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Sun 12 Jul 2020 12:26 PM

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Aviation, Covid and the inevitable Tesla moment

Protecting passengers from the Covid-19 pandemic can not be solved with current commercial restraints, writes Howard Leedham

Aviation, Covid and the inevitable Tesla moment

Howard Leedham, managing director of Consilium.

The aviation industry is faced with painful short-term survival plans as a result of the devastation inflicted on it by the Covid-19 pandemic and, with the exception of an effective vaccine, short-term solutions seem elusive.

However, the industry’s longer term challenges are no less significant. Plane makers are facing inexorable pressure to meet inevitable 2050 environmental carbon-neutral initiatives - and beyond meeting the justifiable demands of Miss Thunberg, the technological migration away from fossil-fuel aircraft engines seems the most promising route to radically reduce operating costs.

The root problem currently confronting airlines is that the pandemic has singled out the primary concern of every passenger… safety.

Passengers and indeed nations now demand of airlines that they are protected against Covid-19 infection, which requires social distancing.  This represents a conundrum that cannot be solved within current commercial restraints.

Limited choices

Airlines are pretty much left with two choices.  They can either continue to try to cram mask-wearing passengers into pre-Covid layout cabins, which will deter safety-conscious passengers from travelling, or they can reduce passenger loads, which causes airlines to operate at load-factors below break-even. Either option is likely to result in the airlines operating at a loss until a lasting solution is found.

The airline industry has traditionally been reluctant to change, not least because of modern engineering requirement to meet a 10-9 failure aversion rate.  However, if you could step back in time to 1969, to compare what existed then to what still exists now, the two items you would recognize for sure would be the Boeing 737 and 747.  The Airbus 300 emerged just one-year later.

The corporate structure of the aviation industry has reduced to Boeing and Airbus for airframes, GE and Rolls Royce for engines.  It is not quite Henry Ford’s selling point on his Model-T Ford - “You can have my cars in any colour you like…as long as it’s black” - but it’s pretty close.

In aviation, the manufacturers decide the pace of technology, availability, price, and the prospects.  Change is slow because the risk averse route for a manufacturer is to upgrade an existing aircraft design, rather than to create a new one.  This ‘revise and tweak’ business model has in most part worked well for the two aircraft manufacture leviathans.

The A380 is a case in point. A magnificent and technologically brilliant aircraft - but a commercial failure for Airbus compared to the ‘revise and tweak’ A320 series. 

Boeing was even less adventurous, but in the case of the 737 Max they’ve discovered the consequences of redesigning of an aircraft, which was created long before large diameter hi-bypass engines were invented.

In the case of the Boeing 737 Max the engines were so large that the only solution in order to achieve ground-clearance was to protrude the engine mounts forward of the wing, and rely on computer electronics to defeat centre-of-gravity physics; the result was two catastrophic crashes, a currently unsaleable fleet of 400 grounded aircraft and losses in the tens of billions.

The financial woes imposed on Boeing by the 737 Max have arguably only been saved by the US Treasury’s Covid-19 sector backstop/bailout to the industry. Boeing took advantage by raising $25bn though the sale of a 10.5 year bond offering a 5.15 per cent yield - the sixth largest bond sale on record. It was three times over subscribed.

But no amount of revisionist design can solve the current problem. An airline cannot operate profitably while socially distancing passengers. Therefore, CEOs’ are understandably cutting manpower and fleet size. But the largest operating cost by far is fuel.

'Tesla moment'

Reduction of fuel consumption is all but optimised in modern engines, which remain a radical but nevertheless revisionist technological adaptation of a gas-turbine design dating from 1934.

Despite considerable technological advances and, unlike the car or power generation industries, the aviation sector has yet to have its “Tesla moment”; it remains solely reliant on fossil fuels. Hence it’s responsible for 12 per cent of the world’s transport-related carbon emissions.

In the case of motor-vehicles it widely recognized that the internal combustion engine will be a thing of the past within 15-years. In the case of aircraft engines similar progress has arguably been stifled by the industry itself.

Enter the “Superconducting Ultra Power Efficient Radial Fan Augmented Nano-Aerodrive”, or more simply, the “SuperFan”. It is the next generation of aircraft engine that has been designed and developed by a brilliant team of engineers and scientists with lineage from NASA who have formed a commercial conglomerate to build their patented design.

Current SuperFan design models utilize magnetic coils and high temperature technologies to electronically drive turbines within a shaftless engine. The design is calculated to achieve a 90 per cent reduction in carbon footprint. 

The SuperFan is designed to achieve thrust equivalent to currently operated engines, but it is lighter and smaller, with 45 per cent fuel reduction, 90 per cent emissions reduction, half the number of parts and at a predicted two-thirds of the cost.  Additionally, the Superfan is specifically designed to meet zero emissions by 2050 because the power source for each turbine stage is electric.  In short, like Tesla, it is an inevitable industry disrupter.

Current SuperFan development predicts a 55-month schedule to complete flight testing.  But investors do have the power to accelerate this process. The existing aviation industry, which has most to gain from the SuperFan, would seem to be the natural partners.

Private placement investment is in progress to accelerate the SuperFan through to test stages. This accelerative funding requirement represents less than 1.9 per cent of the recent Boeing bond issue; which in context is probably less than the combined issuing fees on that bond and a comparatively small sum for the aviation industry.

After all, GE predicts sales of $123bn per lifetime of their latest engine model. Annual sales of gas turbines amount to $93bn a year, or a total market value of $2 trillion by 2050, by which time, under zero emissions requirements, all currently operating aircraft engine designs will have become redundant.

Given that Tesla was recently touted to out-value Toyota, while only producing around 3.5% of Toyota’s vehicle production, then similar events in the aviation sector where additional zeroes are placed on the production of any component provide for an exciting comparative for SuperFan’s market-place potential.

The world’s environmental future demands a “Tesla moment” in aircraft engine design. The current crisis that Covid-19 has inflicted on airlines and manufacturers combined with market conditions seems set to accelerate that transformation.

Howard Leedham MBE is a former Royal Navy commander and British Special Forces officer. He is now managing director of Consilium, whch offers special project consultancy services.

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