Facing an energy crisis at home and punitive new regulations abroad, some of the largest airline companies are banding together to face the problems these trends engender.
The leaders of three top aviation fuel management companies—Flight Sciences International, Sabena Flight Academy, and BMB Fuel Consulting Services—held a press conference Thursday, August 07, 2008, to announce their merger and the subsequent creation of Flight Sciences Global Partners.
Michael Miller, President of Miller Air Group in Orlando, Fl, stated that “The airline industry is facing the toughest challenge since 9/11, with fuel prices that have nearly doubled in the past year and ten airlines that have shut down in the U.S. since January alone. That’s why we’re here today.”
The merger resulted from the companies’ understanding of the need for an international fuel efficiency organization following the U.S.-based airlines’ difficulty with handling skyrocketing gas prices and the European Union’s newly released aviation emissions standards.
Robert Callahan, President of Flight Sciences, stated that he did not believe airlines were doing as much as they could do to combat high gas prices. Callahan pointed out that “Right now they’re rapidly changing prices upward—they’re charging for pillows, coffee, and everything that you do—but the basic problem is the price of fuel,” and asserted that efforts to reduce prices needed to be seen in increased fuel efficiency instead of increased fringe costs. Robert Kelland, CEO of BMB Fuel Consulting, stated that while each plane carries extensive sets of flight data, the airline companies weren’t taking advantage of this information to conduct the more complicated data analysis required to increase overall fuel efficiency—which is where Flight Sciences Global Partners steps in.
Coupled with the fuel efficiency problems are the new European Union requirements for airlines to track and reduce their level of carbon dioxide emissions. The vote to include the aviation industry in the EU’s Emissions Trading Scheme occurred July 8th; airlines are expected to follow a timeline to have the trading scheme implemented by 2012. In four years, the airlines must have a functional reporting and monitoring program for their emissions, and the airlines will be allowed 85% of their recorded emissions with 15% up for auction in a cap-and-trade program.
Currently, the monetary amount for emissions is set at 30 euros per ton of carbon emitted. According to Callahan, “Each ton of fuel makes over three tons of carbon.” Patrick Van Dessels, CEO of Sabena Flight Academy Consulting, stated that “We estimated the impact of this new cost for the airlines at $5 billion euros per year, [an] average of the first nine years,” yet mentioned this was only at the initial implementation, as “trading could change the price.”
Despite the drastic increase in the price of oil and the increased cost imposed by the EU on airline fuel’s emissions, the airlines have no truly viable alternatives to oil-derived fuel. Stuck between a rock and a hard place, Callahan stated that “Unfortunately, [airline companies] are still going to have to use fuel.” Miller asserted that it could take at least 15-20 years before an alternative energy was developed enough to handle the demands of the aviation industry. In the mean time, airlines will continue to pass the costs along to the customer as the energy crisis intensifies.
E.D. The EU regulations, meanwhile, take effect in about four years, and effect “airlines flying to, from and within Europe,” according to the FSI press release. The scheme “will require airlines to track, monitor and report emissions levels beginning in 2012.”