Post on 08-May-2015
description
Investment Opportunities in the Greener Flight to Future
Madusudanan Ramani, Research Associate
Business and Financial Services
November, 17th 2009
2
Introduction to Green Aviation Introduction to Green Aviation
Measures and InitiativesMeasures and Initiatives
3 - 5
6 - 21
Focus Points
� Alternate Aviation Fuel
� Fuel Cells in Aviation
� Electrical Power Systems
� Green Air Traffic Management
� Green Aero Engine
� Composites in Aviation
ETS and AviationETS and Aviation 22 - 23
ConclusionConclusion 24 - 25
3
IATA’s Four-pillar Strategy
Strategy
Technology
Infrastructure
Aircraft
Operations
Economic
Instruments
Aviation Industry : IATA’s Four-pillar Strategy (World), 2008
Source: Frost & Sullivan
B e t t e r f l i g h t
operations
A i r t r a f f i c
management
Opt im i za t ion of
routes
Weight reductions
Engine upgrades
Eff icient aircraft
design
Use of sustainable
alternate fuel
1
2
Efficient operations
Engineering and
m a i n t e n a n c e
F u e l p l a n n i n g
3
Carbon offsetting
p r o g r a m s
Emission trading
Positive economic
incentives
4
4
Electric Power Systems
Alternate Aviation Fuel
Fuel Cells Green ATM
Green Trends in AviationGreen Trends in Aviation
Green AeroEngine
Advanced Composites
Scope of the Study
Aviation Industry : Various Segments (World), 2008
Note : All figures are rounded and the base year is 2008
5
Electrical Power System
Alternate Aviation Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Alternative Aviation Fuel
6
Alternate Fuels
Alternate Fuels
Coal to liquid (CTL)
Coal to liquid (CTL)
Gas toliquid (GTL)
Gas toliquid (GTL)
Biomassto liquid (BTL)
Biomassto liquid (BTL)
Synthetic fuel
Synthetic fuel
BiofuelBiofuel Cryogenic fuel
Cryogenic fuel
Alternate Aviation Fuel (Contd…)
Aviation Industry : Various AlternateAviation Fuels (World), 2008
Source: Frost & Sullivan
Factors that make a fuel a good alternative
Blend with the existing infrastructure
A renewable source
Have a stable supply
Should not be a food stock
Cost efficient
Should not cause harm to environment
Since, most of the first-generation fuels are
manufactured using food stock, they are not an
ideal alternative. Moreover with increasing price
of food items, the feed stock for the fuel will
become expensive and the cost of production
would increase. As a result, the focus of the VC
investors has been shifting from the first-
generation fuels to the next-generation fuels such
as cellulostic ethanol and algae biodiesel.
0
0.5
1
1.5
2
2.5
3
3.5
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
Volu
me F
ore
casts
('0
00
BP
D)
CTL BTL GTL Biofuel
Source: Frost & Sullivan
Aviation Industry : Volume Forecasts for Aviation Alternate Fuel (World), 2007-2015
7
Fuel Cells in Aviation
Alternate Aviation
Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Electrical Power System
8
Fuel Cells in Aviation
The potential application of Fuel Cells could happen in the Auxiliary Power Unit, Ground Power Unit
and Ground Handling Equipment. The application of Fuel Cells in APUs for long range aircraft is
expected to be developed by 2015. But the large scale application of the fuel cells could take
another decade.
The potential application of Fuel Cells could happen in the Auxiliary Power Unit, Ground Power Unit
and Ground Handling Equipment. The application of Fuel Cells in APUs for long range aircraft is
expected to be developed by 2015. But the large scale application of the fuel cells could take
another decade.
Drivers
Restraints
Challenges
Due to its modular fitting, fuel cells offer flexibility in storage. The levels of
emission and heat generated is very less. It is highly efficient and can be
operated continuously.
Proper regulatory procedures for the application of fuel cells in aviation have
to be in place before fuel cell are used extensively. The development of the
technology requires huge investment into research and development.
The fuel cells technology is still in its nascent stage. Non acceptance of public
might be a challenge for the participants in application of fuel cell in aircraft.
9
Electrical Power Systems
Alternate Aviation
Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Electrical Power System
10
5.00
10.00
15.00
20.00
25.00
Re
ve
nu
e F
ore
ca
sts
($
Bil
lio
n)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Commercial Aviation Electrical Power Systems Market Forecast - 2008-2017
The market for commercial aviation electrical power systems is expected to grow at a compound
annual growth rate of 13.6 percent from 2008 to 2017. The revenues are expected to increase from
$7.68 billion in 2007 to $24.21 billion in 2017.
14.013.0 13.0
14.0
17.0
22.0
24.0
28.0
32.0
10.0
15.0
20.0
25.0
30.0
35.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Ex
pe
ns
es
(%
)
Fuel as a Percentage of Expenses for Airlines
Electrical Power Systems in Aviation
Source: Frost & Sullivan
11
Green Air Traffic Management
Alternate Aviation
Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Electrical Power System
12
Green Air Traffic Management (Contd…)
Green ATM refers to efforts taken by air navigation service providers to introduce cooperating working
arrangements and innovative approaches to reducing emissions, including flexible paths and continuous
descent approaches. According to IATA, reducing flight time by a minute per flight globally, would save 4.8
million tons of CO2 every year. Continuous Descent Approach (CDA) enables pilots to navigate long gradual
landings at idle speed instead of a series of descending and plateauing before the landing.
Green ATM refers to efforts taken by air navigation service providers to introduce cooperating working
arrangements and innovative approaches to reducing emissions, including flexible paths and continuous
descent approaches. According to IATA, reducing flight time by a minute per flight globally, would save 4.8
million tons of CO2 every year. Continuous Descent Approach (CDA) enables pilots to navigate long gradual
landings at idle speed instead of a series of descending and plateauing before the landing.
Present Senario
Most of the ATM systems are serving more
aircraft than they are supposed to handle. This
leads to congestion near the airport, which
subsequently causes delay in landing and
wasteage in fuel. There is a 4,800-foot
seperation for IFR approach the acoustic noise is
dispered over large area.
Future Senario
A next-generation ATM system would be
effective. This new traffic system will enable
more direct/efficient routing and taxi routes
and eliminate wasteful holding times in the
air. Airlines would adopt the continuous
descent approach. There would be a 600-foot
separation for IFR approach.
13
Green Aero Engine
Alternate Aviation
Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Electrical Power System
14
Green Aero Engine (Contd…)
� The development of the green aero engine is key to sustainable future of aircraft propulsion
systems.
� Factors that drive the application of the green engine are regulations to reduce the greenhouse
gases emissions and the need to reduce the operating cost due to increasing fuel cost. Green
engine form an integral part of the next generation aircraft.
� A technological advancements that enables efficiency in Green aero engines is the use of
composites as engine material, high pressure and efficient compressor designs, low emission
combustor designs, counter rotating turbines, advanced engine health management and
prognostics systems, and reduction in engine bleed dependency.
� Pratt & Whitney’s PurePower engine has been developed after with more than 20 years of R&D
and is expected to enter service in 2013. The fuel consumption is expected to be 12
percent lower in comparison to its current model.
� GE Aviation’s GEnx Engine provides approximately 15 percent fuel efficiency over the other
aircraft engines. This translates into estimated fuel savings of around $ 2 million per aircraft
every year. The emissions are up to 95 percent below the current regulatory limit. In comparison
with the non-green engine, the GEnx is 20 percent longer, uses 30 percent fewer parts and is
expected to reduce the maintenance cost.
15
Advanced Composites
Alternate Aviation Fuel
Fuel CellsGreen ATM
Green AeroEngine
Advanced Composites
Electrical Power System
16
Advanced Composites (Contd…)
Wing
Vertical Tail
Fuselage
Surface Controls
Horizontal Tail
Around 70 percent of the expected improvement in fuel efficiency in aircraft
would come from a better aircraft body. Out of the efficiency arising, 71.42
percent is from use of advanced composites and 28.58 percent is due to
improved design.
Potential Applications of Composites in Aviation
Use of Composites in Aviation
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2008 2009 2010 2011 2012 2013 2014
Year
Volu
me F
ore
casts
(Tons)
Exteriors Interiors
� The strongest drivers for use of composites in
aviation is the increase in fuel efficiency of the
aircraft. Composites are durable and have a longer
material life.
� The biggest restraint in the use of composites is the
high level of investment required to build the
autoclave unit. There is high level toxic emission
while recycling that poses to be a problem.
� High level of certification cost act as a challenge to
the increased use of composites in aviation.
� The strongest drivers for use of composites in
aviation is the increase in fuel efficiency of the
aircraft. Composites are durable and have a longer
material life.
� The biggest restraint in the use of composites is the
high level of investment required to build the
autoclave unit. There is high level toxic emission
while recycling that poses to be a problem.
� High level of certification cost act as a challenge to
the increased use of composites in aviation.Source: Frost & Sullivan
17
Emission Reduction Scheme and Aviation
� European Trading Scheme and Aviation
18
European Union ETS and Aviation
The European Union's Emission Trading
Scheme (ETS) is the world’s first international
emission trading scheme. It is a result of the
Kyoto Protocol on climate change, which
became effective in February 2005. The Clean
Development Mechanism is a function under
the Kyoto Protocol where projects to reduce
emissions in developing countries are
awarded tradable credits called Certified
Emissions Reductions (CERs). These ‘CERs’
can be used by companies to meet their
targets under the ETS, as well as by
governments under the Kyoto Protocol.
The European Union's Emission Trading
Scheme (ETS) is the world’s first international
emission trading scheme. It is a result of the
Kyoto Protocol on climate change, which
became effective in February 2005. The Clean
Development Mechanism is a function under
the Kyoto Protocol where projects to reduce
emissions in developing countries are
awarded tradable credits called Certified
Emissions Reductions (CERs). These ‘CERs’
can be used by companies to meet their
targets under the ETS, as well as by
governments under the Kyoto Protocol.
The European Commission will publish the total allowances that will be available to the entire industry, when it enters the
EU ETS in 2012. It will go on the establish the individual caps for airlines in 2011.
The Aviation Allowances (AEUA) will be created to 97 percent of that baseline forthe year2012. Three percent of the would be reserved for the fast growers and new entrant. A further 15 percent of the rump would be auctioned by the government.
The Aviation sector has been included in the purview of the Kyoto Protocol. All the flights taking off and landing from Europe
would fall in its purview.
Note: All figures are rounded; the base year is 2008.
Source: IATA and Frost & Sullivan
Aviation Industry : Timeline for EU ETS and Aviation(World), 2008
19
Conclusion
� Conclusion
20
Conclusion
� Green aviation encompasses slew of initiatives to be taken by the entire industry
to ensure sustainable development. Regulations from IATA and other agencies
provides major impetus to Green Initiatives of the industry participants.
� Even though the traffic is expected to grow at 5.2 percent, IATA has a vision to
have carbon-neutral growth. Use of technology, operational efficiencies, better
infrastructure, and economic instrument are enabling factors to ensure carbon-
neutral growth.
� The total emission of CO2 by the aviation industry is expected to reduce by 9
percent in 2009. Around two percent of this reduction is because of green
initiatives and the rest 7 percent is due to fall in traffic.
� Some initiatives are capital-intensive and need a lot of investment in R&D. Active
support from government and regulatory authorities would help the participants
to face the challenges.
21
Next Steps
Request a proposal for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com)1-877-GoFrost (1-877-463-7678)
Join us at our annual Growth, Innovation, and Leadership 2010: A Frost & Sullivan Global Congress on Corporate Growth, September 12-15 2010, San Jose, CA (www.gil-global.com)
Register for the next Chairman’s Series on Growth: The CEO's Perspective on
Market Research (December 1st) (http://www.frost.com/growth)
Subscribe for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
22
Your Feedback is Important to Us
Growth Forecasts?
Competitive Structure?
Emerging Trends?
Strategic Recommendations?
Other?Please inform us by taking our survey.
What would you like to see from Frost & Sullivan?
23
For Additional Information
Jake Wengroff
Corporate Communications
Business and Financial Services
(210) 247-3806
Jake.wengroff@frost.com
Angie Montoya
Global Analyst Briefing Coordinator
Marketing
(210) 247-2435
amontoya@frost.com
Jennifer O’Grady
Director of Research
Business and Financial Services
214-887-1818
jogrady@frost.com
Lori Salazar-Malone
Sales Manager
Business and Financial Services
(210) 247-2448
Lsalazar-malone@frost.com