Jet fuel will continue to power the industry for the foreseeable future. Overcoming its challenges will be vital to aviation growth.
One of the big commercial questions, for example, is how to improve sustainable aviation fuel (SAF) uptake. Though the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has been adopted to compensate for aviation’s CO2 emissions, SAF will be important in helping airlines to reduce their carbon footprint and to reach the industry goal of carbon neutral growth.
Technically, SAF are tried and tested. The first flight using a SAF blend was in 2008 and the first plant producing SAF opened in 2016.
“We have come a long way in a short period of time,” says Hemant Mistry, IATA’s Director for Global Airport Infrastructure and Fuel.
Still, SAF represent just 0.01% of total fuel uptake. The challenge is to get this figure up to about 2% by the middle of the next decade, an ambition that will require significant government support through the introduction of policies to stimulate research and investment in SAF production.
Six SAF plants are coming online in the next few years—either being built or having the finance to be built. Looking out to 2025, publicly announced projects alone should push SAF uptake in aviation to 3.5 billion liters annually, equating to approximately 1% of jet fuel uptake. Among the many recent commercial announcements is Neste’s decision to expand its renewable product capacity in Singapore by up to 1.3 million tons by 2022.
Moreover, there will be a sixth SAF certification pathway later this year or in 2020 that could be game-changer as it involves bio-diesel—which is already produced in large quantities.
“That will show that the confidence in SAF is there and that opportunities exist,” insists Robert Boyd, IATA’s Senior Manager, Aviation Environment. “But, of course, it needs the right government policies to make SAF prices competitive.”
35% Jet fuel prices in Africa, for example, are around 35% higher than the global average
In the technical arena, digitization of the fuel management process is a major issue that is already bringing enormous efficiencies to the fueling sector from tender/bid to invoicing. In the case of aircraft fueling operations, voice and paper have dominated communications between the cockpit and an into-plane service provider (ITP). Airlines have started to electronically interface with ITPs but only at stations where the number of fuel uplifts justify the cost involved.
Fueling training is based on aircraft manufacturers’ Aircraft Maintenance Manuals (AMM) but, over time, each airline has applied its own approach to training design and delivery. This has resulted in into-plane service providers (ITP) having to deal with a variety of fueling procedures and training materials for the same aircraft type, which can quickly grow into a safety risk.
IATA’s Fueling Training Portal will streamline training activity. Based on IATA guidance material, it will allow airlines to monitor the training status of ITP personnel trained through the e-learning platform. ITPs will also be able to validate that personnel have undergone training necessary for practical proficiency.
“The system will be initially developed in English but will be expanded to additional languages as demand dictates,” says Michael Moosberger, IATA Project Manager. “And aircraft types flying the majority of global operations will have training modules in the system.
“The full launch is scheduled for mid-2020 following a pilot in North America and Europe. This solution will deliver increasingly greater efficiency and industry benefit as more ITPs and airlines use this standardized solution.”
To help drive connection costs down and move everybody forward, IATA is developing an industry Fuel Operational Message hub that allows communications between ITPs and the cockpit using a single connection. IATA’s solution means airlines and ITPs will need to deploy a connection only once, and then just switch channels to communicate with any partner around the world using IATA’s XML fuel operational messages standard.
“This will save airlines and ITPs time and money,” says Daniel Chereau, IATA’s Assistant Director, Commercial Fuel. “It will also help mitigate cybersecurity concerns as it greatly simplifies the multitude of digital connections existing in this area today.”
There are some regulatory hurdles to overcome—such as some countries requiring paper proof that the fuel was “exported”—but the opportunity for greater efficiency is sure to drive the hub’s development forward. Proof of concept has been achieved and the emphasis is now on the roll out.
More than 175,000 scheduled flights have used sustainable aviation fuels, equating to about 10 million liters
Both commercial and technical challenges will feed into what remains the primary jet fuel concern for many airline CEOs; its price.
As it stands, oil looks set to average about $70 for 2019. While OPEC+ nations have agreed to reduce production, US tight oil producers continue to increase their output. In large part, the current state of global oil supply reflects the interaction between these two competing forces.
There are, however, many other elements to consider, including the level of investment in refining capacity and regional disparities. Jet fuel prices in Africa, for example, are around 35% higher than the global average due to government taxes and price-setting, cost-inefficient infrastructure, and the lack of market competitiveness. Europe, meanwhile, is suffering significant bottlenecks in jet fuel supply. Older refineries in Europe are closing and production is shifting to mega-refineries in the Middle East and Asia. Jet fuel is therefore being imported into such major ports as Rotterdam.
Discussion on… Harmonized fueling standards
In the technical work stream, the harmonization of fuel handling standards is work in progress. The variances that have been noted by an in-depth industry group are numerous, though many are easily rectified. Each partner in the group is committed to make improvements and adapt requirements to the global standards.
Filtration is a more complex undertaking. Water and dirt are routinely filtered out during the fueling process with super absorbent polymers (SAP) particularly good at removing water. SAP particles, however, can escape the filter and potentially contaminate aircraft fuel.
The task at hand, therefore, is to find new filters that ensure the industry maintains its excellent safety and efficiency records in this field.
There is a self-imposed deadline of 2020 to find a drop-in alternative and work has already progressed to field trials.
These take place under a variety of conditions. The effects of climate, fuel quality, fuel specifications, fuel volumes, flow rates, and equipment are all tested. For example, some airports put a lot of fuel through a filter every day, while others might go days without using a filter. Passing the rigor of the approval process will ultimately earn an inclusion in industry standards.
“The technical challenges are considerable but so is the collaborative effort of industry expertise to find solutions,” concludes Hemant Mistry, IATA’s Director for Global Airport Infrastructure and Fuel. “I am sure we will solve these issues.”
“But the Central European Pipeline System (CEPS)—originally a military concept—which is used to distribute fuel throughout continental Europe is capacity-constrained,” explains Mistry. “It could mean fuel shortages at European airports, including the major hubs. All partners in the fuel supply chain will need to work toward a solution.”
Lufthansa’s Katja Kleffmann agrees. She notes: “Missed investment in logistics is a big problem. We have enough product with new refineries in the Middle East, China and elsewhere. The problem is how to get it into our airports.”
The greater demand for low sulfur middle distillates from shipping due to a forthcoming mandate known as IMO2020 could also affect the jet fuel market, although the extent of the impact is open to question.
25% On average, fuel accounts for around 25% of an airline’s operating costs
IMO2020 mandates a reduction of the sulfur levels in marine fuel from 3.5% to 0.5% from January 2020 and it is estimated that over half of the 87,000 active ships in the world are not yet compliant.
One suggestion is that this will increase the crack spread, the difference in price between crude oil and the petroleum products the refineries extract from the oil by “cracking” oil’s long hydrocarbons into shorter, more useful chains.And a one dollar per barrel increase in the crack spread pushes the industry’s annual fuel costs up $2.5 billion. In short, IMO2020 could hike up the cost of jet fuel for every airline.
“I would sum it up this way,” says Patrick Callan, Chair, Commercial Fuel Working Group and Managing Director, Fuel Management, Delta Air Lines. “Uncertainty in the market leads to price volatility, which leads to excited traders. And excited traders lead to airlines paying the wrong price for jet fuel.”