Last week, Continental, Delta, and American, three of the country's largest airlines, announced combined second-quarter losses of nearly $2.5 billion, the worst downturn to hit the industry since right after 9/11. Unlike previous rough patches, the airlines' current slump won't necessarily end once the economy recovers. That's because the culprit isn't just sagging demand; fuel prices, now the single largest expense for U.S. airlines, have doubled since last year.
That grim fact—plus the constant wrath of the climate-change movement—gives airlines a massive incentive to find a more fuel-efficient way to fly. But how fast can the industry change?
In the short run, airlines will try to make up some of that shortfall by raising fees and slashing service. But over the longer haul, they need to start looking at two kinds of changes: a different kind of plane and a different kind of fuel.
Some movement toward greener airplanes is already on the way: At last week's Farnborough Air Show outside London, Bombardier unveiled its C-Series jet, which the company claims uses 20 percent less fuel than other jets. That efficiency puts the C-Series in the same category as Boeing's new 787 Dreamliner, which the company hopes to have in the air by the end of next year.
But even if airlines could magically replace their entire fleets with these new planes tomorrow, they'd still be in trouble. Delta's year-on-year fuel costs went up by 50 percent in the second quarter to nearly $1.7 billion; American Airlines' second-quarter fuel costs went up 47 percent to $2.4 billion. A 20-percent cut in fuel costs would still leave both companies in the red.
There are other potential answers. In 2003, Cambridge and MIT began designing a new type of plane, one so quiet that it would be inaudible beyond the airport fence—and it uses less fuel, to boot. The project, called the Silent Aircraft Initiative, produced a concept aircraft called the SAX-40, a sleek new plane that would get an estimated 125 passenger-miles per gallon of fuel *, more than the Dreamliner (about 100 passenger-miles per gallon) and much more than current passenger jets (less than 80 passenger-miles per gallon). According to the project's Web site, the SAX-40 would get the same mileage per person as a Toyota Prius Hybrid carrying two people.
What makes the SAX-40 design superior to more traditional jets? Like the Dreamliner and the C-Series, the Cambridge/MIT design uses lighter-weight materials and more fuel-efficient engines. But what sets the aircraft apart is its frame.
Like traditional airplanes, Bombardier's C-Series is still "a tube with wings on it," said James Hileman, a researcher at MIT and one of the project's chief engineers. Hileman and his team took that basic tenet of aircraft design and tore it up. "Instead of having the fuselage for people and the wings generate lift," he asked, "why don't you have the fuselage also generate lift, and blend it out into the wings?" The result was a plane that was both quieter and significantly more fuel-efficient—similar in appearance to the B-2 stealth bomber.
But Hileman doesn't expect a commercial aircraft like the SAX-40 to enter production anytime soon. First, it costs more to build than the standard tube-with-wings design, at least for now. Second, building a new kind of plane would force aircraft manufacturers to take on more risk. Boeing's Dreamliner has already been delayed repeatedly because of technical glitches and problems with suppliers—a risk that would only increase with a fundamentally new design.
A more promising route to cutting fuel costs, at least in the next few years, comes from changing the kind of fuel aircrafts use. Can planes fly on jet fuel made from something that's cheaper than oil and that leads to lower greenhouse-gas emissions?
For more than 80 years, the technology has existed to do just that. As Slate's Daniel Gross has written, a pair of German chemists in the 1920s developed the Fischer-Tropsch process, which turns coal or natural gas into a synthetic liquid fuel that's chemically identical to its petroleum-based counterpart. Germany used the technology to power its air force during World War II, and the oil-embargoed South African apartheid regime created a state company, Sasol, to provide the country with fuel.
Synthetic fuels have been tried in the United States as well. In 1944, Congress passed the Synthetic Liquid Fuels Act, aimed at producing fuel from coal, forestry products, or whatever else looked promising. The program ended after the war, but the government tried again in 1980, creating the Synthetic Fuels Corp. to build a market for alternative fuels. Within five years, the project was abandoned and the corporation shut down, with the blame going to a mixture of falling oil prices and inept government management.
Now, a combination of rising oil prices, unstable supply and concern over climate change has propelled Washington to try again, with a twist. Instead of creating another state-run corporation to produce synthetic fuel, the federal government is encouraging private companies to do it themselves by lifting the regulatory burdens standing in their way.
The Federal Aviation Administration has launched a partnership with industry groups called the Commercial Aviation Alternative Fuel Initiative (PDF), which includes a goal of certifying a 50-50 blend of synthetic and petroleum jet fuel for commercial use by the end of 2008. The American Society for Testing and Materials, an international standards group that sets the specifications for commercial fuel, expects to vote on the use of synthetic fuel before the end of this month. And on July 10, the Department of Transportation announced an FAA grant for a new $10 million X-Prize for the first commercially viable alternative jet fuel.
The FAA is also cooperating with the Air Force, which aims to qualify all its planes to fly on 50 percent synthetic fuel by early 2011. The Air Force makes up some 10 percent of the U.S. jet fuel market, according to Tim Edwards, senior chemical engineer in the Air Force Research Laboratory's Propulsion Directorate. By certifying military jets to fly on synthetic fuel, he said, the Air Force hopes to create an incentive for U.S. companies to start producing it.
"The Air Force was paying 91 cents for jet fuel in 2004, and now we're paying $4.13 a gallon," said Edwards. "That just totally destroys any kind of budgetary planning. If we do have a domestic synthetic fuel industry, the prices would be lower, and the volatility would be lower."
Synthetic fuel can be greener fuel, depending on how it's produced. Boeing says that coal-based synthetic fuel is only a viable option if manufacturers can find a way to capture and store the CO2 emissions created during the production process—technology that's still in the planning phase. Airlines like Lufthansa and JetBlue are looking at biomass, including algae, as a power source, but for the moment those plans seem more significant for their publicity value than their near-term utility.
Can money-losing airlines, facing an onslaught from environmental groups, take solace from any of this? Not in the short term. But if the government program can actually create a domestic market for synthetic fuel, and if companies like Bombardier and Boeing can think beyond "tubes with wings"—big ifs—then the battered domestic airline industry might be able to count on something even more important than profits: a future.