The wide gap in top and bottom domestic US airline fuel efficiency rankings highlights market complexity
Alaska Airlines was found to be the most fuel-efficient US domestic carrier in 2010
Wed 18 Sept 2013 – A comprehensive study of the fuel efficiency of the 15 mainline airlines on US domestic routes shows a 26 per cent gap between the most and the least efficient. The study by the International Council on Clean Transportation (ICCT) is the first to quantify performance using both publicly available data and a newly designed methodology to account for the differences in business operations across airlines. Alaska Airlines was the most fuel-efficient carrier operating in the United States in 2010, followed by Spirit Airlines and Hawaiian Airlines. Around one-third of the variation in fuel efficiency between airlines can be attributed to differences in the utilisation of advanced aircraft efficiency technology. Those airlines towards the top of the rankings, however, were found not to be as fuel efficient as others on certain popular routes. Counter-intuitively, the least fuel-efficient airline was also the most profitable airline in the period studied.
The authors of the study say the efficiency gap is larger than what might have been expected in a mature aviation market during a period of high fuel prices. A portion of the gap can be explained by differences in technology across each airline’s fleet, with the balance a function of operational practices such as single engine taxiing and fuel loading/tankering procedures, as well as variations in load factors, seating density, route circuity and matching aircraft capability to operational mission.
Airlines that have invested in more fuel-efficient aircraft, with technologies such as winglets, high-bypass-ratio engines and lighter airframes, obviously burn less fuel. However, the study found a significant scatter in the relationship between aircraft age and efficiency. Carriers such as Hawaiian and Southwest have high efficiency scores despite operating relatively older fleets, while carriers such as Virgin America and AirTran operate newer equipment yet score below average in terms of overall efficiency (see table below). The least efficient airline in the study, Allegiant Air, has a particularly old fleet – with an average age exceeding 20 years – of McDonnell Douglas aircraft first developed in the late 1970s.
The study also compared the fuel efficiency of individual airlines serving 10 common routes across the United States, which together accounted for 1.6 million tonnes of jet fuel and 5 million tonnes of CO2 in 2010. The route-specific results demonstrate that high fuel efficiency scores do not necessarily translate into more efficient flights on all routes. For example, on the Atlanta-New York City route, operated by six airlines in total, although both AirTran and Delta rank below average in overall efficiency, on this specific route they operate efficient flights because Atlanta serves as a major hub for both, leading to more direct flights in larger aircraft. Other airlines, in contrast, serve this route with smaller aircraft and will often have a layover at their own hub. Spirit Airlines, for example, is estimated to offer the least fuel-efficient service on this route despite having the second-most efficient US operations on average.
Greater deviations are seen generally on longer routes because more distant city pairs are linked via a greater diversity of aircraft types and flight paths due to layovers. Shorter trips, such as north-south coastal flights that are generally less than 800 miles, are significantly more fuel intensive than transcontinental flights on a fuel per passenger mile basis.
“These findings suggest that consumers aiming to reduce their environmental footprint would gain from a closer look at the fuel efficiency of individual flights rather than that of airlines overall,” says the study’s report.
Each airline’s fuel efficiency score was also compared against its profitability to investigate the relationship between market performance and airline efficiency. Since fuel accounted for around 35% of total aircraft operating expenses in 2010, it could have been expected that operating more efficient aircraft would correlate with greater airline profitability. However, no clear correlation was found by the researchers.
Allegiant Air, the lowest ranked airline in the study, had the most profitable US domestic operations between 2009 and 2011, largely due to flying routes that other airlines show little interest in and therefore giving it pricing power. As well as market competition, other business-related concerns such as labour contracts, fuel price hedging and generating ancillary revenues temper the relationship between fuel costs and profitability. Furthermore, newer, technologically advanced aircraft cost more to purchase than used equipment that burn more fuel, allowing airlines to profit from operating less efficient aircraft on certain routes. There is sometimes a skewed incentive for airlines when older aircraft are available at a significant discount and the fixed cost of state-of-the-art aircraft might not be offset by the projected fuel savings, says the study’s report.
“Fuel costs are a big concern for airlines now, but these numbers raise real questions about the conventional wisdom that fuel costs by themselves act as a sufficient incentive to drive efficiency in this sector,” says Mazyar Zeinali, co-author of the report.
The ICCT analysis is based on fuel consumption data reported by airlines to the US Bureau of Transportation Statistics (BTS). The methodology was developed by a team of researchers at the FAA’s National Center of Excellence for Aviation Operations Research (NEXTOR) at the University of California, Berkeley. It evaluates an airline’s fuel efficiency relative to both the mobility (straight-line passenger miles between origin and destination) and access (airports served and/or flight frequency).
This approach, says ICCT, permits a precise distinction between fuel burned to provide a given level of service and fuel burned as a result of inefficiencies, such as the use of older technology, circuitous routing or taxiing with two engines instead of one. A metric failing to take into account mobility and access together will therefore bias the findings in favour of airlines operating fewer, longer flights, it argues. Other airline efficiency comparison studies to date, it points out, have failed to cover the full range of airlines serving a given market, including low-cost carriers and smaller affiliate airlines.
“The frontier-analysis approach developed for this study applies a well-recognised method of productivity analysis in a novel manner that reflects the unique features of this problem,” says UC Berkeley’s Mark Hansen, one of the researchers whose work provided a foundation for the study. “To do a fair comparison, you have to find a way to adjust for varying business models, network structures and scale, and to properly account for regional carriers. This methodology does all that.”
Although more recent data is available from the BTS, the choice of 2010 provides a useful base year for the study, says ICCT, as it is both post the global recession and prior to a number of major airline mergers. “Getting the methodology right and establishing this baseline was the hardest part,” says Dan Rutherford, another co-author of the report. “Because we rely strictly on publicly reported data, the updates will be pretty straightforward.”
This study, say the authors, is a first step towards providing consumers, researchers and policymakers with better information about airline efficiency and CO2 emissions and will be updated annually. The frontier analysis methodology is expected to be expanded to include international operations.
Results for 2011 are slated for release later this year. ICCT says more robust causal conclusions will be drawn as the fuel efficiency scores of individual airlines change over time, for example when new aircraft types enter the fleet, when underperforming airlines go bankrupt or are absorbed by others, or when operational practices change.
“More complete and accurate data would help policymakers make sounder decisions about this highly complex industry,” conclude the authors. “Analogies can be made with many other businesses. For example, consumers are able to make better purchasing decisions about automobiles and electric appliances based on fuel efficiency labels. Nothing of the sort is available to airline passengers today and this is an information gap that the report and other ongoing ICCT initiatives aim to help fill.”