A Fuel Efficiency Masterclass PART ONE OF THREE
Author: Sander de Moor, Global Lead – Fuel Efficiency, Aircraft Commerce ConsultingSubscribe
A Fuel Efficiency Masterclass – Part One of Three
Sander de Moor, Director Airline Operational Efficiency with Aircraft Commerce Consulting explains how to build a successful fuel savings program or further enhance an existing program
These articles will be about fuel efficiency: we’ve called it a masterclass but there is a limit to what can be fitted into a few pages so maybe an exposition would be a better description. Nevertheless, the three articles will take readers through a number of aspects of a typical fuel efficiency program. The topics that I plan to share with you will include:
- Why fuel efficiency management is important.
- How to start and organize a fuel efficiency program.
- What fuel saving initiatives can be implemented?
- How to discover savings and manage initiatives.
- Choosing the right software for fuel efficiency program.
- How to ensure that you make the most out of your current software solution.
WHY FUEL EFFICIENCY MANAGEMENT IS IMPORTANT
I wonder how many readers work in airlines that have a fully developed and active fuel efficiency program. When we ask this in workshops there are never many positive responses; so I imagine that might be true among readers as well. Of course, the reason why I’m interested is because it’s what I do: I do Fuel Efficiency and have done so for many years with both large and small airlines, and on IATA’s Green Teams: my background is fuel efficiency management in airlines and these days I share my experience as a consultant.
Why manage fuel efficiency?
The obvious starting point is cost savings; as figure 1 shows with an overview of IATA’s profit and loss for airlines…
… profits versus fuel prices. Of course there is a correlation, plus fuel prices are currently heading up and, at the time of writing, the price was more than 50% higher than a year before, as figure 2 shows.
Jet fuel can be bought in Euros or in US$ and was, as recently as 2011, at $140 a barrel. Then there was the fall in oil prices that brought jet fuel prices down to as low as $40 a barrel at the beginning of 2016, however, since then, the trend has been up and back towards previous high price levels. This graph comes from the IATA website where there is a special area for fuel efficiency which is updated on a weekly basis.
So, when I started supporting fuel efficiency programs with airlines my slogan was ‘Every Kilo Counts!’ both in cost and in weight (figure 3).
Our business works on small margins; what you have here is an older figure from Southwest Airlines with the revenue generated by the flight ($12,550 on the green bar) and the expenses incurred by that flight ($12,092 on the red bar) leaving a profit of $458, which is a margin of only 3.6%. On the right of the P/L figures are some of the things that happened on the flight with the extra fuel costs that they generated, bringing the profit down to only $51 or 0.4%! 89% of the profit gone! Small numbers, just a few dollars in each case, took away the already small profit, which is why it’s important to consider every kilo that can be saved in a fuel efficiency program.
Fuel management and flight safety
Of course, flight safety remains the number 1 priority and, sometimes, people who are not wholly supportive of a fuel efficiency program will cite flight safety as the reason for their concern, i.e. ‘we need all this extra fuel for…’ (any number of reasons). However, professionals in the field will confirm that an airline that tries to save fuel is a more efficient and safer airline, for several reasons. Such an airline looks much deeper into their operations, they look at their SOPs (Standard Operating Procedures) and make sensible changes: they are much more involved with the operation and execution of the flights than is the case with an airline that simply adds on tonnes of fuel and ‘we’ll see how things go’. They have increased situational awareness and increased accuracy because they invest in the right tools to ensure that all flight crews, flight dispatchers and maintenance engineers have the correct information on which to base good decisions. They also have specific training and, most importantly, management support. The people who lead the business need to buy in and be the people who say to those concerned with fuel efficiency, ‘we are going to do this and, whatever changes you want to make, we’ll work with it, finance it, push it, ensure that you get what you need.’
The important thing when talking with pilots about fuel efficiency is that it’s not about taking fuel away, which is a common misconception. What the program is trying to do is to right-size the fuel planned for and taken on board for the flight. Not too much, not too little; simply a well-managed amount instead of too much a lot of times.
HOW TO START AND ORGANIZE A FUEL EFFICIENCY PROGRAM
If readers want to undertake a fuel efficiency program in their airline because they have seen the writing on the wall; have seen that fuel prices are rising again and know that their airline will hit profit and loss challenges in the near future; plus want to stay ahead of the competition, they must start with know-how (figure 4).
How to start
There is a lot of reading material available about fuel efficiency. The best-known publication is the one on the right, the IATA Fuel Book, ‘Guidance Material and Best Practices for Fuel and Environmental Management’ which is also the best place to start. If your airline doesn’t have this book, it’s a worthwhile investment at $500 or so and very good read – not to gather dust on a bookshelf – to give you a very good idea about how to get started; in fact there’s a whole chapter on ‘how to start your fuel efficiency program’. There are other publications: Airbus is very good with publications on fuel economy, on performance monitoring and a great one on cost index and Boeing has similar publications as do Embraer, Bombardier and even Fokker. Start with this first step.
Next is organization inside the airline. The airlines that have a fuel efficiency program should have a group of people that work together as a team to push and drive fuel efficiency initiatives across the entire airline: not only the pilots, important as they are, but also maintenance engineering, the commercial areas, ground operations and flight dispatch, a very important involvement more of which below. Organization, processes and senior management support as referred to above.
The third main area is the tools, the software to support the fuel efficiency program. Readers will be familiar with the mantra that ‘you cannot manage what you cannot measure’. To a degree that is true although it’s still possible to do some right things without full information. However, in general you’ll need the right software to collect all flight operational data and do analyses so that you can see where the big-ticket items are, to see how much is being saved or even if savings are being made and, if not, why not? All of that can be discovered in analyzing quality-checked data. Getting the data first requires the right tools. Some airlines develop tools in-house, there are also companies in the industry that have developed excellent tools. Usually, it’s the best thing to such a tool in place when starting an FE program.
For the last part, if you’re stuck on starting a fuel efficiency program or you want to know how your airline is doing because there’s already a program in place but you’d like to benchmark it against others, call in a consultancy service. They have the knowledge, they know how and what to fix, and they will give you a crash course in fuel efficiency.
While the organization is a pretty important part of the program, it’s also something with which readers will be familiar. To be successful, a clear will, mandate, and support from Senior Management are vital. There will have to be a strong and empowered fuel efficiency team consisting of people from all areas of the airline and they will have to follow the principles of change management related to internal communication and stakeholder involvement. Everybody needs to be bought in to the program; everybody needs to be looking in the same direction; there needs to be somebody in the organization who talks about fuel efficiency all the time; it’s very important to leverage success, to publish within the airline what has been achieved, how it has been achieved and who did that. Also, the improvements will have to be measured, you’ll need a tool for that; and, most importantly, improvements will have to be sustained, make sure that whatever has been put in place doesn’t slip because of lack of interest, you’ll have to ensure that people remain interested.
Tools and software
Aircraft generate operational data. Data is received from ACARS, from the flight data recorders, the operations control system, there are many sources. So, airlines will want to gather all that data to start looking at it and to make comparisons, to check what is happening in actual flights compared to what happened during planning; and is planning close to actual or is there a very large gap? If there is a gap, we can use data to start looking for the reasons in order to know what has to be done to close the gap. For all of that, you need a tool. Many readers will have worked with Excel and traditionally, airlines have used Excel or simple database solutions while having partial or limited data available. However, it’s difficult with too much time lost or wasted by a fuel efficiency manager or team cleaning up data, ensuring that the data is attributed to the correct flight. The problem is that all the data comes from different recorders and different backgrounds so it’s very difficult to make sure that you have the right data. But there are five or six excellent software tools on the market today that will do all of that work for you: there is a bit of pain to get such a solution installed because the IT people have to do some work to ensure that data is flowing and that core systems aren’t affected, but once it is flowing, all of that data will be at your fingertips, leaving you free to spend the time on analysis; looking for the problems and the issues, and putting the team to work on fixing them rather than chasing data.
A fuel budget
We’ve already touched upon fuel price and, from that same IATA website we have figure 5.
Let’s start with the main information. The table on the left shows the jet fuel price position at the start of March 2018. On the right, the table shows the same information but twelve weeks later in late May. As you can see, the price has risen by 16%. The question is; if the fuel price has risen by 16%, should you start to worry? Well, of course you should.
Some readers will be familiar with the term ‘cost index’ which is directly related to the price of fuel, i.e. if the fuel price is up by 16%, the cost index should be down by 16% but the question to ask is yourself is, ‘is it?’ Only a few airlines will ask and answer that question every week. Those airlines have a flight planning system that automatically reads the fuel prices so that every flight produced by that system already has the correct cost index: just change the fuel price a bit and the cost index will change. That’s very efficient but even if it’s done manually, the airline’s performance department should update the cost index every time the fuel price changes – if the price goes down, you fly faster; if the fuel price goes up, you fly slower. But the important bit here is the fuel price and how it related to the fuel price in 2000, i.e. 250% of the fuel price in 2000.
A fuel budget exercise
To illustrate the point, here is a little exercise to build a fuel budget; calculate for an airline how much fuel it is burning: and it’s quite simple.
In figure 6.1, on the left you’ll see a number of different aircraft types, these are from the Etihad fleet because I used to work there so had the numbers handy. These are numbers in the fleet during a given year with new arrivals to the fleet during the year as decimals, i.e. if an aircraft joined the fleet in July, it would be 0.5 of an aircraft for the year. That year an average of 113.5 aircraft were in the fleet.
Now, figure 6.2, we can look at the number of flights they make, the flight hours per aircraft per year and the number of flight hours for that type fleet for the year.
Next, figure 6.3, we add in how much fuel they burn per flight hour on average…
… and, in the end, using a fuel price of roughly $700 per tonne at the time of writing (figure 6.4), a budget can be calculated.
Where to get all this information on which to base the budget? If not available in an Operations Control system or similar, the Technical Department is a good place to start for historical data. Once available, extrapolations can be made for network changes and fleet size changes.
Taking the A320s as an example, we see 37,201 flights. And, looking at the number of flight hours ‘per aircraft, per year’, we see that the A320 fleet averages 5,083 flight hours per aircraft per year. Multiply that by the number of aircraft in the fleet and we see that the A320 fleet managed 109,283 hours flight time during the year. The next column is the important bit, the fuel burn per hour. It’s possible to look at a few flight plans and make your own calculations or look at some industry data and take averages but it’s important to remember that, for every airline, the average fuel burn is different because the network is different and the average flight times are different, in turn giving a different average fuel burn per hour. In this calculation, use numbers that make sense in the context of the operation.
Then we get to the estimated burn where, in this example, you’re looking at 3.2 billion kg in the year, i.e. 3.2 million tonnes of fuel being burned which, together with the fuel price we’re using, gives a fuel budget of about $2.2 billion. Why is this important? Because you want to answer a few basic questions such as below.
In figure 6.5 I’ve added Taxi Fuel and APU Fuel, the latter based on runtime statistics from the Technical department who will keep a monthly tracking sheet of how many hours the APUs are run; then Honeywell can tell you how much they burn per hour, so you know how much the burn is. For taxi fuel, just look at the movement data for the amount of taxi minutes, again multiplied by a factor. Also, remember that all of this is plus or minus 10% which is OK because you simply want to have an educated idea of total and average. And then, still on figure 6.5, on the right hand side, there is a breakdown of which fleet burns what percentage of fuel as a guide to which fleet should be dealt with first in the efficiency drive.
As the budget table shows, the narrow body fleet operates almost half (48.5%) of all the flights but only burns 12.4% of the fuel: that begs the questions, for the narrow body fleet, on what should the program focus in terms of fuel efficiency? If I were looking at important areas for this airline, I would say, for the narrow body fleets, focus on ground operations, climb and descent but not so much on cruise because the aircraft don’t spend so much time in cruise. With the long-haul fleet I would focus on cruise because that is where most money can be saved. I wouldn’t bother too much about ground operations.
You can see that APU use burns about 33,000 tonnes or about 1%, while taxi burns about 53,000 tonnes of fuel, about 1.6%; again, these are areas where money can be saved, especially for the narrow body fleet. So one percent of this fuel budget means $23 million saved, i.e. 1% of the entire fuel budget and, if the fuel budget is one third of the total operational budget, that one-third of a percent is a big effect. These are the kinds of numbers that consultants can help you to evaluate with a good team and good advice. It all starts with Awareness and Campaigning.
End of Part 1. Part 2 will follow in the next issue of Aircraft IT Operations.
Sander de Moor
Sander de Moor has more than 30 years’ experience in flight operations support across all sectors of aviation with particular expertise in Flight Operations Efficiency, specializing in fuel and operational efficiency strategies. He was a member of the IATA Green Teams for two years and subsequently he has held the position of Fuel Efficiency lead at LOT Polish Airlines and Etihad Airways. Sander has extensive experience in managing RFP (Request for proposal) and implementation processes with FMIS (Fuel management Information Systems) tools across group airlines.
Aircraft Commerce Consulting
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