David
Neeleman, the serial entrepreneur with four successful airlines under
his belt, is looking to tackle one of aviation’s most acute problems:
the price of jet fuel.
“My big thing—a $1 billion X-Prize—is to
figure out how to make natural gas into jet fuel,” Neeleman, JetBlue’s
founder, said Sept. 17 at an airline forecast conference in Dallas.
“That’d be awesome. That’s my next big thing.”
The notion of converting a gas into a liquid jet fuel is not as technically far-fetched as it may initially sound. In Qatar,
Shell (RDSA)
has built an $18 billion GTL (gas-to-liquid) plant that produces jet
fuel from gas at a cost of $80 per barrel. A Qatar Airways flight in
2009
became the first to be powered by fuel derived from gas.
While
that price is too high for worldwide feasibility, Neeleman said that
cutting it to $40 would be a “game changer” that would make natural gas a
better alternative-fuel source than current research into fuel sources
such as jatropha, algae, and other biofuels. Bio-jet fuels are a pet
project of Virgin Atlantic Airways founder Richard Branson, whose Carbon
War Room in December
launched a
website
devoted to cutting in half the use of traditional jet fuel. While
promising, such research has not yielded commercial projects of a scale
needed for global airlines.
Neeleman is hoping to rally other
carriers to contribute $1 billion to a fund that would reward innovators
who successfully convert natural gas to jet fuel. He said that could
have saved
Delta Air Lines (DAL) one-third of its $12 billion fuel bill in 2011.
Such
incentives have a long history, including the first trans-Atlantic
crossing, when Charles Lindbergh won $25,000 from a New York hotelier
for making his
Spirit of St. Louis flight in 1927. More
recently, a $10 million prize was awarded in 2004 for the Paul
Allen-Burt Rutan effort SpaceShipOne, the first manned craft to achieve
successful private space flight.
Since crude oil spiked to near
$150 per barrel in July 2008, airline executives have bemoaned the
extreme volatility that has marked commodity prices. In the past week, a
barrel of West Texas Intermediate has passed $100 only to drop more
than 4 percent at one point on Monday. Such volatility—even more than
sustained high prices—impedes executives’ abilities to plan and control
their costs.
Neeleman, 52, helped to start Morris Air out of a charter operation in the early 1990s;
Southwest (LUV) bought that company in 1993. After helping to found Canada’s WestJet Airlines in 1996, he founded
JetBlue (JBLU)
three years later, based at New York’s JFK Airport, and built it into a
successful independent carrier. He was replaced as chief executive
officer in 2007 after a disastrous Valentine’s Day
snowstorm snarled
the airline’s operations for several days. The next year Neeleman, who
was born in Brazil and speaks Portuguese, founded a Brazilian carrier,
Azul, which operates out of Campinas, northwest of Sao Paulo.
In
his remarks before the Boyd Group’s annual International Aviation
Forecast Summit, Neeleman said his days of starting new airlines are
probably over. “If you start a thing that 40 percent of your cost is
fuel … there’s just a smaller piece of what you can control now. When I
started JetBlue it was so easy. It was like taking candy from a baby.
Fuel changed the whole dynamics.”