fuel
consumption amounts to 30+% of the operating costs for a total consideration of
USD209 billion in 2012.
676
million tons of CO2 emitted in 2011, equivalent to 1.5 billion
barrels of oil.
2. Airline industry’s challenges
Environmental
concerns project a negative image to the public and induce new and costly
regulation (EU).
The
return on invested capital is awful compared to the weighted average cost of
capital (3.5% investor value loss in 2011): the industry as a whole is a serial destroyer of shareholder’s value.
Fuel
cost is persistently high (kerosene x 4 over 10 years).
The
industry is not profitable (cumulated P&L between 2003 and 2011 is zero)
with net post-tax profit margins forecasted in the very low single digit in
2012 and 2013.
The
world economy remains weak and may impair international trade, a key driver of
airlines’ growth.
The
industry is moving as much as possible towards the use of electricity in
airplanes.
Per
minute, most of the fuel is consumed during taxiing (1%) and takeoff to cruise
altitude (14%) for a 747 Boeing 8 hours flight time. The ratio is obviously worse
for short hauls (majority of flights).
As
for any industry, electricity has eventually always replaced fossil fuel for transportation, technology
and economics permitting. Electricity is much cheaper than kerosene, the
magnitude varying depending on countries. A rough calculation results in a USD 35
billon economy a year to airlines if it were to use electricity instead of kerosene
as an energy source, making the industry from one of the economically worst
possible to a profitable one on a consistent basis.
For
example, SAFRAN, the French engineering company, recently designed an electric
system to avoid using kerosene during taxiing.
Research
in dramatically improving energy density of batteries is also advancing with Lithium-Air
batteries theoretically being able to reach an energy density close to kerosene
(we are 5-10 years away). Further down research is also focusing on totally new
architecture for quantum batteries.
I
came across a video from a TEDx conference held in Geneva in November 2011 about 100% electric
turbojets, called Turboarcjet. I found this presentation from a young physicist
fascinating even if it is a long way down the road, but I would love to fly with an all electric airplane.
http://www.youtube.com/watch?v=N27yYgL-iIg
http://www.youtube.com/watch?v=N27yYgL-iIg
Source:
TEDx conference: Empowering the Limitless Mind –“Thinking
Outside the Box: Turboarjects”
http://www.youtube.com/watch?v=N27yYgL-iIg
IATA: Financial forecast and statistical data
http://www.iata.org/
Slideshare: Introduction to the Global Air Cargo Market
http://fr.slideshare.net/xiaoxiang/air-cargo-101#btnNext
Jon Petersen: Air Freight Industry – White Paper
http://www.efiko.org/material/Air%20Freight%20Industry%20Whitepaper%20by%20J.%20Petersen.pdf
SAFRAN: Electric Green Taxiing System
http://www.safranmbd.com/systems-equipment-178/electric-green-taxiing-system/?lang=en
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