One way that airlines are trying to control low-cost flights is by shifting to a business model with lower-base ticket prices and adding on fee-based services. This has produced mixed results in terms of consumer satisfaction. However, some airlines are looking at a new way to reduce their costs over the long term: using biofuels.
The use of biofuels won’t directly translate into cheap flights any time soon, but airlines say that they won’t pass on the expense of using these exotic new fuels to passengers while they develop workable systems for incorporating them into their fleets. Last week, two U.S. airlines flew passenger routes with alternative fuel mixtures. United flew a 737 powered by a blend of traditional jet fuel and an algae-based biofuel from Houston to Chicago. Alaska Airlines flew the first of 75 passenger routes using a fuel mixture made from recycled cooking oil.
The Two Alternate Fuel Types
United’s algae-based fuel was created and tested in a partnership with the company Solazyme. The fuel is partly derived from genetically modified algae that eats plant wastes and creates a type of oil. The mixture used consists of 60 percent jet fuel and 40 percent biofuel. Alaska Airlines’ biofuel is a 20 percent blend of biofuel mixed in with traditional jet fuel. The fuel is made from spent cooking oil in Texas that is processed in New Orleans.
How Biofuels Differ from Traditional Fuels
No modifications were required for the planes to begin using the biofuels. However these new fuels are currently expensive and do not represent a cost savings over traditional jet fuel. But these fuels do reduce airlines’ carbon footprints. The algae-based fuel could produce an 85 percent reduction in greenhouse gas emissions over fossil fuels. The cooking oil-based fuel reduces carbon dioxide emissions by about 10 percent. While the algae-based blend costs about the same as regular jet fuel, the cooking oil-based fuel is currently more expensive.
How Biofuels will Affect Consumers
Since these fuels are in the development phase, they don’t affect consumers yet. However, the goal with these alternative fuels is better fuel-price control for the airlines. Volatility in the price of crude oil affects the price of jet fuel in an unpredictable manner. Airlines try fuel hedging and other fuel-buying methods to keep fuel costs down, but fuel still accounts for 36 percent of airline operating costs. Airlines hope that alternative fuels will eventually give them more control over these costs, and the result should be savings passed along to the consumer.
The Future of Biofuels in Commercial Aviation
FareCompare readers are not likely to be taking flights powered by biofuels for several years – the technologies are still being smoothed out. However, United recently signed a letter of intent with Solazyme to start buying 20 million gallons of the algae-based fuel per year starting in 2014. This represents approximately 0.6 percent of United’s 3.3 billion-gallon-per-year consumption of fuel. A Boeing spokesman stated that their near-term goal is to have 1 percent of aviation fuel contain some level of biofuel content by the year 2015. To make alternative fuels economical, supply chain infrastructure must be built. It could be 15 years or so before real progress in terms of cost will be realized.