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'High fuel costs may force airlines go green'

BERLIN: Airlines around the world are going green as they push to cut their fuel costs - one of their biggest expenses - in a struggle to widen margins.

There will likely be an alternative to traditional kerosene on the market within the coming three to five years, said Billy Glover, Boeing's director of environmental strategy for commercial aircraft, at the ITB travel fair on Friday.

"At that time, volumes will of course be small," he said.

Airlines would gradually start mixing biofuel with kerosene to lessen their dependence on fossil fuels. The global aviation industry uses around 75-80 billion gallons of fuel a year, accounting for around 6 per cent of fossil fuel consumption.

"Given the extent of rising fuel costs in the two years to mid-2008, it is surprising that any of our legacy airlines managed to announce profits in 2008," said Howard Wheeldon, senior strategist at BGC Partners.

Oil prices last year reached a record level of more than $145 per barrel, although they have plunged since.

"I do not expect a recovery in oil prices in coming months. In the longer term, I would see increasing oil prices again," Lufthansa's Chief Financial Officer Stephan Gemkow told Reuters TV in an interview on Wednesday.

The German flagship carrier's fuel costs in 2008 came to 5.4 billion euros ($6.95 billion), more than one fifth of its 24.9 billion euros of revenue.

Another way that airlines already try to cut their fuel-related costs is by rejuvenating their fleets. Newer planes have more advanced technology that cuts down on fuel consumption.

For example, Lufthansa has said it aimed to cut the average age of its fleet by 7 per cent to around 10.5 years by 2011. Dubai-based Emirates' [EMIRA.UL] fleet has an average age of 5.5 years and low-cost carrier Ryanair's boasts 2.5 years.

Paul Steele, director of aviation environment at IATA, said at the ITB on Friday that besides newer planes and alternative fuels, a third factor needed to cut fuel consumption was international air traffic management.


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