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How Airlines Can Combat Rising Fuel Prices in a New Way

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How Airlines Can Combat Rising Fuel Prices in a New Way

Commentary by Michael Edmonds of Honeywell Aerospace Services and Connectivity

PR Newswire

PHOENIX, July 24, 2018 /PRNewswire/ -- What makes for efficient air travel? That depends on who you ask. For travelers, it means getting to and from the airport without incident and arriving at your destination on time (and with your bags). From the airline's perspective, efficiency can mean many things.

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Michael Edmonds has led the Honeywell Aerospace Services and Connectivity business since 2010, and has nearly 20 years of experience working with airlines across the globe to advance technology and create new efficiencies.

On-time performance will always be important, but as airlines strive to increase efficiency, there are several other factors that contribute to running an efficient airline. How quickly can an aircraft be "turned around" from one destination to the next… is every seat occupied… is the internet connectivity strong enough to allow passengers to relax with a movie or get some work done? As important as these factors are, fuel prices – especially when they are rising – tend to be the dominant concern from the airline's perspective when it comes to efficiency.

We're in the thick of earnings season, and it is no surprise that the recurring theme in quarterly reports from airlines is rising fuel prices and how they are cutting into profits. Jet fuel prices continue to put enormous bottom-line pressure on the world's airlines, and those prices have soared 54 percent from June 2017 to June 2018, according to the International Air Transport Association (IATA). The increases in the first six months of 2018 added more than $42 billion worldwide to carriers' operating costs, IATA estimates. 

Prices are still below their historical peak. Research from the Massachusetts Institute of Technology shows U.S. airlines spent a combined $42.8 billion on fuel in 2012, when prices topped out. That number was $25.2 billion in 2017 and will inevitably be higher this year.

Just think, if a global carrier could cut fuel costs by just 1 percent, the savings could top $50 million a year – and that's if prices hold steady.

Airlines have addressed fluctuating fuel prices for many years, but there's a big difference with this latest spike in fuel prices. Now, airlines can use Connected Aircraft technologies fueled by big data and advanced analytics to become more efficient managing their fleets and their fuel.

It's not hard to understand that the heavier the aircraft, the more fuel is needed to propel it, but ironically, fuel itself is a large component of the weight carried on a typical flight. Software like Honeywell's (NYSE:HON) GoDirect® Flight Efficiency helps airlines better understand the amount of fuel they need to operate an aircraft without sacrificing safety. The software examines not just how much, but how fuel is used.

We've all been on flights that take off about 30 minutes late, and the pilot says "we'll make it up on the way." What that really means is the pilot will throttle up during flight – and burn more fuel than anticipated – to make up the lost time. Travelers land on time, but the airline burns money along the way.

Honeywell's software can help prevent this common and costly habit by analyzing historical flight data to make better strategic decisions on flight routes that take into consideration weather patterns, the time of day, approach patterns and more. Additionally, pilots can make tactical decisions in flight based on that historical data. This is accomplished through Honeywell's algorithm that blends engineering and flight operations expertise with advanced statistical and machine-learning methods.  The result is a new level of airspace efficiency that airlines could never achieve before.

The benefit of this technology to travelers can be seen in their pocketbooks. As airlines implement more advanced software technologies to drive out inefficiencies, rising fuel costs will put less pressure on ticket prices. In addition, analytics that optimize routes will reduce time in holding patterns around busy airports and enable more on-time arrivals.

Operating an airline is one of the most logistically challenging undertakings in the business world. Despite the challenges, airlines connect every corner of the world each day with a remarkable amount of efficiency. Thanks to new technology, airlines will only grow more efficient, and we will all benefit because of it.

Michael Edmonds has led the Honeywell Aerospace Services and Connectivity business since 2010, and has nearly 20 years of experience working with airlines across the globe to advance technology and create new efficiencies.

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