Airlines

If Mitsubishi studied pigs and aviation closer

In 2007, CM suggested that the Mitsubishi Regional Jet (MRJ) was doomed to failure at the concept stage.

All the tea leaves were there to be read. A simple study of the widely available Boeing & Airbus 20-yr commercial market forecasts at the time revealed how the regional jet market was set to shrink 40% in favour of larger jets.

Yet the Mitsubishi Aircraft Corp (MAC) pushed on ahead regardless hoping for a 20% share of a collapsing market. What would possess a company to target a dying segment with a product that wasn’t a game changer? A plane that promised to use composites to reduce weight yet was forced back to conventional alloys and to resize because customers had no demand for the original design.

With 90% of the regional market occupied by Bombardier and Embraer, airlines get great efficiencies by sticking to the same brands during upgrade cycles – minimal marginal costs required to train ground staff and pilots. For airlines to pursue a brand new aircraft that offered little in terms of superior economics nor extensive after sales services, it was always going to be the Achilles’ heel for MAC.

Airlines would not only take on extra costs to train existing staff, but would run huge financial risks with leased MRJ’s (now called the Spacejet to rebrand the failure) if they needed to downsize fleets because there would be next to no other airlines to sell or release them to unlike Bombardier & Embraer. Pilots who chose to be certified to fly the Spacejet also risked limited career options if an airline collapsed.

So it is refreshing to read this great summary on Wolf Street of how terribly the aircraft program is (not) progressing in 2019.

It would make a great Harvard Business Review study on how not to crack into a market.

Qantas to sue Will.i.am?

Image result for will.i.am helicopter

CM rarely has a kind word for Qantas when it comes to service, but good on the airline for being prepared to defend a stewardess who Will.I.am decided to accuse of “racism” on Twitter. Of course, the full facts about what went on board to cause the fracas is yet to be released but sadly passengers need to realise when they are on the plane, the crew do have the law on their side. Apparently, the musician didn’t want to put his laptop in the overhead bin. Good luck winning that fight when instructed by the crew. It is a condition of flying.

One could almost be forgiven for thinking it was a pre-concert promotional stunt to stir up the media into a frenzy to sell more tickets. Thankfully Qantas flight attendants don’t wear MAGA hats, serve Subway sandwiches or carry bleach. Yet they do carry restraining kits. If Will.I.am truly did his homework he would have realised that Qantas is more woke than he is.

As successful as Will.I.am has been in his career, the triggered musician has had a history of not always living in the real world. Sadly when celebrities make millions they become so conditioned to having wind blown up their backside that when someone pushes back over the most trivial of things their outrage is amplified as if their life was at stake. Sometimes they don’t even get their own hypocrisy. Take this example.

Will.I.am attended a climate change debate in Oxford in his own helicopter – which is not dissimilar in size to Marine One – and said at the conference, “Climate change should be the thing that we are all worried and concerned about as humans on this planet, how we affect the planet, our consumption, and how we treat the place that we live in.”

Qantas’ 2050 zero-emissions nonsense

Woke? The only way Qantas can cut net CO2 emissions to zero by 2050 is to cease operations. In what world does CEO Alan Joyce AC think he is somehow ahead of the aerospace technology curve? In any event, it’s highly unlikely he’ll be CEO in 2050.

Joyce said the Qantas and Jetstar will cap net emissions at their current level from next year, cutting it gradually over the next 30 years. A big pronouncement but by sheer virtue of upgrading an ageing fleet (phasing out 747 Jumbos) the efficiency targets are a walk in the park, not some tremendous virtuous milestone. Burning less fuel is good for the airline’s bottom line. Lower fuel burn means fewer emissions.

The ultimate irony is that aircraft manufacturers are doing their utmost to “carbonize” the fuselage and wings in order to save weight (Boeing 787, 777X, A350, A330). Even the next generation engines are featuring extensive use of carbon derivatives because of the fuel efficiency benefits that are created by them. Put simply, even in 2050 carbon and fossil fuel derivatives will be major source materials for future planes. Maybe in Joyce’s mind, that won’t count.

Aerospace technology is utterly amazing. To think that a 650t Airbus A380 can take off, fly 12 hours and land in complete comfort. Or that one fan blade on a 777 jet engine can theoretically suspend a locomotive from it without snapping such is the tensile strength. Now we can fly 19 hours nonstop. 30 years ago, half that distance was achievable.

Bio-fuels exist. However, if the airports across the globe don’t provide bio-fuels then his zero emissions pledge is shot. According to the IEA, aviation biofuel (aka sustainable aviation fuel (SAF)) is forecast to be 20% of all aviation fuel by 2040, from 5% in 2025.

The IEA stated,

SAF are currently more expensive than jet fuel, and this cost premium is a key barrier to their wider use. Fuel cost is the single largest overhead expense for airlines, accounting for 22% of direct costs on average, and covering a significant cost premium to utilise aviation biofuels is challenging…Subsidising the consumption of SAF envisaged in the Sustainable Development Scenario (SDS) in 2025, around 5% of total aviation jet fuel demand, would require about $6.5 billion of subsidy (based on closing a cost premium of USD 0.35 litre between HEFA-SPK and fossil jet kerosene at USD 70/bbl oil prices).

For commercial aviation to be a success, cost is always a factor. Great advancements like the Concorde died because of sustainable economics, not because of the accident. The vaunted Boeing Sonic Cruiser died at the concept stage because airlines couldn’t accept the commercial economics afforded by those higher speeds. So we have been stuck at 900km/h for decades and for decades to come.

Yes, there have been talks of electrically-powered planes (several developmental prototypes exist) but the technology to make them fly 10,000km at 900km/h with 300+ passengers on board won’t be met by 2050. Airbus intends to

make the technology available to fly a 100-passenger aircraft based on electric and hybrid-electric technology within the 2030s timeframe.”

Don’t buy into the malarkey that 10% of Qantas passengers carbon offset their travel. If one does the math, less than 3% of miles are actually covered by such virtue signalling. Either way, more than 90% don’t care to pay for their carbon offsets.

Aussie company has only approved technology for Qantas Boeing 737NG wing crack detection

Very simple story. Aussie based company Structural Monitoring Systems (SMN AX) has the only approved crack detection product in the market.

The 5 Qantas Boeing 737 NG planes (and dozens like it around the world) could have had far earlier detection with SMN’s CVM technology. To cut a long story short, CVM technology has vacuum channels, which if broken (via cracks emerging) notifies the ground crew of the structural issue.

The company already has a contract with Delta Airlines for its aircraft. This type of technology not only has the potential to ward off catastrophic failures but reduce the cost of inspections for airlines.

CM has owned SMN for over a decade. This trend was always coming.

Qantas & Virgin answering questions nobody is asking

Qantas CEO Alan Joyce and Virgin CEO Paul Scurrah have told the National Press Club that part of the role of their businesses is to back social issues. Puhlease.

Have shareholders overwhelmingly voted in favour of Joyce deploying their funds to sponsor woke causes? No one is stopping Joyce from pushing whatever virtue signaling he likes in his own time, but he probably might reflect that most of his customers haven’t requested to be lectured on board. Scurrah is the newbie, so he seems to want to score some media attention.

The latest excuse to push this corporate social nonsense is the unfounded research that kids of today require their corporates to have these woke causes embedded in the culture for them to join. What happened to “employer of choice” based on the business model? Will budding pilots want to pick the airline with the best conditions and business survivability or that which has the best carbon offset programme? Truth be told, what young ecomentalist university graduate wants to join an evil carbon dioxide producing airline anyway?

Having said that, employee retention will not favour wokeness when pay and conditions remain crimped by misguided company policy vs more attractive opportunities at firms that focus less on this. Harvey Norman is exhibit A on that measure. It is crushing the competition.

Qantas only needs to look internally at its own carbon offset program and how dismal it is. While it might be the world’s largest, truth is around 2% elect to pay for the sin of flying.

Back in May 2018, CM noted, while waiting in the lounge,

“So to offset my flight to Haneda, CM would pay $11.21 AUD. CM can put it to ‘local action’ (fund activism?), ‘developing communities’ or ‘global renewables’. In its 2017 Annual Report, Qantas boasted,

We have the world’s largest airline offset program and have now been carbon offsetting for over 10 years. In 2016/17, we reached three million tonnes offset.”

Carbon calculators tend to work on the assumption of 0.158kg CO2/passenger kilometre.

In the last 10 years Qantas has flown around 1 trillion revenue passenger kilometres. While the literature in the annual report denotes one passenger offsets every 53 seconds, the mathematical reality is simple – 2% of miles are carbon offset. So that means that 98% of people couldn’t care less.

Perhaps more embarrassing is that The Guardian noted in Jan 2018 that,

Qantas [was the] worst airline operating across Pacific for CO2 emissions

Kind of a massive load of hot air when you do the maths!

Mr Joyce might earn $24m p.a. CM would reckon shareholders would be glad to hike that if he ditched the social justice nonsense.

Qantas service is rarely anything to rave about so more effort applied in that area could well serve the company’s (and shareholder’s) interests far better than answering question hardly anyone is asking.

Sir Elton is on to something big here folks

Sir Elton is on to something. He vigorously defended the use of his private jet by Prince Harry and Meghan by saying he’d offset the emissions via Carbon Footprint (CF) so the flights were carbon neutral.

CM decided to input the figures of what a return trip to Ibiza followed by a return trip to Nice would cost the lovely couple to offset their evil ways using CF’s calculator. Turns out there is no “private jet” setting on the CF website leaving CM to use first class as a default.

The return trip from the UK to Ibiza would only require £2.00 each. The UK-Nice run would also run £2.00 return. So for the grand total of £8.00, their carbon emissions could technically be paid for on CF. CM notes that if the flights were combined then the cost drops to £3.71 each, a saving of 58p!

To splurge, Sir Elton could select the ‘UK tree plant’ for £12.90 (incl 20% VAT) each for a grand total of £51.60. Kenyan reforestation options are £9.50.

We don’t know how much Sir Elton paid for his offsets. One would hope his billions did a bit more than £8.00 or worse, £7.42 on a package offset.

Perhaps the $100s of billions of tax dollars spent (wasted) on renewables every year could be abolished and easily replaced by the generosity of pop stars paying to plant trees in Kenya! Who knew?