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Airlines are pragmatic.
Each, inherently, is a sizable organization as a degree of scale is necessary due to the
massive capital costs needed to, quite literally, get a plane off the ground.
There are no mom and pop airlines.
Therefore, airlines have the resources to analyze choices to a far greater level of
detail than most businesses—any decision that we, the public, see has passed through
such a level of review, such a level of scrutiny, that it must mean something.
Airlines typically don’t make emotional, informal, or off-the-cuff decisions.
Therefore, it’s odd how much airlines care about climate change because, from a theoretical
perspective, they shouldn’t.
It doesn’t currently make sense for airlines to care about climate change.
Of course, from a moral perspective it does, but businesses, traditionally and theoretically,
don’t value morality higher than profit.
That’s the role of non-profits—the organizational structure designed to value social impact
first and foremost.
For-profit business, in the traditional sense, are designed for profit.
Therefore, properly managed, they do what generates the most profit, and for airlines,
right now, what enables that is to not care about climate change.
Carbon doesn’t have a cost for airlines.
With a few exceptions, emitting more carbon does not cost the airlines anything, but it
enables them to make more profit, so the theoretically correct thing for airlines to do is to emit
the amount of carbon that enables them to generate the most profit, regardless of environmental
consequences.
Some say airlines care about climate change for public relations, and they’re right—but
only to an extent.
Airlines clearly posture as caring about their carbon footprint because consumers increasingly
care about their carbon footprint, so being viewed as a greener airline translates to
being a more desirable choice for consumers—who, unlike for-profit businesses, do care about
what’s morally right to an extent.
However, net carbon-zero is expensive, biofuel development is expensive, sustainable aircraft
development is expensive—all more expensive than would make sense if airlines and aircraft
developers exclusively cared about PR.
So, the reason why airlines are starting to care about climate change is because they’re
terrified of the r-word: regulation.
It’s started already.
In France, the national assembly has passed a bill that would ban short-haul flights on
routes that could be travelled in two and a half hours or less by train.
Here’s the worst thing for airlines: measures like this make absolute, perfect sense.
With airports located away from city centers, security lines, less reliable departure times,
and more, no journey that would take two and half hours by train could reasonably and reliably
be accomplished faster by plane.
The bill would still allow these shorter flights to operate for the purposes of connections
to longer-haul flights, but passengers just couldn’t book the short flights by themselves.
So, there’s no real downside, but there’s the massive upside of shifting travelers onto
trains, which in the case of France emit 77 times less carbon per passenger on journeys
of this length.
While this bill faces an uphill battle as it needs to pass through the more conservative
French senate before enactment, it’s no wonder why similar measures have been seriously
considered or implemented in the Belgian region of Wallonia, Austria, the Netherlands, and
by countless employers globally.
The problem for airlines is that they just don’t have any good arguments against regulations
like these.
A move away from the shortest-haul, most replaceable flights will be the start, but it won’t
end there.
As one of the more carbon-intensive industries, airlines will face increasing regulatory barriers
to their operations—unless, of course, flying becomes less carbon-intensive.
Flying must happen, in many cases.
Governments will not ban flying, full-stop.
Governments will not heavily restrict flying, full-stop.
But governments will make it so the externality, the carbon footprint, is priced in to the
cost of flying.
That is, governments will create structures in which greener flying is cheaper flying
with, for example, hefty carbon taxes.
So, why airlines care about climate change is because airlines are pragmatic, and its
quickly and increasingly become the case that competitiveness, as companies, is linked to
how green they are.
Biofuels, engine efficiency improvements, carbon offsetting—these things all help,
but they’re incremental changes that can only take flying from being incredibly carbon-intense
to very carbon-intense.
However, there is one solution that can actually, realistically turn flying into a somewhat
sustainable method of transport: electric aircraft.
Now, here’s the thing: electric aircraft are no massive innovation.
They existed in 1973 when the MB-E1 became the first to fly with a human crew, they existed
in 2015 when the Solar Impulse 2 circumnavigated the world exclusively on solar power, and
they existed in 2020 when the Pipistrel Velis Electro became the first commercially-available
type-rated electric-powered aircraft.
There’s not a whole lot technologically that has or is preventing electric aircraft
from existing.
What is is the business case.
Batteries are just more expensive and less energy dense than fuel, so with carbon emissions
always having been free for airlines, it just always made sense to use petroleum-based fuel.
Aircraft development is an unbelievably expensive endeavor, and getting an aircraft certified
for commercial use using a new type of motor is just all that much more, so it never made
sense for a manufacturer to go through all that for an aircraft that didn’t have a
strong business case.
Now, however, for the first time ever, a strong hypothesis of a business case has developed
and, if it works, we will see the the most dramatic shift in how commercial aircraft
work in generations.
Electric aircraft inherently have constraints.
While much progress has been made in the past decade to bring down the price of batteries,
and they now cost 1/10th as much per kilowatt hour compared to a decade ago, less has been
done to increase battery energy density—that is, the amount of electricity stored per pound
or kilogram.
That’s because, with electric vehicles, the primary novel application, weight doesn’t
matter that much—it’s easier to increase range by bringing down cost and putting more
batteries in than improving their energy density.
It’s different with aircraft.
The lighter they are, the further they can fly, so there are diminishing returns in adding
additional batteries since doing so means one needs to add even more batteries to provide
the energy to carry the weight of those batteries and so on and so forth.
Also, for now, all viable electric aircraft are propeller-driven, specifically because
it would be far more costly to develop an electric jet engine, and the time savings
it would offer on the short-range flights that electric aircraft would be capable of
completing would be negligible.
So, airlines need to find a use case for short-range, slow, electric aircraft.
Conveniently, it already exists.
From their Denver, Colorado hub, United Airlines flies to sixteen destinations less than 250
miles or 400 kilometers away.
In particular in this case, many of these destinations, such as Montrose, Aspen, Eagle
County, and Hayden, are high-yield and high-frequency despite their close distance since they connect
tourists to popular ski towns.
In the case of Widerøe, a Norwegian regional airline, 19 of their 47 overall destinations
are within 250 miles of their Tromso hub, and a strong majority of their routes are
over distances less than this.
Then, there are airlines like Cape Air, who do not fly a single route over 250 miles in
length.
The use case for electric aircraft already exists, because airlines like Cape Air have
already found it, just not yet using electric aircraft.
They fly from large hubs to small destinations on 9-seat propeller aircraft, and partner
with mainline airlines to offer connecting itineraries.
For them, the electric aircraft range constraints don’t matter since all their routes are
so short, and therefore the speed constraints don’t either.
When Cape Air flies from Martha’s Vineyard to New York JFK on their propeller-driven
Cessna 402, the flight takes an average of 70 minutes, whereas Delta, flying the same
route using a jet CRJ200, takes 45.
When Cape Air flies from Nantucket to Boston Logan airport, they take 39 minutes, whereas
JetBlue, on their E190 aircraft, takes 28.
Those extra 11 or 25 minutes are negligible in the overall travel experience, especially
considering that Cape Air’s boarding times, with 9 passengers, are certainly quicker than
with Delta’s 50 passengers or JetBlue’s 100.
So, not only could electric aircraft seamlessly replace all of Cape Air’s flights, but they
could also take over some of Delta, JetBlue, United, or other larger airlines’ routes
without a negative impact to overall trip time.
So, the use case exists, passengers would be accept the switch, but what do electric
aircraft do for airlines, aside from enabling a continuation of operations in the face of
increasing regulation?
A very specific answer for this exists thanks to one short document.
This is the US Department of Transportation’s Order Re-Selecting Airline document for their
essential air service subsidized flights from Boston Logan Airport to Augusta and Rockland,
Maine.
You see, the US government subsidizes routes like these to small, remote communities across
the country, in order to improve connectivity and economic opportunity for these areas.
As it’s the US taxpayer funding these programs, the bids from airlines to operate these routes
are a matter of public record, providing a truly unique glimpse into accurate operating
costs for a single airline route.
While they competed against Boutique Air, Cape Air ended up winning the bid, so they
now operate the route to Rockland, Maine.
In exchange, they received a subsidy of $2,218,126 for their first year, 2018 to 2019, ramping
up to $2,495,090 by their fourth.
Rockland is a tourist hotspot in the summer, but it returns to a quieter state for the
rest of the year, so the airline’s obligations for flight frequency varies by the season—anywhere
between three daily round-trip flights in winter, to six in the summer.
All in all, though, they’re obligated to operate some 1,365 flights annually, representing
12,285 total available passenger seats in each direction.
According to Cape Air’s estimates, this route should cost some $3,350,746 a year to
operate.
They estimated some 15,122 total passengers would fly, but publicly available data shows
that only 6,733 boarded their planes in Rockland in 2019.
Assuming it’s roughly the same in the other direction, as one would expect, that means
they saw only 13,466 total passengers, representing a 54.8% load factor.
Selling tickets for an average of $83, the airline likely therefore brought in $1,117,678
in passenger revenue which, combined with their $2,247,721 year two subsidy, means they
earned some $3,365,399 in revenue.
Subtracting their annual cost estimates, that means they only turned $14,653 in profit or
$1.09 worth per passenger.
This is how tight airline profit margins can be.
But what would they be if this route was operated by an electric airplane?
Well, to start, fuel costs would be almost entirely eliminated.
Electricity isn’t free, but its costs are so low compared to fuel that it essentially
becomes a non-factor.
Electricity can also be converted into a capital cost, instead of ongoing cost, through investing
in solar or wind energy generation, which Cape Air has hinted at doing.
So, this $844,002 in annual fuel costs—we can consider it, for all intents and purposes,
eliminated.
Other costs would go up.
Cape Air budgets $269,903 per year on ownership costs—meaning, the amortized, prorated cost
of owning their aircraft.
While details are not known, and so an accurate estimate would be impossible, there’s no
world in which a new, electric aircraft is cheaper than the mass-produced, long-proven
Cessna 402.
It would’t be unreasonable to expect that ownership costs would, say, double.
Then, there are the maintenance costs.
These would be significantly lower than with traditional internal combustion driven aircraft.
The thing is, electric motors just so simple.
They have exactly one moving part—the shaft.
Electric vehicles typically never require motor maintenance, as there’s really just
nothing that can break or wear down within their lifetimes.
This same principle will apply to electric airplanes, as so much of the maintenance work
aircraft require currently is on their engines.
While its very tough to know with any confidence how this will play out in reality with planes
that don’t yet exist, there’s a world in which aircraft maintenance would cost a
fraction as much.
Overall, these three factors combined—a near-total elimination of fuel costs, a dramatic
increase in ownership costs, and a dramatic decrease in maintenance costs—track with
Cape Air’s estimates for a 40% reduction in operating costs.
That is enormous.
On their Rockland route, assuming no change in revenue, that would take $1.09 in per passenger
profit, and turn it into $100.62—a number so dramatically different that it doesn’t
even sound correct.
This would immediately turn Cape Air into the highest operating-margin airline in the
world—full-stop.
This is why the future of short-haul flying is inevitably electric.
This is why, in 2019, Cape Air became the first commercial customer to order the Alice—a
nine-passenger electric aircraft developed by start-up aircraft manufacturer Eviation.
It will be able to fly each and every one of the airline’s routes roundtrip without
charging.
There are certainly no guarantees that the Alice will see the light of day—aircraft
development is an incredibly costly, risky, and long process that can spell failure for
even the strongest concepts—but everything so far suggests that Eviation has just as
much a shot at success as all the other players that have entered this race.
While Cape Air may be pioneering the use of these aircraft in the commercial context,
as they have the advantage of a preexisting route network and business strategy that are
conducive to their use, the release of such aircraft will fundamentally break a long-held
truth about aviation.
Short-haul flying is currently more expensive, per mile, than long-haul flying, due to the
high fixed costs involved with the ground operations at each airport.
However, with electric aircraft available exclusively on shorter routes, at least in
the near-future, there’s a reality in which its cheaper per mile to fly 200 miles than
2,000 miles.
That will shift airlines’ focus to more regional route networks, and connect communities
that previously were too small to make economic sense for airlines.
It short, not only will electric aircraft allow airlines to continue to operate short-haul
as regulations ramp up, but it will allow them to increase it in a sustainable, profitable
way.
The future of flying is inevitably electric, because the business case is just too strong
to ignore.
Plenty of progress has already been made to make electric flying a reality, and as much
as I’d like to tell you in detail about the specific electric aircraft that you might
fly in a matter of years and how they work, there just isn’t the time in this video.
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