ISTAT Jetrader - Spring 2024 - 33

complexity overall. Not included here
are the energy requirements and CO2
emissions for changing the airport
infrastructure, etc.
Conclusion: Using only flight
consideration is misleading, and the
industry must take a holistic approach.
There is an advantage for adoption
of synthetic fuels, which relies on
hydrogen and results in lower CO2
basis and less contrails, provided
the aromatics are eliminated as well.
Moreover, this energy source does not
interfere with the human food chain.
The above simplified comparison
becomes more challenging as aircraft
increase in size and as this segment of
the global fleet account for a greater
share of global fuel consumption.
Looking at the commuter segment
of below 20-seaters, the equation
is quite different, but this segment
is too small to meaningfully reduce
the industry's global CO2
emissions
or provide sufficient commercial
incentive or reward for major
technological investment. Hence,
incremental improvements, with
minimal on-aircraft and airport ground
infrastructure physical impact, will be
the optimum path.
If this analysis is extended to " wellto-wake, "
i.e., emissions arising from
production and refining are added to
those generated from flight operations,
the famous " zero emissions at tailpipe "
are then no longer zero. Again, the
conclusion is that only a holistic view
makes sense to bring discussions
around climate impacts and global
warming back to the target value.
So far, aviation has achieved
many goals but also missed some
environmental targets. The goal today
is to make a significant step forward
overall on impact on global warming,
thus in CO2
and contrails.
The Financial Side
Finally, there is the financial side,
which will play a significant role in
the industry achieving its targets. To
increase fares that would be acceptable
to the end customer, whether a
passenger or cargo forwarder, the first
thing we need are aircraft that consume
less. According to Airbus and Boeing,
this should be achievable by the
middle to end of the next decade. This
must also be the time when sufficient
synthetic fuel without aromatics
becomes available (i.e., the ramp-up of
production must be completed by then).
A numerical example: Assume an
aircraft consumes 20% less fuel after
2030 and that fuel costs 30% more,
and fuel costs are 50% of operating
costs. If the fuel loaded into the aircraft
is a blend far beyond the mandate of
10% is assumed, then SAF/PtL could
cost four times as much as kerosene
per liter to then achieve the 30% price
increase for a 10% blend.
These numbers appear realistic
according to several industry sources.
This would result in an ~2% cost
increase. While excluding the extra cost
due to higher aircraft prices (assume
10% like A320ceo to neo), it also does
not take into account a more efficient
use of the aircraft, hence say the 10%
extra capital cost could result in a
depreciation cost increase of less than
10% on a per flight basis.
kerosene (in Europe, twice as expensive
is currently under discussion). The CO2
surcharge on kerosene, which does not
apply to SAF, must then be added.
To simplify the above calculation,
we should accept that the fuel cost
increase through SAF will not kill
commercial aviation nor meaningfully
deter demand. Some of us will
remember that when oil was $40/
bbl, people were whining that, should
oil reach $100/bbl, there would be no
more aviation. This opinion has been
proven wrong.
However, in the introductory phase,
it is therefore necessary to create
incentives for the buyer (the airline) -
analogous to renewable energies and
feeding to the power grid or electric
car subsidies - and investors to
start investing.
In a nutshell: To reach 2050
goals for SAF, better PtL is the key
element. Aromatics have to disappear,
and we should take advantage of
better propulsive efficiencies that
are expected to become available
shortly. Pricing seems to be more of an
emotional issue. And all this with a less
complex and more efficient industry
infrastructure, including air traffic
We should accept that the fuel cost increase
through SAF will not kill commercial
aviation nor meaningfully deter demand.
Altogether, these result in a net cost
increase below 5%, which should be
acceptable for current models of price
elasticity versus demand. This should
not scare the industry considering the
much higher increases post-COVID-19,
which did not deter demand. Under
different framework conditions, SAF
in the U.S. is expected to be about
30-90% more expensive than today's
control, airports and the like. This is
similar to statements made 20 years
ago, so now it is high time to just do it
to avoid aviation increasing its share of
CO2
versus other industries.
Nico Buchholz is a co-founder, chief
commercial officer, chief procurement officer,
airline director and sustainable aerolab mentor.
* SPR I NG 2024 * 3 3
ISTAT Jetrader - Spring 2024

Table of Contents for the Digital Edition of ISTAT Jetrader - Spring 2024
