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Fuelling green change
06 July 2012
Aviation’s dependency on oil leaves it vulnerable to political upheavals and the green lobby. Jamie Bullen investigates how aviation can become greener, quicker.
Read more:
Biofuels
Delta Airlines
Lufthansa
Aero Mexico
There are hard-nosed reasons why aviation needs to be more environmentally friendly. Jet fuel makes up 30% to 40% of an airline’s costs. According to the Air Transport Association (Iata), the industry spent $176 billion in 2011 on fuel alone.
Yet airlines have little to no control over oil prices. Record oil prices in 2011 wiped out the profits of many airlines last year. Fuel hedging can help an airline navigate volatility but it cannot do much to alter the underlying price.
Much of the world’s oil production remains in politically sensitive areas. Disagreements with a country such as Iran can see Brent crude spike, hurting airline balance sheets.
In the past couple of months Delta Airlines has bought a refinery near Philadelphia for $150 million from ConocoPhillips in an attempt to reduce this exposure. It hopes the acquisition will provide 80% of the US carrier’s jet fuel...
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