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• Aviation Fuel Market

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Aviation Fuel Market Size, Share & Industry Analysis, By Fuel Type (Jet Fuel {Aviation Turbine Fuel}, Aviation Gas, Bio Jet Fuel), By End-user (Commercial, Private, Military), and Regional Forecasts, 2022-2029

Last Updated: April 08, 2024 | Format: PDF | Report ID: FBI100427

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KEY MARKET INSIGHTS

The global aviation fuel market size was valued at USD 177.32 billion in 2021 and is projected to grow from USD 351.85 billion in 2022 to USD 654.79 billion by 2029, exhibiting a compound annual growth rate (CAGR) of 9.3% during the 2022-2029 period. 

The global COVID-19 pandemic has been unprecedented and staggering, with aviation fuel experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of -66.5% in 2020 as compared to 2019.

Aviation fuel is used to power airplanes. All types of fuel are the by-products of crude oil. The primary function of jet fuel is to power an aircraft; energy content and combustion quality are key fuel performance characteristics. Other essential performance properties are lubricity, stability, volatility, non-corrosiveness, and others. In addition to providing an energy source, fuel is used as a hydraulic fluid in engine control systems and as a coolant for specific fuel system components.

COVID-19 IMPACT

COVID-19 Negatively Impacted Market Growth Due to Reduced Passenger Traffic 

The COVID-19 pandemic has significantly impacted the airline industry, which relies on commercial passenger traffic. As demand for air travel declined and remained low in 2020, various sectors were affected, including passenger airlines, airports, aerospace manufacturers, and repair station owners.

The demand also depends on tourism, and tourism was negatively impacted during COVID-19. Despite the recovery in demand for vacation travel in some countries in 2021, operational issues and concerns about COVID-19 hampered the recovery. However, many countries still have testing and vaccination requirements to protect against transmission of COVID-19 throughout the travel process.

Constantly changing regulations and travel guidelines were the most significant challenges. This messy situation was not allowing companies to navigate at best, and companies with global operations faced challenges such as keeping their employees safe.

Business travel will be the slowest to recover as companies and teams become accustomed to virtual gatherings. Still, most leaders were ready to return to in-person conferences and meetings with partners and clients. However, quarantine measures in different regions continue to hamper this return to face-to-face business for many companies.

Business travel spending is highest in many destinations and is thus critical to global economic development. Leading companies should consider supporting the return to travel responsibly.

The demand for aviation turbine fuel decreased significantly owing to COVID-19 pandemic, as flights were down by 40% to 50%. This decline led to a supply-demand imbalance, which resulted in a drop in crude prices. However, the demand is still expected to recover in the coming years, but oil prices have recovered and now risen above pre-pandemic levels.

LATEST TRENDS

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Rising Shift toward Sustainable Alternatives to Generate Lucrative Opportunities for the Industry 

There is an increase in the shift toward sustainable fuel, also referred to as bio jet fuel. It is used to power aircraft and has properties similar to traditional jet fuel but with a lower carbon footprint, depending on the raw materials and technologies used to produce it. It can drastically reduce lifecycle greenhouse gas emissions compared to conventional jet fuel. Manufacturing bio-jet fuel from waste resources can create new economic prospects for farmers, improve the environment, and even enhance aircraft performance.

The entry of renewable fuels in the aviation fuel industry offers the most promising opportunity for the market. These fuels are made from organic waste such as agricultural waste and cooking oils . The aviation industry in almost every country is looking for options to decarbonize the sector. Renewable fuels can reduce CO 2 emissions by 80% compared to conventional ATFs.

DRIVING FACTORS

Increased Sports Tourism and North America’s Dominance in Commercial Airlines to Boost Aviation Fuel Demand

Sports tourism means traveling to either attend or follow sporting events. Sporting events attract spectators. The Olympic Games and World Championships boost tourism development. In addition, increasing bilateral series between two countries in sports such as cricket is also a factor driving sports tourism. For example, the Indian cricket team is a significant driver of sports tourism in India. In addition, it is also one of the teams in world cricket that travels the most for bilateral series. In addition, Europe is an essential region for football tourism as it hosts most football matches. Football's fan base is found worldwide, leading to increased travel domestically and internationally. The increasing franchise tournaments in cricket and football are also driving air travel as it involves the participation of international players. These factors encourage sports tourism and air travel, thereby driving the market.

According to the Airports Council International (ACI) World, eight of the top 10 airports for passenger traffic are in the U.S. These airports have a large share of domestic traffic, and thus the traffic segment is leading the global recovery. Orlando International Airport in the U.S. witnessed the most significant improvement, jumping from 27th place in 2020 to seventh place in 2021. Jackson Atlanta International Airport (ATL) has also been one of the busiest airports in the world in terms of passenger numbers for many years. According to the U.S. Census Bureau, Atlanta has a population of almost 500,000. This factor makes it only the 38th largest city in the U.S. and well behind many other global cities. However, well over six million people live in the metropolitan area, which is one of the main factors for the excellent performance of the airport. Another critical reason for Atlanta's success is Delta Air Lines' strong presence at the airport. The legacy U.S. airline and SkyTeam establishing member uses Atlanta as one of its major hubs.

Increasing Tourism in the Middle East to Promote Infrastructural Development

Middle East countries, such as the United Arab Emirates and Saudi Arabia, focus on tourism by developing attractive infrastructure. On the tourism front, Saudi Arabia aims to welcome over 100 million visitors yearly by 2030, according to the International Trade Administration U.S. Department of Commerce. To this end, it has executed several initiatives, such as an e-visa system for tourists from 49 countries, opening its UNESCO World Heritage Sites, constructing resorts on the Red Sea coast, and establishing a cruise line. In 2020, the Ministry of Tourism announced it would invest up to USD 4 billion in strengthening the tourism industry by launching the novel Tourism Development Fund. The ministry also said it would actively work with private sector investors to capture new growth opportunities in the coming years as tourism enters a post-COVID-19 recovery phase.

RESTRAINING FACTORS

High Aviation Fuel Costs to Hamper Market Growth

The biggest reason expected to hamper the aviation fuel market growth is fuel price. The high cost is likely to hamper the market growth. The increased fuel cost is due to the increased Brent crude oil price as jet fuel is the derivative of Brent crude oil. The price of Brent crude oil is increasing due to the supply-demand gap. The rising demand for Brent crude oil, but the lack of crude oil production increases the prices.

Saudi Arabia - one of the Organization of the Petroleum Exporting Countries (OPECs) founding members – slashed its crude oil production. They claimed that the ailing global economy, and interest rate hikes in some western countries prompted the production cut (equivalent to 2% of global supply).

These factors result in high airfares, which is likely to hamper the market as low-income countries may not be able to afford. Asia Pacific and Africa are among the price-sensitive regions. The area includes developing countries with lower per capita incomes, which does not allow them to spend on high ticket prices.

SEGMENTATION

By fuel type analysis.

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Jet Fuel Segment Garnered Highest Market Share Fueled by Robust Adoption in Commercial Airlines

Based on fuel type, the market is classified into jet fuel (aviation turbine fuel), aviation gas, and bio jet fuel. The jet fuel (aviation turbine fuel) segment accounted for 97.58% of the aviation fuel market share in 2021. Jet fuel (aviation turbine fuel) demand increased in 2021 but not at pre-pandemic levels. The need for jet fuel might surpass the pre-pandemic in the coming years. However, the price of jet fuel has reached pre-pandemic levels. The higher costs of jet fuel might hamper the market in the coming years.

The bio jet fuel segment is expected to offer lucrative opportunities during the forecast period due to its excellent characteristics such as reliability, safety, and low carbon emissions. In addition, there are significant developments when it comes to bio jet fuel. For instance, In October 2022, Honeywell announced a new technology for processing ethanol -to-jet fuel (ETJ). The technology allows manufacturers to convert corn, cellulosic or sugar-based ethanol into renewable jet fuel. The technology uses high-performance catalysts and thermal management features to maximize production fuel efficiency, resulting in a low-cost, lower-carbon intensity jet fuel.

In July 2022, Twelve, Microsoft Corp., and Alaska Air Group Inc. inked a Memorandum of Understanding (MOU). The MOU aims to advance the Sustainable Aviation Fuel (SAF) market to include fuels derived from reclaimed CO2 and renewable energy and has worked toward the first commercial demonstration flight in the U.S., powered by Twelve’s e-jet.

By End-user Analysis

Commercial Segment to Dominate Owing to Rising Air Traffic in Developing Regions

Based on end-user, the market is classified into commercial, private, and military. The commercial segment garnered the highest market share and is expected to be the fastest-growing segment. The commercial segment is expected to grow significantly during the forecast period due to growing commercial airlines and international traffic in developing regions such as Asia Pacific and the Middle East & Africa. Increasing fuel prices might create challenges for the commercial segment.

The private segment is also expected to be one of the fastest growing segments during the forecast period. Moreover, the private segment is also one of the significant segments. In addition, increasing disposable incomes and high living standards fuel private aircraft demand.

REGIONAL INSIGHTS

Asia Pacific Aviation Fuel Market Size, 2021 (USD Billion)

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The Asia Pacific region dominates the global market. Asia Pacific is now relatively open to foreign visitors and tourism, helping foster recovery. Given the prevailing economic uncertainties, travel demand is developing well. There have been some instances of lifting or easing of travel restrictions in some vital Asian destinations. As airline travel is associated with economic growth, the presence of developing countries in the region is expected to foster airline travel during the forecast period.

Besides, North America is also set to witness the second-highest growth rate between 2021 and 2029. North America's market is likely to grow at the second-highest rate during the forecast period. According to the International Air Transport Association, North American airlines saw traffic increase by 203.4% in May 2022 compared to 2021. As most restrictions on travelers from this region were lifted, tourism and a high willingness to travel continued to fuel the global recovery.

Furthermore, Europe is likely to hold a substantial share of the market. According to the European Organization for the Safety of Air Navigation (Euro control), in 2021, commercial flights were still severely affected by the COVID-19 pandemic. In 2021, the EU carried 373 million passengers, an increase of 34.9% compared to 2020. All EU member states recorded a significant increase in air passenger traffic in the second quarter of 2021 compared to a similar period in 2020. However, the air passenger traffic was still -59% below pre-pandemic 2019 levels.

Latin America has potential growth opportunities for the market. The private segment is one of the major segments in Latin America. The development of new helicopter models specifically for business aviation and VIP transport is likely to enhance the demand from corporate and private helicopter operators in the region.

The Middle East & Africa is also expected to grow in the coming years. The demand for jet fuel is expected to grow in the coming years attributable to tourism recovery. In addition, Middle Eastern countries, such as the UAE and Saudi Arabia, have a workforce from outside the region. These factors boost international travel and the demand for aviation jet fuel.

KEY INDUSTRY PLAYERS

Shell to Dominate Backed by its Wide Product Offerings and a Reputed Brand Name

Royal Dutch Shell focuses on the critical aspects of its business, giving it a competitive advantage in the marketplace. Some of its strengths are following the market trend (such as renewable fuels), investments in R&D, experienced employees, geographical presence, and others. In addition, it serves private pilots to global airlines. It creates value for its customers through safe and timely delivery of excellent-quality aviation fuels and a broad range of high-performance aviation lubricants and fluids.

• In June 2022, one of the world's first blockchain-based digital SAF solutions for business travel was launched following a collaboration between American Express Global Business Travel (Amex GBT), Shell, and Accenture. They have unveiled Avelia, which is a carbon accounting mechanism. Industry bodies approve it as an acceptable form of emissions reduction. Avelia could enable airlines and companies using sustainable fuel to record the associated benefits of emissions reduction through SAF against their voluntary ESG and to report regardless of where in the world it is used in a flight.
• In September 2021, Royal Dutch Shell plc (Shell) announced a final investment decision to construct an 820,000 tons per annum (TPA) biofuels facility at Shell Energy and Chemicals Park Rotterdam, Netherlands, formerly known as the Pernis Refinery. Once built, the plant will be among the largest in Europe, producing renewable fuel and renewable diesel from waste.

LIST OF KEY COMPANIES PROFILED:

• Vitol (Switzerland)
• Exxon Mobil (U.S.)
• Chevron Corporation (U.S.)
• Shell Plc (U.K.)
• Indian Oil Corporation Limited (India)
• TotalEnergies SE (France)
• BP Plc (U.K.)
• Valero Energy Corporation (U.S.)
• Marathon Petroleum Corporation (U.S.)
• World Fuel Services Corporation (U.S.)
• Essar Oil (UK) Limited (U.K.)
• Bharat Petroleum Corporation Limited (India)
• Rosneft Deutschland GmbH (Germany)
• LUKOIL (Russia)
• China Aviation Oil (Singapore) Corporation Ltd (Singapore)
• Viva Energy Group (Australia)
• Q8Aviation (U.K.)
• PT Pertamina (Persero) (Indonesia)
• ADNOC (Abu Dhabi National Oil Company) Distribution (United Arab Emirates)
• Neste (Finland)

KEY INDUSTRY DEVELOPMENTS:

• January 2022- ExxonMobil acquired a 49.9% stake in Biojet AS, a Norwegian biofuels company that plans to convert forest and timber construction waste into lower quality ones.
• April 2022- Chevron joined the Clean Skies for Tomorrow Coalition, working to fast-track the deployment and utilization of sustainable alternative fuel technologies to achieve 10% of the global supply by 2030.
• October 2021- IndianOil and Praj Industries Ltd. inked a Memorandum of Understanding (MoU) to discover and collaborate on business opportunities in biofuels, including CBG, SAF, biodiesel , ethanol, and so on, through the formation of a JV company in India.
• October 2021- Air France, TotalEnergies, the Metropole, and the Airport of Nice Côte d’Azur operated a flight from Nice to Paris fueled with 30% of SAF, made from waste and residues generated by the circular economy.
• June 2021- Vitol Aviation and Neste enabled Heathrow to become the U.K.'s first major airport to launch sustainable alternative fuel. Vitol Aviation's expertise in handling kerosene combines Neste's market-leading SAF production capabilities. Neste MY SAF is made from 100% renewable and sustainable waste and residual raw materials such as used cooking oil and animal fat waste. Neste It reduces up to 80% of greenhouse gas emissions in undiluted form and over the entire life cycle compared to fossil fuel.

REPORT COVERAGE

An Infographic Representation of Aviation Fuel Market

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The global aviation fuel market research report highlights leading regions worldwide to offer a better understanding of the competitive landscape of the market. Furthermore, the report provides insights into the latest industry trends and analyzes technologies that are being deployed at a rapid pace at a global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the industry.

Report Scope & Segmentation 

Frequently asked questions.

Fortune Business Insights says that the global market size was USD 177.32 billion in 2021 and is projected to reach USD 654.79 billion by 2029.

In 2021, Asia Pacific stood at USD 63.94 billion.

The market will likely grow at a CAGR of 9.3%, exhibiting substantial growth during the forecast period (2022-2029).

Shell Plc, TotalEnergies, Chevron Corporation, and BP Plc are some of the major participants in the market.

Asia Pacific dominated the market in terms of share in 2021.

The jet fuel (aviation turbine fuel) segment is anticipated to dominate the market during the forecast period.

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• STUDY PERIOD: 2018-2029
• BASE YEAR: 2021
• HISTORICAL DATA: 2018-2020
• NO OF PAGES: 221

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The global aviation fuel market is projected to grow from $351.85 billion in 2022 to $654.79 billion by 2029, at a compound annual growth rate (CAGR) of 9.3% in forecast period, 2022-2029

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Fueling the Future - a guide on Sustainable Aviation Fuel

The Business Aviation Coalition for Sustainable Aviation Fuel (SAF Coalition) released a new informational guide detailing how industry leaders can incorporate sustainable aviation fuel (SAF) into their operations and accelerate the adoption of low-carbon fuels, while reducing greenhouse gas (GHG) emissions.

The new guide, titled,  Fueling the Future , serves as an educational and informational resource about the practicalities of SAF development, industry adoption, and pending expansion of supply and use, primarily from the perspectives of the Business aviation community.

The guide can be downloaded on the left.

About the Business Aviation Coalition for Sustainable Fuel 

Business aviation has been working to increase the use of sustainable aviation fuel (SAF), which can cut flight emissions by as much as 80 percent. The industry’s efforts are led by the Business Aviation Coalition for Sustainable Aviation Fuel (SAF Coalition), which includes the Commercial Aviation Alternative Fuels Initiative (CAAFI), European Business Aviation Association (EBAA), General Aviation Manufacturers Association (GAMA), International Business Aviation Council (IBAC), National Air Transportation Association (NATA) and the National Business Aviation Association (NBAA). The SAF Coalition’s work is supported by a Steering Committee that includes dozens of aviation businesses, representing every point in the SAF development-and-supply chain.

Need more information ?

Please contact Bruce Parry at [email protected]

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Sustainable aviation fuel ventures plan launch in Washington By Jacqueline Allison June 20, 2023

PNNL researcher Rich Hallen, in partnership with LanzaTech, helped develop a process that converts ethanol to jet fuel. (Photo: Andrea Starr/Pacific Northwest National Laboratory)

Sustainable aviation fuel is in high demand around the globe but supply is limited. Production of the low-carbon fuel needs to massively scale up for aviation to reach net-zero emissions by 2050. Washington could soon be home to a new industry to help meet the demand.

At a Glance

Sustainable aviation fuel (SAF), made from renewable sources such as agricultural waste, wood, sewage and algae, is a low-carbon alternative to conventional petroleum jet fuel.

Aviation is one of the most difficult sectors to cut emissions, and airlines and other companies are relying on SAF to reach net-zero targets. SAF can be used alone or mixed with conventional jet fuel.

The Washington Legislature passed new policies this spring to kickstart SAF production here, and it’s already paying dividends with two companies already announcing plans to build manufacturing facilities in Washington.

How do we make Washington a leader in sustainable aviation fuel production?

In 2012, a group of businesses, lawmakers and researchers came together to explore that question. This spring, the Legislature voted overwhelmingly for new policies – 10 years in the making – to spur sustainable aviation fuel (SAF) production in Washington.

“We want more SAF because it’s such an effective way to reduce carbon emissions, but we also want to capture the positive economic impacts and jobs,” said Sen. Andy Billig, D-Spokane, at a hearing on his bill, Senate Bill 5447 , in February.

More than a dozen people testified in support, including AWB President Kris Johnson, businesses, airlines, airports and labor unions.

Sustainable aviation fuel is made from renewable sources such as wood and crop residues, municipal waste, sewage and algae. The low-carbon fuels are considered a crucial tool for aviation to cut emissions and the best short-term solution to reach net-zero targets.

There is no SAF commercially produced in Washington state, but that could soon change. Several companies are exploring manufacturing plants here in anticipation of the legislation’s new tax incentives, which aim to reduce costs for SAF manufacturers and buyers. Since the legislation passed in late April, two companies — SkyNRG and Twelve — have announced plans for industrial SAF facilities in Washington.

It’s an opportunity for businesses to help launch a new industry and meet soaring demand.

Airlines are scaling up SAF purchases as they work to cut carbon emissions and reach net-zero by 2050. Alaska Airlines, Delta and other airlines want to fuel 10% of their operations with SAF by 2030, and to meet that goal, Delta would need 400 million gallons a year, Dana Debel , managing director of state and local government affairs for Delta, told lawmakers at the hearing in February.

“Washington has been thinking about sustainable aviation for more than a decade, and we’re on the cusp of enabling the best, most well-thought-out-policy that provides the most support out of any state in the country.” — John Plaza, chief investment officer for SkyNRG Americas, which plans to build a $600 to $800 million SAF plant in Washington to open by 2029.

Meanwhile, Boeing has committed to delivering aircraft ready to fly on 100% SAF by 2030. The International Air Transport Association estimates that global SAF production tripled in 2022, reaching more than 79 million gallons, but will need to massively scale up to nearly 120 billion gallons to achieve net-zero by 2050.

The U.S. alone would need to boost SAF production to 3 billion gallons a year, and it’s estimated that U.S. firms produced only about 4.5 million gallons in 2021, according to the White House.

SAF is about twice as expensive as traditional jet fuel and the state’s new policies aim to lower the price tag. “The cost and the supply barriers today are prohibitive to reach the goals we have set,” Diana Birkett Rakow , senior vice president of public affairs and sustainability at Alaska Airlines, testified.

Global SAF production was 79 million gallons in 2022. Production needs to massively scale to nearly 120 billion gallons for aviation to reach net-zero by 2050. Chart: The Association of Washington Business

Other low-carbon or zero-carbon technologies like hydrogen fuel cell and electric airplanes are progressing, with promising breakthroughs for smaller, regional flights. But they are not expected to be commercially ready for larger aircraft and longer flights for several decades.

Aviation accounts for just 2% of global emissions, but the sector has fewer options to cut emissions than other modes of transport, said Corinne Drennan, who oversees the bioenergy programs at the Pacific Northwest National Laboratory (PNNL), which has a main campus in the Tri-Cities.

“I think the Pacific Northwest is an ideal place to stand up manufacturing of sustainable aviation fuels. You’ve got Boeing, you’ve got airlines, you’ve got a national lab, and WSU.” — Corinne Drennan, who manages the bioenergy programs at the Pacific Northwest National Laboratory

PNNL and Washington State University collaboratively run the Bioproducts Institute, which has a mission of “keeping carbon in play,” Drennan said. The goal is to use carbon that’s already on the ground – rather than underground – for difficult-to- decarbonize sectors, like aviation.

“For aviation, you have to have a liquid fuel for decades to come,” she said.

At the Bioproducts Institute – which AWB toured on its 2022 Manufacturing Week Bus Tour – scientists are developing ways to convert everything from kitchen scraps , wastewater and industrial gasses into jet fuel.

“I think the Pacific Northwest is an ideal place to stand up manufacturing of sustainable aviation fuels. You’ve got Boeing, you’ve got airlines, you’ve got a national lab, and WSU,” Drennan told Washington Business.

The state’s new policies include a preferential B&O tax rate for the manufacturing and wholesaling of SAF, plus a B&O and public utilities tax credit for SAF sales and purchases. The credits kick in once one or more facilities are operating with a combined production capacity of 20 million gallons a year.

SkyNRG Americas, part of the Dutch biofuels supplier SkyNRG, is one company looking to open a SAF plant in Washington state.

“Washington is a very strong contender, and we’re pretty excited about this new policy,” John Plaza, chief investment officer for SkyNRG Americas, told AWB this winter.

In May, the company announced plans to build a $600 to $800 million SAF plant in Washington to produce about 30 million gallons of SAF by 2029. Plaza said he expects the facility will employ 80 when operational and 600 during construction. No location has been announced yet.

Dr. Jonathan Male, co-director of the Bioproducts Institute, a collaboration between PNNL and WSU-Tri Cities, holds up a jar of bio-algae and a jar of bio-crude, while his colleague Karthikeyan Ramasamy, laboratory relationship manager, holds up bottles of bio-diesel and bio-gasoline created from waste products like treated sewage sludge. (Photo: Brian Mittge/AWB)

Plaza, a former commercial pilot of 20 years, said the advantage of SAF is that it’s a “drop-in fuel” that can be used right away with existing airplanes, either alone or mixed with conventional fuels. SkyNRG Americas participated in the workgroup that recommended policies to the Legislature in December.

Berkley, California-based startup Twelve plans to open a SAF plant in Moses Lake and acquired 14 acres last December. Andy Stevenson, VP of project development and partnerships, said Twelve has developed technology that turns carbon dioxide into aviation fuel and other products from sunglasses to laundry detergent to car parts. The company also testified in support of the new incentives.

“Anything that helps reduce the costs is a big benefit to us,” Stevenson told Washington Business.

He said the other main input for Twelve’s technology is electricity, and the company was drawn to Washington, in particular Moses Lake, because of low-cost, renewable hydropower. At the Paris Air Show in June, Gov. Jay Inslee officially announced Twelve’s plans for a commercial SAF production facility in Moses Lake .

As the industry gets off the ground, there will be challenges: permitting, finding trained workers, and understanding how the new facilities will impact communities. But business leaders were optimistic.

“Washington has been thinking about sustainable aviation for more than a decade,” Plaza said, “And we’re on the cusp of enabling the best, most well-thought-out-policy that provides the most support out of any state in the country.”

This story originally appeared in the Spring 2023 print edition of Washington Business magazine. The full online version of the edition is available to read here .

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UK ministers firm sustainable fuel plan with 2% 2025 target

By Graham Dunn 2024-04-25T18:22:00+01:00

UK ministers have formally set out a target for 2% of jet fuel in 2025 to be sustainable aviation fuel, a step toward a mandate for 10% of jet fuel to be sustainable by 2030.

Source: Air bp

UK transport secretary Mark Harper says: “Today, the government is confirming a trajectory for the mandate from 2025 up to 2040 that is ambitious but realistic.

The 2% SAF target for 2025 is in line with that required under the European Union’s Emission Trading System, though the latter mandates increase to 6% by 2030.

The plan still requires parliamentary approval, which the government aims to secure this year.

Earlier this month, Wizz Air became the latest European carrier to commit to its own aspiration of having 10% of its flights powered by SAF  by 2030, citing the imminent introduction of mandates in the EU and the UK.

Alongside confirming the timetable for the mandate, the UK also outlined plans for a ”review mechanism” to help manage prices and minimise the impact on airfares given SAF is more expensive than traditional jet fuel, at least “in the immediate term”.

It has also launched a consultation on plans to introduce an industry-funded ”revenue certainty mechanism” for UK SAF production, with a view to it being delivered by the end of 2026.

Airlines have consistently complained about shortages of SAF availability and argued greater incentives and policy certainty is required in order to kick start SAF production, citing the example of policies implemented in the USA by the Biden Administration.

Tim Alderslade, chief executive of Airlines UK, the industry body representing UK-registered carriers, says: ”UK airlines support a SAF mandate as a vital step towards the net-zero transition as SAF will be one of the important technologies to achieve aviation’s net zero commitments.

”However, it is vital that Government now puts the right measures in place to incentivise production and reduce the cost of SAF as seen in the EU and US, as quickly as possible. Without these, the UK will be at a competitive disadvantage with consumers at risk of higher fares.”

• Air Transport

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• Ethanol 101

Ethanol’s Flight Plan to Sustainable Aviation Fuel

A role for ethanol in the roadmap to decarbonize aviation fuel.

Sustainable aviation fuel (SAF) announcements are being made weekly, if not daily, in the business news as airlines and technology developers announce new ventures.

The administration laid out its “SAF Grand Challenge Roadmap” goal last year — 3 billion gallons of domestic SAF produced by 2030, expanding to meet 100 percent of expected jet fuel use by 2050, projected to be 35 billion gallons. The plan includes achieving a minimum 50 percent reduction in lifecycle greenhouse gas (GHG) emissions compared to conventional fuel in the near term and supporting airline commitments to reach net zero by 2050.

Considering 2021 domestic production was a mere 5 million gallons, that will have to be one impressive hockey stick growth curve — something the ethanol industry is familiar with. But just what are ethanol’s prospects? After all, alcohol-to-jet (and specifically ethanol-to-jet) is one of nine ASTM-approved SAF pathways, and ethanol is one of the few — and arguably the only — renewable fuel commercially produced at relatively large scale and low price.

“If we could snap our fingers and all ethanol in the U.S. converted to SAF at 50 percent blend, we could meet 100 percent of the jet fuel needs of America. Just like that,” says technology developer Pat Gruber, CEO of Gevo Inc. He bases that on current U.S. jet fuel consumption of over 20 billion gallons and ASTM specifications allowing no more than a 50 percent blend of renewable jet fuel with petro-jet. A gallon of ethanol yields roughly two-thirds of a gallon of finished jet, so the U.S. ethanol capacity of 17 billion gallons would yield more than 10 billion gallons of renewable jet — enough to blend with petro-jet to get 20 billion gallons of SAF.

The administration’s SAF Grand Challenge, however, suggests lipid-based pathways converting fats, oils and greases will be the primary fuel pathway leading to the 2030 goals.

That’s because HEFA (hydrotreatment of esters and fatty acids) technology is already being commercialized at a rapid pace — primarily because of HEFA’s similarity to petroleum refining and growing demand for renewable diesel. (Recent record-high prices for distillers corn oil reflect that growing demand.) Diesel and jet overlap in the distillation curve and it’s a relatively simple retrofit to optimize for jet fuel production, though costly at refinery scale.

Commercialization of alcohol-to-jet (ATJ) is a step behind. A table of ASTM pathways in the administration’s roadmap lists six companies advancing projects: Gevo, LanzaTech, Cobalt, Honeywell UOP, Swedish Biofuels and Byogy. The roadmap discusses progress in all nine approved pathways, and others under research and development, predicting the momentum is building to meet the 2050 goals: “Technologies in this portfolio are expected to result in a dramatic buildout and expansion of alcohol, waste-based, lignocellulosic, and waste and captured carbon gas pathways.” The document also says there are ample feedstocks, citing the “Billion-Ton Report” that suggests about 1 billion dry tons per year of biomass can be grown or collected sustainably and converted into 50-60 billion gallons of advanced biofuels “without impacting agriculture, trade, or current uses of biomass.”

Last year’s SAF Grand Challenge Roadmap goals are backed by provisions in the 2022 Inflation Reduction Act that provide an immediate incentive for SAF production by including SAF in the current blenders tax credit program. That will be followed by SAF incentives in the Clean Fuels Production Tax Credit program of $1.25 per gallon producer tax credit for fuels with at least a 50 percent GHG reduction compared to conventional jet.

That’s a big deal, says Jill Blickstein, vice president of sustainability for American Airlines. “The policy incentives for renewable fuels were created before SAF was a possibility, so the framework for those incentives didn’t contemplate SAF – until Congress passed the Inflation Reduction Act.” There’s more work to do, she adds, because renewable diesel is still more profitable than SAF, but she’s pleased that the IRA’s tax credit is performance based.

The tax credit incentive for SAF increases by a penny with every percentage point of improved lifecycle GHG emissions over the 50 percent reduction threshold up to $1.75 per gallon. There lies the challenge for ethanol producers. To qualify as a feedstock for SAF conversion, which inherently adds carbon intensity (CI), corn ethanol must reduce its CI scores.

That raises two points — just how does ethanol slash its CI score, and who will do the scoring?

CORSIA vs GREET

The IRA legislation instructs the Internal Revenue Service (IRS) to use GREET for determining lifecycle GHG emissions of renewable fuels, with the exception of SAF where it names CORSIA, although the legislation allows the use of “similar methodology” based on the statute.

CORSIA would be a problem for corn ethanol. The June 2022 publication of default values under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) scores fuels produced with ETJ at 90.8 g/MJ for USA corn grain, of which 25.1 grams is the indirect land use charge (ILUC) and 65.7 is the core value. That compares with Brazil sugarcane at 32.8 g/MJ. Global corn grain-based ETJ fuel scores are even worse at 100.6 g/MJ. (An interesting side note: CORSIA’s default scores HEFA fuels using DCO at 17.2 g/MJ, compared to USA soybean oil at 64.9.)

Under GREET, ethanol would fare better, although still too high to qualify for IRA incentives. The 2021 Midwest GREET average for corn ethanol is 55.2 g/MJ, to which the CI of the SAF intensity needs to be added — an estimated 20-25 g/MJ. The GREET value includes 7.38 g/MJ as the ILUC penalty.

Gevo’s Gruber strongly suggests the ethanol industry get behind the use of GREET. “We need to have everybody pushing to use the full Argonne GREET, just like in diesel, gasoline, hydrogen or electricity. There shouldn’t be an exception for jet fuel.”

And we believe the government has the ability within the IRA to recognize the use of GREET for SAF, particularly because GREET is already required for other transportation fuels under the IRA.”

The American Coalition for Ethanol (ACE) concurs GREET must be used for the SAF tax credit. According to ACE CEO Brian Jennings, “The CORSIA model was developed by an international aviation safety organization who quite frankly lacks the experience and expertise of the scientists with the U.S. Department of Energy who developed the GREET model. What’s more, the SAF tax credit transitions into the 45Z Clean Fuel Production Tax Credit, which Congress requires the use of GREET by Treasury for making emission factor determinations. For these reasons and many more, GREET must be used for the SAF tax credit as well.”

Slashing CI to Zero

Gevo’s ETJ plant under construction in Lake Preston, South Dakota, is meant to showcase how corn-based ethanol converted to jet fuel can reach net zero—proclaimed in its name: Net-Zero One (NZ1). The 100 MMgy corn ethanol plant will be fully integrated with the ethanol-to-jet conversion process to produce 65 MMgy hydrocarbons, of which 60 MMgy will be renewable jet and the remainder renewable diesel and naphtha.

The yield loss from ethanol to jet is water produced in the first step in the ETJ process to create ethylene. The oxygen in ethanol (C 2 H 4 OH) is removed as water (H 2 O) leaving ethylene (C 2 H 4 ) — a short hydrocarbon chain that is then catalytically combined into longer hydrocarbon chains and distilled.

Every step of the way is well-established technology, Gruber stresses. On the jet conversion side, Gevo has partnered with Axens. “They have something like 100 of these hydrocarbon plants working in the petrochemical industrial. It’s not new technology, they’ve done this for years, but from petrochemical raw materials.”

Similarly, the fermentation side uses known technologies, but configured in new ways. “That’s why we’re building a green field plant. We’ve cut thermal load by 80 percent, just by our designs,” he says, adding that when CI reduction is the goal, it’s all about efficiency. “We wind up spending more capital on equipment than you would if you were building a commodity ethanol plant. We also are able to use some of the chemical energy produced during the jet fuel production and integrate it back into the plant.”

At a $850 million capital investment, Gruber admits it’s expensive. “The reason we do a vertically integrated plant is that I have many levers to adjust CI score. Our jet fuel is just jet fuel. The only thing that makes it interesting is the CI score. It’s all about how to drive that carbon reduction downward and keep the optionality for the future, because these are 20-year investments, and we know things will change.”

The key is to go after all renewable energy, Gruber says. “Everything we touch will be tied to renewable energy. That’s the real problem. It’s not the corn. Accounting for the corn is the problem, it’s not the corn. Energy is the real problem. That’s how we drop the CI score, by decarbonizing the energy.”

The electricity for NZ1 will be generated from wind from 20 turbines to be built and operated by Zero6 Energy (formerly Juhl Energy). A key to getting interest from power companies, Gruber adds, is to make the wind farm big enough. Wind will not only power the NZ1 plant, but it will produce the hydrogen it needs for the ethanol-to-ethylene step, with surplus hydrogen sold as a new coproduct. The ethanol-to-ethylene step also generates energy, which is recycled in the plant to replace fossil natural gas.

Gevo landed a USDA grant to help with another aspect of its CI reduction approach — paying farmers a premium for supplying sustainably produced corn feedstock. Gevo’s Verity Tracking platform has about 60,000 acres enrolled this year, Gruber says, demonstrating Verity’s use of block chain technology to verify farmers’ tillage and fertilizer practices, as well as other inputs.

Modern agriculture is misunderstood, Gruber says, with too many urban folks thinking all corn is all bad. “We’re out to make a transparent system, tracking how something is grown straight through to all the energy used in the plant, all the way to the marketplace and out to burning the fuel. Completely transparent. That’s the way you stop the arguments.”

When NZ1 becomes operational in 2024, Gevo won’t be done. NZ2 is on the drawing boards — a 300 MMgy ethanol equivalent to make 195 MMgy of hydrocarbons. “We’ve got several sites that could fit and ways to do it. We’ve begun the engineering. We’ve sold almost 400 MMgy jet on take or pay contracts. We make it. They buy it. That’s an important point for financing.”

Gruber also anticipates working with Gevo’s partners, Axen and Praj, to help other ethanol producers reduce their carbon intensity and diversify into hydrocarbons.

SAF Roadmap

While the roadmap document dances around the term “corn ethanol,” calling it “the current fermentation-based fuel industry” or “the existing starch ethanol industry,” it is clear the departments involved in writing the administration’s SAF Challenge Roadmap — DOE, DOT, USDA, EPA — see fostering ethanol-to-jet as important to achieving the goal of 35 billion gallons of SAF. The document calls for reducing the carbon intensity of the existing starch ethanol industry while increasing capacity without planting additional corn.

Other measures include:

—Conducting a market analysis of starch-based ethanol, the supply/demand impact of increased SAF demand, the availability of feedstocks, as well as R&D and policy needs.

—Reducing GHG emissions through the agricultural practices of corn production.

—Developing supply chains for bio intermediates such as cellulosic sugars, alcohols, bio-oils or biocrude, that are sufficiently stable to be stored and transported to another entity for further processing.

— Reducing ethanol-based SAF’s CI and increasing carbon efficiency by integrating carbon capture and sequestration, reducing energy for concentration of alcohols following fermentation and improving the tolerance of ATJ catalysts to impurities and water.

As ground transport electrifies, the document says, “SAF presents a potential market for existing biofuels.” It suggests that more than 400 biorefineries will be needed to produce 35 billion gallons per year, bringing new economic opportunities to rural America.

“There is sufficient feedstock to meet the projected needs of the U.S. aviation industry if cost, sustainability and production barriers can be addressed.”

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Working to Build a Net-Zero Sustainable Aviation System by 2050

The FAA is committed to making aviation cleaner, quieter, and more sustainable.  Here’s how we are going to do it:   

Climate Action Plan

Aviation fuel, technologies, flight operations.

At the United Nations Climate Change Conference in Nov. 2021, U.S. Transportation Sec. Pete Buttigieg released the U.S. Aviation Climate Action Plan that sets out to achieve net-zero greenhouse gas emissions from the U.S. aviation sector by 2050. Because transportation produces the most emissions, the U.S. DOT and FAA need to be a large part of the solution. This ambitious, but achievable action plan, will create a sustainable aviation system that the United States is committed to. The U.S. also will work with international partners to maintain and strengthen the Carbon Offsetting and Reduction Scheme for International Aviation .

• Climate Action Plan  (summary)
• Committed to Making Aviation Cleaner, Quieter, and More Sustainable - overview
• How Your Airport and Your Skies are Getting Greener – fact sheet
• U.S. Aviation Environmental Accomplishments for 2022 – fact sheet

Sustainable aviation fuels  (SAF) produced from renewable and waste feedstock can provide the greatest impact in our effort to reduce greenhouse gas emissions. [See chart above for details.] Such fuels have the potential to slash emissions by up to 100 percent and will be critical to the aviation industry’s ability to meet the net-zero emissions goal . SAF can be used safely in today’s fleet of jet aircraft, without modification, and are produced from wastes, residues, biomass, sugar, oils and gaseous sources of carbon. FAA has partnered with industry for more than a decade to develop SAF through the Commercial Aviation Alternative Fuel Initiative (CAAFI). The FAA is working with the Departments of Energy and Agriculture on a “SAF Grand Challenge” to expand SAF use to 3B gallons of per year by 2030 and 100% of use by 2050.

• NEW Sustainable Aviation Fuels page
• $300 Million in FAST-Grant Funding for SAF Projects –  news release
• Sustainable Aviation Fuels Update - slide presentation
• Potential Sources of Sustainable Aviation Fuels – fact sheet
• Commercial Aviation Fuel Initiative
• Sustainable Aviation Fuel Grand Challenge
• Flight Plan for Sustainable Aviation Fuel
• Putting Sustainable Aviation Fuels to the Test -  fact sheet
• Center of Excellence for Alternative Jet Fuels and Environment (ASCENT) sustainable aviation fuels projects

The FAA and partners in the aviation community launched the EAGLE initiative as the result of a Congressionally mandated report from the National Academies. The EAGLE team’s goal is to eliminate leaded aviation fuels in piston-engine aircraft safely by the end of 2030.

The FAA also is supporting research for piston aircraft to operate safely without  leaded gasoline  and encouraging  actions that minimize  potential exposure to aircraft lead emissions.

• EAGLE Partnership – Eliminating Leaded Aviation Fuel
• EAGLE partnership website
• Eliminating Lead Emissions in Aviation - fact sheet
• FAA Safety Briefing - Looking at the Future of AvGas
• NASEM Report – Options for Reducing Lead Emissions From Piston-Engine Aircraft
• Leaded Fuel Announcement - news release

Through the Sustainable Flight National Partnership, NASA and the FAA are working with industry to accelerate the development of more efficient aircraft and engine technologies with a 30-percent improvement in fuel savings compared to today’s planes, while also delivering substantial noise and emissions reduction benefits.

Recent news about the CLEEN cost-sharing partnership with industry can be found here . 

• Reducing Aviation Noise and Emissions - The Air Up There Podcast   
• Sustainable Aviation - The Air Up There Podcast
• ASCENT Aircraft and Engine Technology Projects  
• Special Conditions Rule - Electric Engine Airworthiness Standards
• Embry-Riddle Aeronautical University -  FAA Powers Electric Flight Research with New Grant
• ASCENT Project 052 -  Assessment of Electrification Strategies for Aviation
• 7 Ways That Drones Foster Sustainability - fact sheet
• Accelerating to the Future: The FAA's CLEEN Research Initiative - fact sheet
• FAA Invests $35M in Environmental Partnership with Top Universities - fact sheet

While the U.S. National Airspace System is efficient, there are opportunities for improvements in all phases of flight to reduce fuel burn. This includes improvements during taxiing, takeoff and landing operations as well as airlines flying more optimal trajectories that reduce fuel usage. Research shows that aircraft operations also affect the climate through non-CO2 emissions, especially via contrails and aviation-induced cloudiness. The U.S. government is supporting research to cost-effectively reduce climate impacts of aviation by limiting contrail formation. The FAA’s NextGen initiatives also support our environmental goals through innovative air traffic control procedures involving Performance Based Navigation and Optimized Profile Descents .

• ATC and Environmental Awareness - fact sheet
• Rolling to the Runway  news release  and Rolling to the Runway  media briefing
• OPDs 2022 news release
• OPDs 2023 news release
• Architect discussion about sustainability video
• Draft Environmental assessment news release
• Tower Design selection news release
• Tower Design news release
• Trajectory Based Operations (TBO)
• ASCENT Operations Projects
• Aviation Environmental Design Tool
• How the FAA is Championing a Greener Aviation Future – fact sheet
• 6 New Ways Your Aircraft May Be Flying Through the Sky

The government provides incentives to reduce emissions from airports through funding and development of several grant programs. Among others, they include the Zero Emission Vehicle Program , which provides grants to replace or convert on-road vehicles for zero-emission vehicles. The Energy Efficiency Program provides funding to identify and implement fuel reduction measures at airports. 

• Initiatives for reductions in airport carbon emissions

• Voluntary Airport Low Emissions program  and program  fact sheet
• ZEV program  news release  and  section 192
• FAA Harnesses the Sun to Save Energy and Lower Expenses - fact sheet
• Airport Cooperative Research Program
• Airport Environmental Review Process (NEPA)
• Compatible Land Use

While there are many benefits to air travel, aviation noise can be a concern for communities. Addressing this concern requires collaboration and community engagement among all aviation stakeholders including the FAA, air carriers, airports, aircraft manufacturers, research universities, other stakeholders and industry partners, local communities, and elected officials. Our Noise Landing Page offers basics about aviation noise , information about noise research , and how to share your concerns or questions with the FAA.

• Review of FAA Noise Policy. Here is the latest information .
• National Park Service plans. Here is the latest information . 

• Electric Propulsion Research Gets a Charge from Upgraded FAA Test Facility
• A Sustainable Standout in Oklahoma City
• FAA Tests Solar-Power Airfield Lighting at Smaller Airport
• 7 Ways That Drones Foster Sustainability
• 10 Potential and Surprising Sources of Sustainable Aviation Fuels
• 5 Ways the FAA is Championing a Greener Aviation Future
• 5 Videos about Aviation and the Environment That You Need to See
• 7 Ways Your Airport is Getting Greener
• The Environmental Page on “Cleared for Takeoff.”

• Aviation Fuel Business
• Case Studies

Comprehensive Disaster Drills

Haneda Airport is expected to play a role in the wide-area medical evacuation and emergency goods transportation services in the event of a large earthquake, and we also play an important part in this role as we have an aviation fuel storage facility at Haneda Airport. So we conduct comprehensive disaster drills in cooperation with the relevant organizations to prevent the spread of a fire and improve the response to disasters.

The drills are performed according to the business continuity plan (BCP) of Aviation Division; a disaster management headquarters is set up and an in-house volunteer fire brigade (comprising a protection team, firefighting team, guard team, rescue team, and reporting/communication team) is called upon, and actions are taken under the command of the fire brigade captain and communication and coordination are performed with the relevant organizations to confirm the roles of members.

Use of a Renewable Diesel Fuel

As part of our SDGs initiatives, Aviation Division uses a renewable diesel fuel for aviation refueling vehicles (fuelers) and refueling facility inspection vehicles.

A renewable diesel fuel is an environmentally friendly fuel produced in a hydrogen refining process using waste vegetable oil, animal fat and oil, and cooking oil, and which is quite different from oil-based light oil and can be used without mixing it with light oil.

Enhancement of Facilities

We enhanced the fuel receiving facility, oil storage facility, and delivery facility to cope with the planned increase in the annual number of landings and takeoffs at Haneda Airport.

The receiving facility has two berths where oil tankers can dock. The facility that could receive only one tanker was expanded so as to be able to receive two tankers at the same time.

The site of the oil storage facility was expanded to add two oil tanks (9,800 kl and 9,300 kl)

Three pumps were added to the delivery facility to be able to supply aviation fuel stably.

As a pioneer of the hydrant system, we will cope with the further development of Haneda Airport and the growing aviation demand.

Consultation on Fuel Supply Facilities

Taking advantage of the know-how acquired from the operation at Haneda Airport, we offer consulting services on design, construction, and operation of fuel supply facilities inside and outside of Japan.

Hazardous substances are handled at fuel supply facilities so it is critical to follow the laws and regulations such as the Fire Service Act.

We were engaged in the construction of a variety of airport fuel supply facilities inside and outside of Japan by assigning experienced knowledgeable engineers to consult with government agencies, filing applications on behalf of customers, coordinating the construction with contractors, managing on-site construction, and commissioning new facilities.

Recently, we consulted on the construction of the hydrant system in the international flight area at New Chitose Airport.

We will provide the best refueling facility that customers require with our technological excellence.

Refueling Excellence and Safety Review Board

A board meeting is held every year to improve the safety, accuracy, and speed of the refueling operation. The board members review the operation procedure and every action of the operators to enable them to compete with each other and refine their knowledge and skills to provide customers with safety and reliability.

• Aviation Fuel Supply Business
• Hydrant System

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Airline Business Plan

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Opportunity.

Economic growth and the requirements of redevelopment, not to mention the impending entry of several countries in the region to the European Union, are creating increased demand for air services between Western Europe and the countries of Southeast Europe and Turkey.

The market combines a variety of elements all of which demand a higher quality of air service than often currently available:

• Business travelers requiring convenience, reliability, speed, and schedules built around business needs.
• Government and international organization travelers, requiring the same elements.
• Personal and leisure travelers from the Southeast Europe/Turkey region who have the money to travel by air and who increasingly demand a higher level of service and convenience, but at an economical cost.
• The “Diaspora,” Personal and leisure travelers originally from the Southeast Europe/Turkey region, but now living and working in sizable numbers in the countries of Western Europe, with the same demands.
• Western European personal and leisure travelers, primarily traveling on the airline’s routes between Western European points.
• Seasonal (primarily summer, with some limited niche markets in the winter period) holiday travelers, primarily destined for Greece, Turkey, and the islands of the Mediterranean. Cost, reliability, convenience, and destination are their concerns.

The proposed new airline will appeal to all these distinct groups by offering better quality service (and in some cases, offering service where none now exists), at a higher level of safety, comfort, and convenience, and at reasonable fares, than currently available. The new airline also will focus on the niche markets identified in the Service Description section of this plan, enabling it to better serve and to become identified as the carrier of choice for those markets.

Competition

The overall airline industry operating between Western Europe and Southeastern Europe and Turkey consists of four primary segments:

• Established mainline European carriers (primarily Swiss International, Austrian, Lufthansa, Alitalia, Malev, Turkish) utilizing their Southeast European routes as spokes connecting to main hubs in Western Europe (or Budapest and Istanbul in the case of Malev and Turkish, respectively) and serving to feed traffic to their prime intra-European and trans-Atlantic routes (or domestic Turkish routes in the case of Turkish).
• Smaller, but generally well-established regional airlines primarily from Western Europe or the upper level of Eastern European states (primarily Swiss International, Tyrolean, and Adria) that perform essentially the same function as the mainline carriers or, in the case of carriers like Adria, link destinations in Southeast Europe to their own national capitals.
• Home-based Southeastern European carriers (such as ADA Air, Albanian Airlines, Avioimpex, Balkan Air, Hemus Air, JAT, and Tarom Airways) that often operate older, Soviet-built aircraft or turboprops, offer a generally lower level of service (though not always lower fares), and are often less highly regarded, including by travelers from Southeastern Europe. These airlines connect points within Southeast Europe, or they may connect Southeastern European destinations to major destinations in Western Europe.
• There also is a fourth segment worth noting, and that is the fairly significant charter market that exists within certain niche or seasonal markets. This market includes charter flights between Pristina and destinations in Switzerland and Germany, as well as primarily summer charters from Southeast Europe to New York and other destinations in North America. These charters are often operated by individual travel agencies or airlines, and often are categorized by a low level of service and utilization of older, often Soviet-built, aircraft. There also are the vacation charters that operate from Western Europe to Greece, Turkey, Cyprus, and the other holiday spots of Southeastern Europe and the Mediterranean.

It is anticipated that the proposed new airline would most closely fit into the second grouping above, but would compete effectively with all four main segments through a combination of a high level of safety and service, carefully selected routes, niche-market service, convenient schedules, reasonable and competitive fares, and modern, safe, comfortable aircraft. It also will offer service on under-served and unserved routes where little or no competition currently exists.

Air Leo will fill a niche in the growing air-travel and cargo markets linking Western Europe, and points beyond, to Southeastern Europe and Turkey; to achieve high, and profitable, load factors by identifying and serving key routes and city pairs currently unserved, under-served, or poorly served, and where significant unmet demand exists; and to set a new standard for air service and professionalism both within the target market region and beyond.

Expectations

Financial highlights by year, current alternatives.

The new airline’s main competitors will vary depending on market and route served, and the category of passenger. For the most part, competition can be expected as follows:

Business and Government/IO segments to and from Southeastern Europe

Austrian/Tyrolean

Swiss International

For SE European Regional and Diaspora Personal and Leisure Travelers

Balkan/Hemus

For Western European Personal and Leisure Travelers, as well as Business and Government/IO Travelers between Western European destinations

Air France/Air Inter

British Airways/CityFlyer 

Deutsche Air BA

TurkishJATKLM/KLM Cityhopper/KLM UK

For seasonal Holiday Travelers to Southeastern Europe and Turkey

British Airways

British Midlands

Hapag Lloyd

The larger, more established carriers often suffer from a lack of flexibility, and a focus on feeding their main intra-European and trans-Atlantic routes. The smaller regional carriers often are focused almost exclusively on their own core regional service. The Southeastern European airlines often suffer from poor service and poor reputations. And the larger, more established charter operators are focused on the holiday charter and package market.

Again, the extent of competition (and what is listed here is not comprehensive) dictates the importance of the new airline’s three-prong strategy to seek out unserved and under-served routes and city pairs, key niche markets where it can effectively compete or create its own market, and meeting peak travel demands on key regional, seasonal, and intermittent routes. It also points out the importance of standing out from the crowd through offering a higher level of service and convenience, and utilizing technology and a service-oriented staff to achieve recognition and passenger preference right from the outset.

Our advantages

In comparing the proposed new airline to its competitors, there are at least two levels of comparison that must be considered; the usually lower-standard airlines, both scheduled and charter, flying out of the Southeastern European region, and the higher-standard, more highly regarded airlines operating out of Western Europe.

Beating the former source of competition is both a reasonable and an essential goal. But comparing favorably, and even standing notably above, the latter also is an important objective since these airlines will represent direct competition to the new airline on many of its projected key routes, despite efforts to avoid such competition to the extent feasible.

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In comparing the proposed new carrier to both its Southeastern European and its Western European competition, it is important to look at those factors that determine how most travelers choose an airline. They include the following (and the order of importance is different for each traveler and each situation, but the most important factors are listed):

• Safety, actual and perceived;
• Cost, and range of fares offered;
• Destinations served;
• Availability of seats;
• Availability of fares;
• Convenience of flight schedules, times of arrivals and departures;
• Frequency of flights;
• Connections, including reliability and convenience of connections;
• Nature of flights: non-stop, direct, number of stops, aircraft changes;
• Availability of different classes of service;
• Onboard comfort, service, meals, and amenities;
• Type of aircraft, including jet or non-jet, size, and speed;
• Age and condition of aircraft;
• Ease and efficiency of reservations and ticketing;
• Reliability and on-time departures and arrivals;
• Ground service;
• Reliability and quality of baggage handling;
• Friendly, competent service in reservations, check-in, and in the air;
• Overall reputation of airline;
• Nationality of carrier;
• Factors of personal preference.

While no airline probably can excel in every one of these areas, the closer an airline comes to "excellent," or at least "good," ratings in each of these key areas, the better it will fare in its competitive standing.

Both in the overall design of the airline and its basic operational features, as well as in its management, quality control, and day-to-day operations, the proposed airline is expected to stand out positively in almost every regard.

Competition with Southeastern European carriers While not all Southeastern European carriers fit the stereotype presented here, and several are in the process of privatization and ostensible upgrading, most do operate at a lower level of service than is customary in Western Europe.

It is not uncommon for carriers in the region to operate older Soviet-built equipment (perceived to be less comfortable, less safe, and less reliable than its Western competition – perceptions that often are accurate).

For instance, such competing airlines as Avioimpex of the Former Yugoslav Republic of Macedonia, Albanian Airlines (Albania’s Kuwaiti-owned private carrier), ADA Air (a smaller private carrier in Albania with which BalkConsort has been partnered for certain purposes), Hemus Air and Bulgarian Airlines, both of Bulgaria, Tarom, Romania’s state carrier, and even Malev, the Hungarian airline, still operate Soviet-era aircraft in their fleets. In some cases, these aircraft are turbo-prop powered, and not pure jet.

While often it is relatively inexpensive to lease such aircraft, their operating costs tend to be significantly higher than newer, more fuel-efficient Western-built aircraft, and their safety, reliability, and noise factors are often poor, in some cases limiting their ability to operate in some markets.

Service levels are poor in general, among both scheduled and charter carriers, which represent a significant part of the market, particularly in service to Kosovo and Turkey, the two niche markets identified for the new carrier.

By utilizing modern, safe, reliable, and cost-effective Western-built regional jet aircraft, the proposed new airline will offer a far more attractive alternative to the traveler both from within and outside Southeast Europe, and will be able to operate with far lower fuel and maintenance costs than the competition.

The comfort, reliability, speed, and safety of the new airline’s aircraft all will enable it to be the airline of preference for virtually all business, government, and organizational travelers from both within and outside the target region when traveling to or within the region, and it also will be preferred by most leisure and personal travelers, including those from with the target region, as well.

Greater reliability and punctuality of the aircraft, augmented by state-of-the-art navigational devices that permit operation under a wider range of weather and visibility conditions, will enable the airline to compete most favorably on those bases also, and will ensure the least likelihood of flight cancellations, postponements, and missed or late connections.

On the basis of fares, the new airline will offer highly competitive fares which, in many cases, should be below those offered by its Southeastern European competition. Higher load factors, combined with greater efficiency both in operational costs as well as in reservations, ticketing, and check-in, will enable the new airline to be highly competitive from both a cost and a quality perspective, and will also enable it to retain a higher percentage of its revenues.

In short, the local competition, except in a few cases (such as Aegean/Cronus Airlines, and to a lesser extent Olympic Airways, from Greece; Adria from Slovenia; in some cases Malev, from Hungary; and the Turkish carriers) will not represent very strong competition to the new airline, and particularly in attracting the primary market groups at which the new carrier will be aimed.

Finally, the new carrier will be seeking out, as part of its business and marketing strategies, routes and city pairs that offer unserved or under-served demand. That strategy also will help reduce the threat from competition, and will enable the carrier to further establish itself as the carrier of choice in Southeast Europe.

Competition with Western European carriers The competitive picture is somewhat different when Western European carriers represent the competition. Many of the new airline’s competitive advantages relative to Southeastern European carriers are erased or at least minimized.

In most cases, the new airline will be competing with other carriers operating aircraft of a similar nature. Safety, comfort, convenience, and reliability, as well as in many cases cost, all are on a similar footing. To stand out from the crowd, the airline must do things either differently or better, or both, than its competitors, and it is here that both the design and the management of the new airline must be at their sharpest.

The competition in this region will include such well-established carriers as Swiss International, Austrian, Tyrolean, Lufthansa, KLM, British Airways, Air France, Alitalia, Sabena, and others of that nature. More recent, lower-cost, and "hipper" start-ups such as EasyJet, Go Fly, Bluebird, Virgin Express, and others like them will represent even more challenging competition in some cases.

But unlike any of its competitors, which may employ one or two or several elements of the proposed new airline’s marketing strategies, informational and electronic technologies, and management techniques, none of them – none – employ the full range of those elements that the proposed new airline will employ.

Consequently, the proposed new airline will be the real equivalent of a whole new generation of airline (regional or beyond), and will represent the kind of revolution in the aviation world that Pan Am, Icelandic, Laker Air, PEOPLExpress, Virgin Air Atlantic, EasyJet, and Air Blue represented in their day (and in some cases, their "day" is still today).

In that regard, the new airline might well be known as "TechnoAir" given its extensive deployment of state-of-the-art marketing, reservations, ticketing, check-in, baggage- and cargo-tracking, and operational and safety technologies.

In other key areas – routes, schedules, and fares – the new airline also will be carefully designed to either compete highly effectively or, alternatively, to go where the competition is limited or non-existent.

Requirements for interline arrangements In order for the new airline to be able to obtain the interline arrangements such as code-shares, interline fare agreements, frequent-flyer mileage sharing, and so forth, that will be so important to its competitive posture and overall success, it must:

• Fly Western-built aircraft, preferably pure jet.
• Meet the standards to have a two-letter airline code.
• Meet the highest standards for safety, reliability, and service.
• Be accessible through normal reservations and ticketing systems.

Meeting these requirements, and negotiating the desired agreements, will be priorities from the outset in setting up the new airline. Additionally, partnering and interline arrangements will be carefully identified and sought that will offer the new airline strategic partnerships that will help give it the "cover" of larger, more established carriers, and also the status and service and growth potentials it will need to grow beyond its initial stage and to become a true presence in the aviation world.

Keys to Success

In descending order of importance, the five critical keys to success for the proposed new regional airline are:

• Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the aviation business; familiarity with, and belief in, the utilization and benefits of the latest aviation, electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization’s personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of the proposed new airline.
• Intelligent, progressive, and aggressive marketing that identifies the airline as a different kind of player , one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger’s needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and fare pricing, all will form key pillars of the marketing strategy.
• Identification, through careful market research, of unserved or under-served routes and city pairs  in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of aircraft envisaged.
• Use of an all-jet fleet of newer, modern, Western-built regional aircraft  that offer a high level of comfort, safety, and fuel and operational efficiency and flexibility, which meet all normal aviation standards, and which offer sufficient, but not excessive, passenger and cargo capacity on the envisaged routes.
• Use of advanced electronic and information technology  to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger, baggage, and cargo handling; and enhance customer convenience and satisfaction.

Additional important, though less critical, keys to assuring the airline’s success include the following:

• Identifying, negotiating, and entering into, in the pre-operational stage and early on, beneficial associations, cooperations, and partnerships with larger, more established, highly regarded carriers  both within and beyond the target market region to offer interline arrangements, through fares, frequent-flyer mileage sharing, and convenient hubbing and long-distance onward connections to passengers. Successful execution of this element of the business plan is crucial to the overall success and growth of the airline, and must be kept in mind in the organizational plan and structuring of the airline.
• Establishing a high level of operational oversight and quality control  that will ensure that the airline always lives up to its marketing commitments and fulfills the promise of a high level of service, customer satisfaction, convenience, and safety, at a reasonable, highly competitive fare.
• Avoiding the temptation to go head-to-head with established carriers  on routes that already are well-served, unless solid evidence exists of additional, significant pent-up demand, or widespread customer dissatisfaction with existing services.
• Maintaining flexibility that enables the airline to always respond and adapt to changing market conditions and opportunities, without being erratic, and employing equipment, scheduling, and staffing on a basis that is sufficient to get the job done properly, efficiently, and at a high rate of return, without "overkill" or fielding costly excess capacity or, conversely, unduly cancelling scheduled flight operations.
• Identifying, developing, and quickly and cost-effectively exploiting opportunities  for new markets, new market concepts, and expanded sales potential.
• Supplementing regularly scheduled passenger service  with both regularly scheduled and also special cargo services when and where sufficient demand exists, and also with seasonal, peak-period, and other intermittent passenger services on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand. Larger, longer-range, or specialized aircraft may be employed on a charter or wet-lease basis to provide these supplemental, but potentially highly profitable, passenger and cargo services.
• Looking to combine the core aviation business with ancillary marketing concepts and activities  and ground-based operations that support, supplement, and complement the aviation elements of the business, including such activities as package-, group-, and charter-travel program offerings; value-added sales and customer services, both land- and Internet-based; construction and operation of enhanced passenger-, baggage-, and cargo-handling facilities and services; and other logical business pursuits both within and outside the immediate aviation business.
• Avoiding growth for growth’s sake , and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.

Marketing & Sales

Marketing plan.

The proposed new airline intends to cut out new territory as it goes about marketing itself. While it will clearly serve the target markets of Southeastern Europe and Turkey, it will just as clearly be a different kind of player on the field, and will seek to be known not only as a Western airline, but at the cutting edge of the aviation business in Europe.

The airline’s emphasis on the latest information and electronic technology, and its stress on comfort, convenience, safety and customer service, will be cornerstones on which the marketing strategy will be built.

The airline will utilize a combination of methods to achieve the recognition that it both desires and needs. A fairly large advertising budget is planned to buy the space and time to get its name and message in front of the largest possible group of potential customers that it can. Given the crowded field of European regional airlines, it is better to come on like a lion than a lamb, or you may be lost in the herd.

The airline will also utilize public relations to good advantage to extend and supplement its advertising budget.

Everything about this airline, from its name to its colors, from the look of its planes to its airport kiosks, from its smart but informal crew uniforms to its advertisements and literature should set it apart. And it costs little more to do things freshly and smartly than the more ordinary way of doing things. An organization is new only once in its life, so the airline should grab that opportunity and get all the attention it can at the outset. And it needs to have both an adequate budget, as well as an outwardly directed management, to achieve that end.

The new airline will become known as one where all the staff practice the motto, "We have a job to do, and we do it every day – for you!""

The airline’s sales strategy will flow from its overall concept and marketing approach. Mass marketing, but with a personal touch utilizing airline employees as spokesmen and women to explain that "I have a job to do, and I do it everyday – for you!", will aim to steer as many people as possible either to the airline’s website, or to its telephone-based customer-service representatives. While clients are free to utilize their own travel agents, and the airline may also want to be accessible through general travel sites such as Travelocity, the more customers that can be encouraged to use the airline’s own reservations and ticketing services, the less revenue will have to be shared in the form of expensive commissions.

E-reservations and e-ticketing, combined with e-check-in, make the most sense for any customers who have online access, and also for the airline itself. But nonetheless, the airline must not lose sight of the fact that many people do not have access to the Internet, or do not care to use it to arrange their travel, or perhaps just prefer a more personal touch, and so other means of access must always be readily available.

The regional and specialized sales and marketing managers, as explained in the section on Personnel, will concentrate their effort on targeting specific clients that have the potential to offer corporate or group travel (including contract arrangements), or who are potential air-cargo customers. The airline will not have the resources to field a large sales team, and so these regional managers must target their efforts, and the airline must effectively utilize its mass marketing methods as well as the Internet to attract individual travelers who, once they experience the new airline, hopefully will feel a close affinity toward it and will become loyal and happy customers.

Locations & Facilities

Financial, traffic, and other studies currently are underway to determine the optimal prime basing location for the proposed new airline. Among the locations under study are the following eight:

• Luxembourg, Luxembourg;
• Berlin, Germany;
• London City Airport, London, United Kingdom;
• Stanstead Airport, London, United Kingdom;
• EuroAirport, Basel/Mulhouse, Switzerland/France;
• Amsterdam, The Netherlands;
• Cologne/Bonn, Germany;
• Munich, Germany.

In selecting a location to base the new airline, the following 11 major considerations are being evaluated, in roughly descending order of relative weight:

• The tax and business regime in place in the selected locale. A low profit tax rate and a regulatory and political climate supportive of business, and particularly foreign investment, are key considerations.
• The availability of relatively low-cost facilities suitable for basing both the business and aircraft-support operations, as well as the aircraft, is another key consideration.
• The availability of sufficient landing and parking slots and gate facilities to permit the desired level of service at the base airport.
• The ability to interconnect with one or more major carriers for onward interline arrangements both within Europe as well as to trans-Atlantic and global destinations.
• A location that, given the maximum range of the selected aircraft, will enable non-stop flights to the most important destinations within the new airline’s service area in Southeastern Europe and Turkey and, at most, one-stop service to more distant or secondary destinations.
• The existence of relatively high-traffic volume between the base location and one or more key interchange points to provide sufficiently high load factors between the base location and onward destinations and points of origin.
• The existence of a reasonably high level of cargo traffic, including opportunities for interline trans-shipment of both inbound and outbound cargo.
• The support of a larger airline with which the proposed new airline can establish a particularly close working relationship.
• The support of local airport and aviation authorities to facilitate establishment, certification, and ongoing operation of the airline and its aircraft.
• A location outside of the U.K. to facilitate British trade finance on acquisition of the new aircraft, should decisions be made to acquire British-built Avro aircraft as previously noted, as well as to purchase, rather than lease, the aircraft.
• A range of other factors, including the availability and cost of local skilled workers, the growth potential of the market selected, year-round climatic and weather conditions as they may affect flight operations, the "cache" of the locale for marketing purposes, the cost and convenience or difficulty involved in command and control of the airline involving key personnel, some of whom may be based at various other locations, and so forth.

It is anticipated that most routine maintenance will be performed at the base location, with some more minor maintenance and repairs relegated to other locations in the route network. In both cases, most of this routine maintenance and repair work will be contracted out to established and experienced service providers, reducing the need for the new airline to maintain its own extensive maintenance and repair teams and facilities.

The airline will, however, perform its own normal line maintenance at home base and will utilize locally available services away from home. Aircraft also may be based at key airline hub locations away from the home business base as well.

With acquisition of British-built aircraft, major overhauls and heavy maintenance may be performed at British Aerospace’s Woodford facility in the U.K. on a selective basis. In addition, it is anticipated that separate fixed-cost maintenance agreements will be entered into for both the airframes and the engines, or these elements will be included in any dry-leasing arrangements entered into.

Estimates for total labor and spare parts costs have been calculated as a fixed per-hour cost and included in the portion of this business plan dealing with anticipated operating costs.

Sufficient apron and hangar space for staging, parking, and storing, as needed on a short-term basis, up to the entire initial five-aircraft fleet will be required at the base location and any other hub locations selected.

As the fleet expands over time, additional parking and storage space will be needed either at the main base location or at regional hubs in the airline route network. Additionally, sufficient office space, preferably in one central location at or near the base airport, will be required to house the airline’s main administrative offices and its central reservations system.

While the airline may consider establishing its own sales offices in key market locations, in general sales will be handled through a combination of Internet marketing utilizing the airline’s own website as well as other Internet travel websites, designated general sales agents in given locales, and regular travel agencies everywhere.

Flight may be based on aerodynamics, but the proposed airline will be based on technology, and lots of it. Efficiency and convenience through use of the most up-to-date informational and electronic technologies, in addition to modern aviation and navigational technologies, are guiding principals of the proposed new airline. Technology will also be a cornerstone of the new airline’s marketing strategy.

Among the technological features  the  new airline will offer are:

• Internet marketing and online reservations (e-reservations) and sales (e-sales)  that will provide quick and easy access to airline schedules, flight availability, reservations, and ticketing to a wide range of customers worldwide. This eliminates payment of agency commissions and keeps costs low – savings that can be passed on to the customer.
• Electronic ticketing (e-ticketing)  which will enable passengers to obtain their tickets online and avoid the need to obtain paper tickets from airline offices, travel agencies, or at the airport. It also frees the airline from having to stock, track, and issue tickets and maintain paper trails of them. Again, more savings for both the airline and the customer.
• Electronic check-in (e-check-in)  that will virtually eliminate waiting in line to check-in for e-ticketed passengers, enabling them to confirm their identities, obtain their boarding passes, and check-in their baggage (and even purchase tickets upon check-in) utilizing a user-friendly kiosk that eliminates those last-minute frustrating waits to get to the counter. And it also greatly reduces the airline’s needs to staff check-in desks, control long lines, employ local contract ground staff, and expend money and resources on an antiquated system that only adds to the traveler’s inconvenience and frustration. Another win-win situation for both airline and passenger.
• Electronic baggage tracking (e-baggage tracking)  which will enable the airline to track any piece of baggage from check-in to final pick-up and claim. If courier services can track parcels as they move around the world, and enable customers to track their parcels using tracking numbers and online tracking systems, then why can’t the same system be used to assure that no passenger will ever again have to wonder where his or her baggage might be? There may still be contingencies (such as late check-in, lack of space, security restrictions, late connections, and so forth) that cause baggage not to be placed on a given aircraft, but at least both the airline and the customer can be assured that they both know exactly where the given item of baggage is at any moment, and when it might be expected to arrive at the destination. This could well be an exclusive feature of the proposed new airline since no other airline appears to be utilizing it at present.
• Electronic cargo tracking (e-cargo tracking)  is the same basic idea as e-baggage tracking, and will use the same basic system, only for tracking cargo and parcels.

It also will track all elements of a given passenger’s or customer’s transactions and interactions with the airline, from initial flight inquiry through reservations, ticketing, check-in, flight, connections, and final baggage pick-up, claim, and check-out, as well as any standing preferences, follow-up comments, inquiries, or problems. It also will monitor things like weather conditions, flight delays or projected delays, gate jam-ups, and other contingencies, and will automatically notify both appropriate airline personnel as well as passengers and customers of any advisories, warnings, or changes.  

• Electronic financial control  (e-finance) will enable complete electronic financial control and monitoring of the airline’s finances, clear advantages.
• Additional technological features will be incorporated on-board the aircraft  to provide flight crews with the latest navigational and communication technologies to assure the highest level of passenger safety and also airline reliability and punctuality. Included in this technology, in the case of the Avro aircraft, is all-digital ARINC 700 avionics with advanced Cat IIIb low weather-minimal landing capability to permit landings under the poorest permissible approach and visibility conditions

Equipment & Tools

Another issue still being evaluated and which will be decided is the question of how to acquire the aircraft. For a variety of reasons, including the ease with which the leases can be cancelled by the lessor and the lack of "ownership" of the aircraft, wet leasing has been ruled out except for short-term acquisition of aircraft that would be employed in meeting peak demand-type services as outlined elsewhere in this business plan.

The two remaining options both need to be examined from cost, flexibility, and finance points of view: Dry leasing the aircraft (generally on a five-year lease), or outright purchase. Both provide long-term control over the aircraft, and while both options tend to restrict changes in the fleet that might be preferred after the initial years of operation, market conditions and high demand for aircraft indicate that it would be relatively easy to be released from the leases, or to sell or lease the aircraft to new owners or operators, or to return them to their sources.

A number of leasing sources are available for the BAe Avro aircraft being considered, and some used aircraft also are available from time-to-time on the market from various sources. In addition, new aircraft can be acquired directly from the manufacturer on a variety of different plans and options, as well as used aircraft on occasion.

Cost factors employed assume dry leasing of new Avro RJ100 aircraft in 99-seat configurations, with a comparison for purchasing. It is anticipated that finance guarantees up to 85 percent of the acquisition cost of the aircraft could be obtained from the Export Credit Guarantee Department of the United Kingdom (ECGD) for purchasing British-built aircraft exported from the UK.

Ownership & Structure

Reflecting the overall nature of the organization envisaged, there is very little hierarchy in the organizational plan for the airline. In an operation where safety and accountability are so much at issue, obviously someone has to be in charge, and there also have to be clear lines of authority (and expertise) in the operational aspects of the airline. But beyond that, the organization is designed around flexibility, a high level of personal accountability and responsibility, and common cross-training and sharing of responsibilities as need arises and circumstances permit.

The levels of organization (reflected in the personnel and salary chart in the Personnel section of this plan) are as follows:

• President and chief executive officer (who reports to the Board of Directors of the airline company).
• Vice president and general manager.
• Functional vice presidents for the core areas of commercial activities, finance, and operations.
• Directors covering sales and marketing, communications, human resources, flight safety, flight operations, ground operations, maintenance, and information systems.
• Managers in sales and marketing, as well as in station management functions.
• Professional, engineering, ground handling, service, and other support personnel.

On the flight side, which reports to the director of flight operations and also responds to the director of flight safety, there are only three levels of personnel:

• First officer;
• Flight attendant.

Salary scales and levels of authority have been simplified and based on a rational scale allowing for similar levels, though of different natures, of functional work to be compensated at the same pay levels. The overall objective is to foster an atmosphere of cooperation and shared responsibility to the overall mission, which is to provide the customer and client with the best possible, safest, and most satisfying experience with the airline. Cross-training and cross-functioning are important parts of the organization plan, as explained in more detail elsewhere in this document.

Management team

A complete management team, covering the elements of administration, aviation, and finance, is being assembled. This team brings together a wide range of skills and backgrounds covering the key areas needed to form, launch, and operate the airline, and from a range of national origins.

6.3 Management Team Gaps

It is premature to speak of management team gaps until a core management team is named. The individuals who will play leading roles with the new airline will need to possess the widest possible range of the requisite skills. The current project team believes investors in the airline will want to play a key role in helping formulate core management. Once primary investment is established, that step can be undertaken, and it is anticipated that the core team will be finalized quickly.

The new airline will need people with skill, experience, energy, and vision to head up and serve in such areas as information management, flight safety, aviation operations, aviation maintenance, ground operations, sales and marketing, communications, and human resources management. Also good pilots, co-pilots, cabin crew members, and ground staff, and administrative staff.

BalkConsort anticipates putting together the best possible airline management team in the business, one that also shares the common vision of what this new airline truly can be and what it can become.

Financial Plan investor-ready personnel plan .">

Key assumptions.

In addition to the general financial and business assumptions presented in  the following table, the key parameters presented on the next page also were included as Operating Assumptions in formulating the financial portions of this business plan.

Every effort was made to be realistic in these Assumptions, and if anything they were formulated conservatively, particularly in calculating initial load factors and revenue yields which, in practice, should be considerably higher than offered here. Additionally, passenger and cargo fares were considered to be flat over the entire period covered by this plan to compensate for the possibility that additional competition could force fares to remain relatively constant over the period. However, the objective of this exercise was to show that the proposed operation will be profitable even with much lower revenues than would normally be expected, and the numbers do in fact confirm a profitable outcome.

Additionally, expected net revenues from offering peak-demand special flights also are calculated. They are set apart separately from the scheduled-service revenues to show that both types of service – and particularly the more important scheduled service – are viable and the airline will be profitable even without these additional revenues.

The assumptions utilized here are based on dry leasing new Avro RJ100s at a high level of outfitting and with necessary spares included. A separate set of figures is provided following the Operating Assumptions section which gives a cost comparison should the decision be made to purchase the aircraft new, utilizing ECGD export financing for 85 percent of the purchase price of the aircraft.

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

Start-up Expenses

Legal and consulting $200,000

Route and market study $100,000

Office supplies, stationery etc. $10,000

Brochures and marketing materials $30,000

Design consultants $60,000

Corporate insurance $20,000

Office rent $50,000

Software and systems development $100,000

Expensed equipment and off. furniture $150,000

Expensed vehicles (8) $100,000

Public relations and advertising $80,000

Crew, staff training and manuals $60,000

Other $30,000

TOTAL START-UP EXPENSES $990,000

Projected Profit and Loss

Projected balance sheet, projected cash flow statement.

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Are Big Ag and the USDA rigging the rules for Sustainable Aviation Fuel project?

The easiest way to win any game is to rig the rules.

That’s what Big Ag and its loyal boosters at the Department of Agriculture (USDA) appear to be doing to make sure their new project, Sustainable Aviation Fuel , or SAF, a hoped-for 3-billion-gallons-a-year jet biofuel market by 2030 and 35 billion gallons annually by 2050, flies despite market gravity and basic science.

To clear the way for corn-based ethanol to become the dominant SAF feedstock, “qualifying producers can earn a minimum $1.25 tax credit per gallon” that can “increase to as much as $1.75 gallon” Andrew Swanson , a University of California (Davis) resource economist, explains in a recent  farmdocDAILY  post. 

Farm and Food: Big Ag reaps the benefits from USDA's wasteful, expensive manure-making program

Those market-making tax credits, included in 2022’s Inflation Reduction Act (IRA) , “are in addition to any fuel credits earned under the RFS,” today’s ethanol-enabling federal Renewable Fuel Standard , and state sweeteners like California’s carbon credits.

The “stacked” credits are not just “lucrative” to potential SAF producers interested in the “jet fuel conversion processes”; they're the whole ballgame. Without them, SAF has little chance of ever taking off.

“However,” Swanson explains in his lengthy, balanced report, “there is a catch.” For any future SAF producer to “receive these tax credits, a fuel must have 50% less emissions than petroleum jet fuel.”

That’s Everest-tall for ethanol and more than double RFS’s comparatively meager “20% less emissions than petroleum gas” standard for automotive fuel.

There’s more. According to Swanson, SAF emissions must comply with “standards set by the International Civil Aviation Organization ” that show “SAF from corn-starch ethanol has higher emissions than petroleum jet fuel.” That means “ethanol producers do not currently qualify for the IRA tax credits.”

But wait, this is ethanol, the federally-mandated biofuel that over the last 40 years has had more lives than the hardiest barn cat. It’s survived decades of sketchy economics, questionable carbon emissions data and, most recently, the fast rise of electric vehicles. 

To win the SAF fight, Swanson notes, the Biden Administration — under intense pressure from Big Ag’s ethanol lobby and USDA’s advocacy — needed to rejigger the SAF emissions rules just to get ethanol into the game.

So “The Biden Administration formally stated in December that the Treasury Department will adopt a different model to calculate ethanol’s emissions for SAF. This model is called GREET,” or, in bureaucrat-speak, Greenhouse Gases, Regulated Emissions, and Energy use in Technologies .

Better yet, this new, customized model yielded a new, customized emission number. “According to GREET, corn ethanol represents a 43% reduction in emissions from petroleum gasoline.”

I know, a miracle, right?

Although that number still doesn’t clear SAF’s steeper hurdle to unlock IRA’s tax-credit gold mine, Swanson says, “… using GREET will certainly reduce the emission gap between ethanol SAF and the 50% threshold — if not eliminate it completely.”

“Moreover,” Swanson adds, “exploring how GREET determines the emissions of ethanol will reveal how ethanol producers could  surpass  the 50% threshold.” The most obvious places to start are “the three largest sources of emissions for corn ethanol … corn production, biorefining, and land use change.”

Of the three, biorefining offers an extraordinary example of how this novel, Department of Treasury math magically makes ethanol “green” enough to enter SAF’s tax-credit heaven.

For example, under GREET, just “Switching from natural gas to renewable natural gas” during ethanol’s refining process, then employing “carbon capture and sequestration … would reduce the carbon intensity of ethanol SAF” to meet the necessary IRA threshold.

In other words, potential SAF refiners can grab the biofuel’s tax credit billions by first grabbing carbon credits generated by other heavily-subsidized, deeply controversial federal “green” programs like methane-making manure digesters and carbon-capture pipelines.

Why all the bald-faced rule rigging — and a spectacular tax credit triple jump — to make SAF fly? More on that next week.

Alan Guebert is an agricultural journalist. See past columns at  farmandfoodfile.com . © 2024 ag comm

Energy Transition / Government

UK to Require 10% Sustainable Aviation Fuel in Jet Fuel Mix by 2030

The UK government announced today that it has confirmed its target mandating at least 10% sustainable aviation fuel (SAF) in the UK jet fuel mix by 2030.

Fuel accounts for the vast majority of the aviation sector’s emissions. Generally produced from sustainable resources, like waste oils and agricultural residues, SAF is seen as one of the key tools to help decarbonize the aviation industry in the near- to medium-term. SAF producers estimate the fuels can result in lifecycle GHG emissions reductions of as much as 85% relative to conventional fuels.

Efforts to meaningfully increase the use of SAF by airlines face significant challenges, however, including the low supply currently available on the market, and prices well above those of conventional fossil-based fuels. Globally, SAF currently represents less than 0.1% of jet fuel volumes.

The new UK announcement forms part of the government’s sustainable aviation fuel mandate, which will come into force in January 2025, subject to parliamentary approval. The mandate follows the launch by the government in 2022 of its “Jet Zero” strategy to achieve a net zero emissions aviation sector by 2050 which identified priority action areas including accelerating supply and demand of SAF, as well as including improving the efficiency of aircraft, airports and airspace, supporting the development of zero-emissions aircraft, and developing carbon markets and emissions removal technologies to help offset residual emissions.

According to the UK Department for Transport, the government’s targets will see around 1.2 million tonnes of SAF supplied to the UK airline industry each year, with the SAF industry estimated to add over £1.8 billion to the economy and create over 10,000 jobs.

Interim and long-term SAF targets under the plan include 2% SAF in the fuel mix in 2025, and 22% in 2040.

The government added that its plan aims to ensure that its plan doesn’t come at the expense of consumers, with the plan including a review mechanism to help manage prices and minimize the impact on ticket fares for passengers.

In addition to the new mandate, the government also announced the launch of a consultation into a range of options for a SAF revenue certainty scheme, aimed at guaranteeing revenue from SAF, and providing producers and investors with confidence to invest in the industry, with the consultation including a preferred option of a guaranteed strike price, or a pre-agreed price of SAF supplied to the UK market.

UK Transport Secretary Mark Harper said:    

“As part of our plan to grow the economy, the measures announced today will give both UK aviation and the UK SAF industry the certainty they need to keep creating skilled British jobs while giving passengers the freedom to continue travelling by air in a way that’s fit for the future.”

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Simple Flying

How a recent increase in fuel tax for business jets will affect the private jet industry.

The proposal also included lengthening the depreciation terms of business aircraft.

• Biden proposed an increase in fuel taxes for business jets to ensure a fair share compared with commercial airlines.
• The proposal includes a jet fuel tax hike from 21.9 cents to $1.06 per gallon by 2029 & elimination of major tax breaks for private jet operators.
• Business aviation organizations, including NBAA, oppose the proposal, citing a negative impact on industry, jobs, and competitiveness.

On Monday, March 11, the President of the United States, Joe Biden, officially submitted a proposal that would increase fuel taxes for business jet operators . The White House indicated this proposal was to ensure business jet operators pay their share compared with airline passengers. Airline passengers already pay special taxes on every ticket that is purchased, so this proposal would attempt to even out the aviation market, according to the White House. Per AIN Online and the United States Department of Transportation (USDOT), private jets account for 7% of all operations handled by air traffic controllers.

However, private jet operators contribute just 0.6% of the taxes that fund the Airport and Airway Trust Fund, which provides funding for the aviation system in the United States. This trust fund covers the majority of the Federal Aviation Administration's (FAA) annual budget.

Initial proposal

The proposal released on March 11 contained two major rule changes for the private aviation industry. The first rule change indicated an increase in the jet fuel tax for all business jet operators. Currently, there is a 21.9 cent tax per gallon of aviation fuel bought. The plan would eventually increase this tax to $1.06 per gallon by 2029. This tax is applicable to any non-commercial operator.

This proposal would be rolled out in five phases. Per the Department of Transportation,

"In the first year, the jet fuel tax would increase to 38.64 cents with a 16.84 cents per gallon increase in each subsequent year until 2029."

The other major rule change included in Biden's proposal is to eliminate a major tax break utilized by many private jet operators. The new proposal would extend the depreciation length for private jets to seven years. This would match the depreciation length of passenger air carriers instead of the depreciation length of major business assets like cars.

The major proposal was filed in line with the budget request for the USDOT. The budget requested for the DOT was $109.3 billion. In this request, nearly $22 billion was dedicated to supporting the FAA, per AP News . These funds would also assist the FAA in hiring over 2,000 new air traffic controllers and also to replace aging FAA facilities across the United States.

Response from the private aviation industry

Business aviation organizations across the United States came out against the recent proposal. Per AIN Online, the President and Chief Executive Officer of the National Business Aviation Association (NBAA), Edward Bolen, spoke out against the proposal, saying,

"The Biden administration’s sweeping plan would hurt business aviation and the jobs and communities that depend on it and make it harder for US companies to compete in a global economy. Among the proposals that single out business aviation for onerous treatment is a five-fold fuel tax increase, even though current fuel taxes already cover the incremental cost imposed on the aviation system. We urge Congress to tell the president that his gambit won’t fly with the citizens, companies, and communities that rely on business aviation."

Executives from other companies across the US, such as the CEO of the General Aviation Manufacturers Association (GAMA) and the CEO of the National Air Transportation Association (NATA).

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• Aviation and the environment

Aviation fuel plan supports growth of British aviation sector

Measures announced to give UK aviation and the SAF industry the certainty to keep creating skilled British jobs while ensuring air travel is fit for the future.

• plans unveiled for world leading sustainable aviation fuel mandate, with 10% of all jet fuel set to go green by 2030
• SAF industry estimated to boost the economy by £1.8 billion and create more than 10,000 jobs across the UK by 2030
• forms part of UK ’s world-leading commitment to cut emissions while minimising impact on consumers

The government has confirmed new targets today (25 April 2024) to ensure 10% of all jet fuel in flights taking off from the UK comes from sustainable sources by 2030 through its Sustainable aviation fuel mandate .

The UK ’s SAF mandate, which, subject to parliamentary approval, which will come into force in January 2025, will be one of the first in the world to be put into law, once again putting the UK at the forefront of decarbonising air travel. It follows the world’s first commercial 100% SAF transatlantic flight taking off from Heathrow in November – backed by up to £1 million in government investment.

Following extensive consultations with the industry, the government has committed to ambitious but achievable targets that will see around 1.2 million tonnes of SAF supplied to the UK airline industry each year – enough to circle the globe 3,000 times.

The plans are good for aviation, the environment and for the UK overall with the SAF industry estimated to add over £1.8 billion to the economy and create over 10,000 jobs across the country. 

This comes following £135 million of recent funding allocated through the Advanced Fuels Fund , supporting the growth of 13 groundbreaking SAF projects across the country.

While we recognise SAF may be more expensive than traditional jet fuel in the immediate term, we’re ensuring decarbonisation doesn’t come at the expense of consumers. This plan is part of our approach to ensure that the rationing of flights through ‘demand management’ is ruled out.

The plan includes a review mechanism to help manage prices and minimise the impact on ticket fares for passengers. The government also has the power to change key limits within the mandate to block higher price rises in the case of SAF shortages – keeping the impact on consumers to a minimum. 

Providing sufficient SAF is available, any increases in air fares as a result of SAF will fall well within the range of usual fluctuations in prices we see every year and the government have plans in place to prevent any major hikes.

This is part of the government’s plan to deliver on our ambitious net zero commitments while ensuring we take a pragmatic and proportionate approach which minimises unnecessary burdens on the public.

Transport Secretary Mark Harper said:     

Sustainable aviation fuel protects the future of UK aviation, the thousands of British jobs that depend on it, and the holidays and business travel flights that we all rely on.  As part of our plan to grow the economy, the measures announced today will give both UK aviation and the UK SAF industry the certainty they need to keep creating skilled British jobs while giving passengers the freedom to continue travelling by air in a way that’s fit for the future.

SAF produces up to 70% less carbon emissions than the traditional fossil fuels used in most commercial flights. It is made from waste materials or by-products – like household waste, industrial gases or used cooking oil.

The government has also launched a consultation today into a range of options for a SAF revenue certainty scheme , which looks to guarantee revenue from SAF and provide new and existing producers and investors with the confidence to continue investing in the industry.

The consultation includes a preferred option of a guaranteed strike price ( GSP ), which guarantees a pre-agreed price of SAF supplied to the UK market – giving producers the confidence that they will receive a certain price for the SAF they make. 

The plans set out in the SAF mandate have been widely welcomed by industry, with airlines, airports and SAF producers now having a clear vision as the sector continues to grow.

Karen Dee, Chief Executive of the Airport Operators Association, said:

“Sustainable aviation fuel is a key part of the decarbonisation of air travel and a domestic SAF industry will create jobs, wealth and help the UK secure its energy independence. We are pleased that the government has brought forward proposals for a mandate and revenue certainty scheme, that will send the message to investors that the UK is serious about developing its own production facilities. Government and industry must now work together to keep this momentum towards delivery going so that we can grow sustainably and meet our carbon targets.”

Tim Alderslade, CEO of Airlines UK , said:

UK airlines support a SAF mandate as a vital step towards the net-zero transition as SAF will be one of the important technologies to achieve aviation’s net zero commitments. However, it is vital that government now puts the right measures in place to incentivise production and reduce the cost of SAF as seen in the EU and US , as quickly as possible. Without these, the UK will be at a competitive disadvantage with consumers at risk of higher fares. We welcome the delay to and subsequent increase in the cap on HEFA -based SAF to allow producers time to scale-up more advanced fuels, but the government must keep the buy-out price under regular review to avoid disproportionate price increases for consumers.

Gaynor Hartnell, Chief Executive of the Renewable Transport Fuel Association, said: 

The mandate, in combination with guaranteed pricing, will see the UK start to produce SAF within the next couple of years. There are many ways of making SAF , and all have a vital role to play. Many of the plants our members will build will be ground-breaking, first-of-a-kind installations. The UK policy aims specifically to encourage SAF made from wastes, which presents an opportunity for innovation and ultimately the export of technology and expertise.

Luis Gallego, CEO of IAG , said:

We will continue to support the work of the Jet Zero Council to deliver the revenue certainty scheme so that much-needed SAF plants can start to be built here in the UK .

The mandate will also ensure SAF is created in ways that are better for the environment, encouraging techniques that turn renewable energy into fuel, known as power-to-liquid.

It will also incentivise the use of different types of waste to produce fuel, like sawdust and bark from forests, to tackle global issues such as deforestation, biodiversity and competition with food production – while placing a cap on fuel primarily made from cooking oil, which is the cheapest and most developed SAF pathway.

The measures have been announced today as the UK is now halfway to net zero – indicating significant progress towards carbon targets with a more pragmatic approach that eases the burdens on British citizens.

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Honeywell announces technology for producing low-cost sustainable aviation fuel 

The new technology will expand the feedstock options available in the industry to sources that are more plentiful, says ken west, president and ceo of the firm.

• Updated Apr 26, 2024, 8:22 PM IST

One of the most carbon-intensive sectors, airlines, roughly account for 2.5% of global carbon emissions. As the jet fuel burned releases carbon dioxide, which traps heat and contributes to climate change, sustainable aviation fuel (SAF) is being looked upon as a game-changer. However, the cost of producing SAF and production capacity has slowed its adoption. Addressing this very challenge, US-based Honeywell has announced technology that can help produce more SAF at a low cost.

“As demand for SAF continues to grow, the aviation industry is challenged by limited supplies of traditional SAF feedstock such as vegetable oils, animal fats, and waste oils,” says Ken West, president and CEO of Honeywell Energy and Sustainability Solutions. “When combined with the existing Fischer-Tropsch process, our new technology will expand the feedstock options available in the industry to sources that are more plentiful, ultimately helping improve our customers’ ability to produce SAF.”

Honeywell’s hydrocracking technology can be used to produce SAF from biomass. The company claims that the new technology can produce 3-5% more SAF, with a cost reduction of up to 20%, and reduce by-product waste streams as compared to other commonly used hydroprocessing technologies. Honeywell’s Fischer-Tropsch (FT) UnicrackingTM technology takes liquids and waxes from processed biomass, including leftovers from crops, wood waste, or food scraps, and can be used to produce SAF that complies with the strict standards of the aviation industry and has a lower environmental impact.

US-based DG Fuels, which will produce jet fuel, has already selected Honeywell’s FT Unicracking technology for its biofuels manufacturing facility in Louisiana, which will produce 13,000 barrels of SAF each day when it begins operations in 2028.

“Using Honeywell’s advanced technology, DG Fuels will supply enough fuel for more than 30,000 transatlantic flights every year, contributing significantly to reducing the carbon emissions of global air travel. This is a big leap forward in supporting the airline industry's goal of reaching net zero carbon emissions from international aviation by 2050,” says Michael Darcy, CEO of DG Fuels.

Earlier, Honeywell’s SAF production with the EcofiningTM process has been used to produce the fuel commercially since 2016. The company now offers solutions across a range of feedstocks to meet the rapidly growing demand for renewable fuels, including SAF. More than 50 sites globally have licensed Honeywell's SAF technologies, with refineries projected to exceed a combined capacity of more than 500,000 barrels of SAF per day when fully operational.

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