A MAGAZINE FOR AIRLINE EXECUTIVES 2009 Issue No. 2

Planning departments follow industry best practices to compete

Global carriers take various steps to remain in the black

Air Malta makes big changes across entire organizations

11 20 46

A Conversation With … Dave Barger, President And Chief Executive Officer, JetBlue Airways, Page 14.

T a k i n g y o u r a i r l i n e t o n e w h e i g h t s

Happy Jetting

© 2009 Sabre Inc. All rights reserved. wearelistening@sabre.com

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Biofuels are extremely attractive to the airline industry because they are “drop-in” fuels requiring no modification to existing air-craft and can be used as direct substitutes to fossil fuels. The issue is large-scale availability and cost of these biofuels.

Biofuels are produced from renewable resources such as different plants with cer-tain attributes such as sugar or oil content. A major environmental benefit is that as plants grow, they absorb carbon dioxide from the atmosphere. After processing the plant biomass into fuel, they release CO

2 back into the atmosphere when the fuel is burned, completing their lifecycle.

First-generation biofuels are derived from crops rich in sugars or starch, such as sugar cane and corn. They can be processed and fermented to make ethanol, which has been used for transport, heating, powering stationary engines and cooking. These first-generation biofuels do not have the energy performance needed for use in jet aircraft. Ethanol has only about half the energy per volume of jet fuel. Biodiesel has about 80 per-cent the energy of kerosene but can solidify at low temperatures of a high-altitude flight. In addition, the quantity of biodiesel that could be produced from oilseed crops is limited.

The solution may come from a combina-tion of hydroprocessing, a technology already used by petroleum refineries and microscop-ic algae. The National Renewable Energy Laboratory, or NREL, has extensive experi-ence cultivating and manipulating microalgae to produce lipids or oils. By using various technologies used by refineries to remove impurities or reduce molecular weight, the algal oils could be made into a kerosene-like fuel very similar to petroleum-derived com-mercial jet fuel.

The recipe sounds like a daydream for using underutilized resources: grow algae in salty water unfit for other use, expose them to the sun in areas unsuitable for growing crops, feed them power plant or other exhaust gases that threaten the world’s climate, and deny them certain vital nutrients. In addition, there is considerable refining capacity strategically located around the world that could be used for hydroprocessing microalgal oil to jet fuel, with both offshore and onshore locations highly suitable for microalgae growth nearby.

Many microalgae naturally store energy as oil when the lack of nutrients makes them unable to use the energy for normal

growth. They also use the lipids to regulate their buoyancy. By manipulating nutrients and other growth conditions and by selecting and genetically engineering strains to increase this oil production, NREL researchers were able to attain quite high lipid production levels.

As it happens, many microalgae grow best in saline water, and like any plants, they require sunlight and carbon dioxide. Unlike terrestrial plants, they do not require precipi-tation or good soil. Warm climate desert and seashore areas that are unsuitable for tradi-tional agriculture are suitable for microlagae growth.

The ability of microalgal cultures to utilize high volumes of carbon dioxide is so great that development of the technology was also motivated by the idea that greenhouse gas emissions could be reduced by passing flue gas from power plants, ethanol plants, oil and gas drilling operations, or other industrial sources through the algal cultures.

Second-generation biofuels are termed “sustainable” since they come from new sources that do not compete for resources

with food supplies or land resources and can be used in aviation. Bio-derived oil from plants such as algae, jatropha, halophytes and cam-elina can be converted by chemical processes to make high-quality jet fuel.

Plant-based fuels offer significant envi-ronmental benefits when considering the full lifecycle from plant growth to the time they are processed and then burned as fuel. Plant-based fuel sources absorb carbon diox-ide while they are growing. In looking at the complete lifecycle of plant-based fuels, scientists count the reduction of CO

2 that takes place during plant growth, processing the biomass into fuel and then burning it in an airplane engine. The net effect of counting the complete lifecycle is that biofuels can reduce CO2 emitted by aircraft by 50 percent to 80 percent plus reduce dependence on fossil fuels.

The diversity of viable sources of bio-fuels increases the potential for making them available to more regions of the world and accelerating market viability. Sustainable bio-fuels could be an attractive alternative as their

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Biofuels: The Natural Alternative

AccordingtoExxonMobil,whichplansforaUS$600millioninvestmenttoproduceliquidtransportationfuelfromalgae,algaecouldproducemorethan2,000gallonsoffuelperacreofproductionperyear,comparedto650gallonsforpalmtreesand450gallonsforsugarcane,whilecornonlyyields250gallonsandsoy50gallons.

Near-AndLong-TermViableBiofuels

2,000

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(Source: Boeing 2009 Environment Report)

By Peter Berdy | Ascend Contributor

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production is not limited to locations where fossil fuels are located, enabling a more diverse geographic supply.

Biofuels offer advantages over standard oil-derived jet fuel in terms of supply, price and eco-efficiency. Biofuel sources should be able to grow in many places around the world, especially where the aviation industry may have demand. Biofuels have the poten-tial to deliver large quantities of greener fuel for aviation at more stable prices.

Sustainable biofuels flight test pro-grams will be useful for the effort to certify these fuels through the ASTM International standards board (formerly the American Society for Materials and Testing). Current jet fuel specifications state jet fuel must be derived from petroleum-based sources. Efforts are underway to accelerate develop-ment, certification and commercial use of sustainable fuels.

The Sustainable Aviation Fuel Users Group, formed in 2008, includes airlines, industry leaders, environmental organizations and fuel technology leaders. There are more than 16 aviation and engineering firms in this coalition, including Airbus, Boeing, Honeywell UOP, Air France/KLM, Virgin Atlantic, British

Airways, Cathay Pacific Airways, TUIfly and Virgin Blue. Their purpose is to accelerate development and commercialization of sus-tainable new aviation fuels.

Its members pledged to work with the Roundtable for Sustainable Biofuels, a global body of non-governmental organizations, green groups and biofuel developers that is working on new standards designed to help ensure that crops used to make biofuels are produced in an environmentally sustainable manner and do not contribute to increased carbon emissions through related deforesta-tion and changing land use.

This activity will help enable the com-mercial use of renewable fuel sources that can reduce greenhouse gas emissions while lessening commercial aviation’s exposure to oil-price volatility and dependence on fossil fuels. And it makes aviation the first global transportation sector to voluntarily promote acceptance of sustainability practices into its fuel supply chain.

The Sustainable Aviation Fuel Users Group said it was currently working on research into using algae and jatropha cur-cas-based biofuels, believed to have a sig-nificantly lower environmental and carbon

impact than fuels made from corn or other food crops. It added that it was also about to launch a new project to assess the viability of halophytes, a class of plants that thrive in saltwater habitats, which it is hoped can be produced in large quantities without requiring agricultural land.

Looking at long-term potential, 25 per-cent of all jet fuel could be alternative fuel by 2025. Biofuels could be 30 percent of that amount by 2030.

At the Eco-Aviation conference, Commercial Aviation Alternative Fuels Initiative Executive Director Richard Altman said much of the hype about biofuels is well-founded but warned that serious challenges lie ahead.

“The expectations may be too high for certain feedstocks, but in terms of moving to biofuel to power commercial flights, there’s not too much hype,” Altman said.

Algae, for example, has been called the “Holy Grail” of alternative fuel offerings by Boeing and others, but he cautioned that while it “looks good on paper ... we really don’t know much about it. We don’t know what the manufacturing process [for turning it into fuel] is.” a

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250+ million The number of registered Facebook

users, according to the Centre for

Asia Pacific Aviation. More and more

airlines are embracing Facebook, the

most used social network by world-

wide monthly active users.

120+ The percentage by which U.S.

airlines have improved their fuel

efficiency during the past three

decades, according to the Air

Transport Association of America.

11 billion The amount in U.S. dollars the industry’s

operating revenues rose by last year,

while operating costs surged US$24

billion, resulting in an industry-wide

operating loss, according to the Air

Transport Association of America.

10 fold The increase in market share no-frills

airlines have realized, from 3 percent in

1996 to 30 percent in 2007, according to

the Civil Aviation Authority.

28,000 The number of flights U.S. airlines

operate on a daily basis, according

to the Air Transport Association of

America. The carriers serve 80

countries using more than 6,000 aircraft

to carry an average of 2 million pas-

sengers and 50,000 tons of cargo.

34 The percentage of all intra-European

capacity represented by low-cost carriers

last year, according to the 2009 edition

of RDC Aviation’s Low Cost Monitor.

Growth across all sectors slowed sharply

toward the end of 2008, with aggregate

annual capacity growing just 2.2 percent,

the smallest increase this decade.

+count it up