Jetrader - September/October 2010 - 10

from year to year. It looks like in North America, the near term feedstock is probably camelina. It’s sustainable in the sense that it doesn’t interfere with food prices or water, and there is probably enough of it in North America to supply 3 to 5 percent of aviation’s needs. And I could see that happening by 2020. We are going to certify our Pratt engines—military and commercial— for biofuels (at least F-T and SPK biofuels) by next year. For us, it’s a build it and they will come. We’ll show investors that indeed if you make the biofuels, airlines can buy it and use it. Then it is up to the investors to develop the technology to supply it at a competitive price.

JT: With Pratt not offering engines on any of the new generation widebodies and being “only” a partner in one of the narrowbody engines (IAE – V2500), the GTF/PW1000G is crucial for Pratt’s market position in commercial engines. What is Pratt doing to ensure the PW1000G will not experience similar problems as the PW6000, which, in the end, were “lethal” for the project? AE: The easy answer to that question is technology readiness. We learned many hard lessons. But, in particular, the most important lesson is that you don’t develop major technology in the course of an engine development project—you do it first, before the project is launched. I joined the company—I’ve been here only three years— because I saw Pratt was doing something that was highly unusual for any engine company. They were spending major amounts of money on technology prior to an engine project being launched. Once you launch a project that has board of directors approval, a commercial deal signed, and you have a customer, typically you’ll spend a round number of a billion dollars on developing an engine—less if it is a smaller engine, more if it is a bigger engine—before the first one is shipped to the customer and goes into service, say in four years. But Pratt & Whitney was spending hundreds of millions of dollars on the technology for the GTF before there was any customer on the horizon. This research phase culminated in a demo engine that was ground tested in 2007 and flight tested in 2008 on a Boeing 747 that we own and an A340 at Airbus. This is a very different way of doing the product development business. All told, for the geared turbofan over 20 years, we’ve spent about a billion dollars on the technology before the product was launched. So, now the product development phase that we are in now is going very smoothly. Pratt put in the tech development investment upfront, and it is paying off. JT: Do you see engine technology accelerating, and if so, wouldn’t this put pressure on the traditional engine-OEM model of selling engines at deep discounts and recouping the investment via margins on maintenance and part sales? AE: Is engine technology accelerating? Well, for narrowbody—yes, because it was stagnant for 30 years. In terms of

widebodies, no not accelerating, but I see engine technology continuing. Engines have gotten better on average 1 percent a year for the last 70 years—better in terms of fuel burn. I see that continuing for the next two or three decades. In terms of selling the engines at deep discounts and recouping the investment in spares and maintenance services, I don’t know of anybody in the entire world who thinks this is a good idea or a wise way of doing business. It’s just where we are. If we care about aviation emissions, then it presents a grand challenge. The challenge is that airplanes and engines are too good in the sense that they last too long. They have 30 and 40-year economic lives. The aviation community has committed to increasing the efficiencies of air fleets by 1.5 percent per year. We said one percent is coming from the engines. That means in 10 years you could do 10 percent better than you can do now. But the airplane is an investment you justify over 30 years of economic life. So in one sense, you are economically forced to operate this inefficient airplane. As an engine person, I could offer other business models. One model would be: I give you an engine for some commercial consideration, you operate it for 10 years and do no overhaul on it—you just run the engine. At the end of 10 years, you ship the engine back to me with a modest economic consideration. And I ship you a new engine—different on the inside but it fits on the same wing of the airplane—and it has that 10 years of improvements in it. It’s very clear to me, talking to our airline customers and other people in the business, that everybody recognizes that we have the wrong business model. The challenge is how to break out of it.

JT: What do you think will be next for civil aviation after the
Geared Turbo Fan engine (GTF)? AE: NASA recently released a set of studies they called N+3. By NASA vernacular, N is the current airplane, N+1 would be a slight improvement over current airplanes, N+2 is airplanes for 2025. NASA just finished a study of N+3, which would be airplanes for 2035. Studies were done by Boeing, Northrop, Lockheed, GE, and MIT with Pratt & Whitney. The goal was a 70 percent reduction in fuel burn and a 40- or 50-decibel reduction in noise—immense improvements. The MIT team thought it might be feasible to meet the NASA goals. One of the keys was tightly integrating the engines with the airframe. Now commercial airplanes have the engines hanging from the wings so the engines don’t “interfere” with the wing aerodynamics very much. What the MIT study shows, is that if you integrate engines tightly, you can get an immense efficiency benefit. And this is really an area that the industry has ignored—the idea that you can’t design the airframe and the engine separately and then bolt them together, that you have to design engine and airframe as an integrated system. In the MIT case the engines were geared turbofans mounted on top at the rear of the fuselage. It looks like there is great promise there.

10 The official publication of the International Society of Transport Aircraft Trading



Table of Contents for the Digital Edition of Jetrader - September/October 2010

Jetrader - September/October 2010
A Message from the President
Contents
Calendar/New
Q&A: Dr. Alan Epstein
Commercial Outlook is Up as Economies Rebound
Crisis, What Crisis?
The Big Question
Funding Fundamentals
Is That a Lawsuit in Your Luggage?
AFRA Sets Ambitious Challenge for Aircraft Recycling Sector
Road to Recovery
Remembering Hafthor Hafsteinsson
License to Fly
Aircraft Appraisals
From the ISTAT Foundation
Aviation History
Advertiser.com/Advertiser Index
Jetrader - September/October 2010 - Jetrader - September/October 2010
Jetrader - September/October 2010 - Cover2
Jetrader - September/October 2010 - A Message from the President
Jetrader - September/October 2010 - 4
Jetrader - September/October 2010 - Contents
Jetrader - September/October 2010 - 6
Jetrader - September/October 2010 - Calendar/New
Jetrader - September/October 2010 - 8
Jetrader - September/October 2010 - Q&A: Dr. Alan Epstein
Jetrader - September/October 2010 - 10
Jetrader - September/October 2010 - 11
Jetrader - September/October 2010 - Commercial Outlook is Up as Economies Rebound
Jetrader - September/October 2010 - 13
Jetrader - September/October 2010 - 14
Jetrader - September/October 2010 - 15
Jetrader - September/October 2010 - Crisis, What Crisis?
Jetrader - September/October 2010 - 17
Jetrader - September/October 2010 - 18
Jetrader - September/October 2010 - 19
Jetrader - September/October 2010 - 20
Jetrader - September/October 2010 - The Big Question
Jetrader - September/October 2010 - 22
Jetrader - September/October 2010 - 23
Jetrader - September/October 2010 - Funding Fundamentals
Jetrader - September/October 2010 - 25
Jetrader - September/October 2010 - 26
Jetrader - September/October 2010 - 27
Jetrader - September/October 2010 - 28
Jetrader - September/October 2010 - Is That a Lawsuit in Your Luggage?
Jetrader - September/October 2010 - 30
Jetrader - September/October 2010 - 31
Jetrader - September/October 2010 - AFRA Sets Ambitious Challenge for Aircraft Recycling Sector
Jetrader - September/October 2010 - 33
Jetrader - September/October 2010 - 34
Jetrader - September/October 2010 - 35
Jetrader - September/October 2010 - Road to Recovery
Jetrader - September/October 2010 - 37
Jetrader - September/October 2010 - 38
Jetrader - September/October 2010 - Remembering Hafthor Hafsteinsson
Jetrader - September/October 2010 - 40
Jetrader - September/October 2010 - 41
Jetrader - September/October 2010 - 42
Jetrader - September/October 2010 - License to Fly
Jetrader - September/October 2010 - 44
Jetrader - September/October 2010 - Aircraft Appraisals
Jetrader - September/October 2010 - 46
Jetrader - September/October 2010 - From the ISTAT Foundation
Jetrader - September/October 2010 - Aviation History
Jetrader - September/October 2010 - 49
Jetrader - September/October 2010 - Advertiser.com/Advertiser Index
Jetrader - September/October 2010 - Cover3
Jetrader - September/October 2010 - Cover4
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