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David Neelman: The Messiah of Jet Fuel?

David Neelman, JetBlue Founder, has found his “next big thing” in aviation. Neelman is on the search to tackle aviation’s most acute problem – high jet fuel prices. More specifically, how to convert natural gas into jet fuel. Read on.

David Neeleman
Photo Credit: [James G. Howes, http://commons.wikimedia.org/wiki/File:Neeleman.jpg]
As they say, necessity is the mother of invention and when it comes to the necessity of lowering jet fuel costs, David Neeleman, founder of JetBlue airlines, wants to be the midwife. In a recent interview, Neeleman indicated that his next big challenge is transforming natural gas into jet fuel.

The founder of three airlines and the president of a fourth, the JetBlue executive is uniquely capable of identifying the Achilles’ heel of the airline business: rising fuel costs. In a recent interview, Neeleman said, “my next big thing is trying to figure out how to make natural gas into jet fuel.”

Even with a fully loaded flight, airlines can see all their profits going into the gas tank as a result of a capricious rise in jet fuel prices. When you are talking about a no-frills airline, with little in the way of expensive amenities, fuel costs are one of the few places they can look to lower expenditures.

JetBlue is not alone in the search for methods to bring high flying fuel costs down to earth. Las Vegas based carrier, Allegiant Travel, is looking at pricing models that are designed to get customers to pony up the cost of increased fuel prices.

As a vacation destination point, Allegiant Travel caters almost exclusively to flyers who book their tickets months in advance thus leaving the airline holding the bag in the event of a spike in fuel costs between the time of booking and the actual flight.

Under Allegiant’s CEO Maurice Gallagher’s proposed plan, travelers will have the option of booking their tickets at higher fares that serves to lock in their ticket price or opting for a lower fare that could be adjusted on the day of the flight based on fuel costs.

This runs the risk of consumer confusion and regulatory oversight which only allows for post-purchased tickets to be boosted as the result of government fees or taxes. It is a measure of the problem that Gallagher is even considering these hurdles.

Competitor, Virgin Airlines, is looking to the feasibility of utilizing bio-fuel compounds such as; algae and jatrupha. Virgin Airline boss, Richard Branson has long been a proponent of bio-fuel experimentation.

Neeleman is looking towards changing the technological equation. Converting natural gas into liquid jet fuel is already a reality. Shell Oil has built an $18 billion gas-to-liquid plant in Qatar which produces a barrel of jet fuel for $80. A 2009 Qatar flight, run on fuel transformed from gas, illustrates the effectiveness of the technology.

Although still too high to make it cost effective, industry wide, the technology shows promise in the future and could prove a game changer should the price get down to $40 a barrel.

Towards that end, Neeleman is hoping, along with other carriers, to establish a billion dollar fund that would encourage further research into the project. Such incentives are not unheard of.

From the $25,000 offered to Charles Lindberg to fly across the Atlantic Ocean to the $10 million incentive designed to spur private space exploration, money talks in the game of evolving innovation.

One idea that is gaining traction is the conversion of carbon dioxide gasses, emitted during the process of burning fossil fuels, to create a “syngas” that can then be utilized in the production of transportation fuels such as jet fuel.

This technology turns the debate of capturing carbon dioxide gases and burying them to capturing the gas and recycling and re-purposing them for airline travel. As to the feasibility of this path, there are differences in opinion.

Some claim that this can be an integral part of airline cost structures in five years; others believe that it will be closer to twenty-years, if ever before an economical solution is reached with this model.

Regardless, forward thinking executives, such as David Neeleman, recognize that the viability of their industry relies on reigning in the volatility of rising fuel costs.

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