by Josh Lew
Last updated: 10:00 AM ET, Fri January 29, 2016
Fuel prices have played a major part in the boom-and-bust cycle that airlines have experienced over the last decade. Right now, airlines are riding a wave of cheap crude to record-breaking profits. With Iran now set to get back online, it looks like prices will remain low for at least the next few years.
But what about after that? What are airlines doing to make sure that they don't return to the days of bankruptcy and bailouts the next time that oil prices rise?
Some airlines are investing in more fuel-efficient planes, some are honing their fuel futures strategies, and others are experimenting with biofuels. At least in one corner of Europe, alternatives to traditional jet fuel are about to get much more accessible.
Oslo's biofuel delivery system
Oslo Airport will start offering biofuel to all of the airlines that use its runways. The fuel, which is made from camelina oil, will be available via the same type of fueling hydrants that planes use when they fill up on standard jet kerosene.
The fuel was produced by Finland-based Neste Oil as part of a project called Initiative Towards sustaAinable Kerosene for Aviation (ITAKA). Air BP, British Petroleum's aviation division, is also heavily involved in the project. Lufthansa, SAS and KLM, who all operate a select number of flights using biofuels, will use the new facilities to fill up while in Oslo.
A more cost-effective solution
The problem, until now, has been that using these gas alternatives has not been very cost effective. Airlines who want to opt for something besides standard jet kerosene had to have it specially brought in via a tanker truck with a fueling hydrant on it. This increased the cost of fueling and made biofuels nothing more than a "nice idea" that might gain an airline a few PR points but wasn't at all cost effective.
Oslo has made it cheaper to opt for alternative fuels by providing them to airlines via standard fueling hydrants. This cuts out the extra expense of having to truck the fuel in.
The EU has set a target of having 3.5 percent of all airline fuel to be biofuel by 2020. If a few more airports install the same kind of system as Oslo, this goal will be a realistic one.
The first time biofuel has been practical
Air BP CEO David Gilmour said that the Oslo project is a game changer because the camelina-based fuel that his firm is distributing commercially will be available to airlines via the same fueling methods that they use for standard fuel: "This is the first time aviation biofuel is being delivered through the normal supply mechanism, thus reducing logistics costs significantly. We want to demonstrate that airports can readily access biofuel with relative ease, utilizing existing physical infrastructure. We anticipate that this will increase interest and demand, as well as contributing to a sustainable biofuel future for the aviation sector."
The Oslo idea works on several levels. First of all, with all the new climate changes deals, the air travel industry can point to this development as a step in a greener direction. Airlines have often been criticized for their contribution to pollution and global warming. On a more practical, dollars-and-cents level, the more readily available alternatives to traditional fuel become, the less airlines will have to worry about the state of the oil markets.
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