Like all corporations, airlines strive be prosperous. Flying passengers from one destination to another drives revenue, but the company also has expenses like all other businesses in every industry. One of the largest expenses that the airline industry has will drive the success of airline manufacturers.
For most airlines, fuel cost, not labor cost is their largest expense. That amounts to roughly 40% of all operations if one looks at the Fuel Cost and Consumption figures compiled by the Bureau of Transportation Statistics. Just over 10 years ago, airlines paid $.84 a gallon for domestic fuel and today they pay just over $2.83 a gallon.
Boeing's Success Come from Fuel Efficiency
We know the markets did well in 2013, but aerospace giant Boeing (BA) did much better for its shareholders anchored by the platform of the 787. The company has had very few problems selling the new airliner because it improves fuel efficiency so much. Boeing presently has back orders topping $415 billion. That's four years worth of work.
Fuel efficiency is the main interest from airlines today. Fuel is the single largest cost in most airlines and when BA can introduce a highly fuel efficient plane, it's going to sell. On top of this, the next generation 737 with more efficient engines is also being introduced to help cut fuel costs.
The 787 Dreamliner is so successful; Boeing has increased its efficiency in building the planes and is now up to 10 per month. That's double the five planes per month within the last year and a half. The high-tech carbon-fiber composite jet, which costs $212 million at list price, has garnered 1,030 total orders from 60 customers.
Even though the Dreamliner 787 uses 20% less fuel per mile than a similar size 767, aviation companies still look for technologies, shapes and materials that will make flying even more efficient than the 787 Dreamliner.
Not only is the design of an airplane important in fuel efficiency today, so are the engines. United Technologies (UTX) owns well-known engine maker Pratt & Whitney. The Pratt & Whitney division has been working on a new approach to Turbofan engines to make them more efficient by adding a special gear. The new engine is said to be able to cut fuel usage by 16% and operating costs overall by 20%. They are called PurePower engines and there are already 3500 orders for these new engines. These geared turbo fan engines will first be manufactured for single aisle jets.
Today's engines are burning about as efficiently as they can with the material being used. In order to burn fuel at a hotter temperature to make engines even more efficient, designers need to look for different types of material. Today they are looking at composite ceramics because it can withstand temperatures well over 2732°F which is almost 30% hotter than today's alloys can stand. To make the material more "ductile" like metal, it has introduced a ceramic fiber mix. Not only do these ceramic parts burn hotter, but they will also decrease engine weight by up to almost 30%.
The material and design of the 787 along with new turbo engines by Pratt & Whitney go hand-in-hand with fuselage design. There are other designs out there that are expected to create more efficiency also.
There is something called the "double bubble" which not only changes the shape of the fuselage but also mounts engines in the rear. This provides more lift for the fuselage as a whole allowing the wings to be designed with stronger lighter newly researched materials. This design is considered to be 70% more efficient than current fuselage designs.
Boeing has its strut wing design nicknamed SUGAR which it believes will reduce fuel consumption by almost 60%.
Boeing's four year backlog in sales is due to the fuel efficiency of the 787 Dreamliner. Aviation companies will continue to be concerned about the efficiency of their airplanes because fuel prices will continue to climb. Success in the aerospace industry will continue to center around efficiency; allowing airplanes to get from one place to another cheaper than they do today.