Cathay optimistic on biofuels

Cathay Pacific is pinning its hopes on biofuels after the European Court upheld the European Union’s carbon tax scheme. The company considers biofuels as the answer to tighter emission requirements and is mulling over the possibility of developing a biofuels chain supply for Asia to provide fuel for its fleet and its subsidiary, Dragonair. Cathay Fuel Purchasing Head Gavin Fernandez said, “If you look at the real cost of growing the [biofuels] feedstock, refining it and transporting it, there is a real good possibility that it could cost 30 to 50% less than today’s jet fuel. If we are involved in production, and we reach a good scale, I don’t see why the savings cannot go over 50% or even more.” He said 35% of Cathay’s operating expenses are fuel-related. Thus, cutting the cost in half could mean substantial savings for the airline. Fernandez explained: “The airline business is one of the most competitive businesses,” he said. “The margins are so small, and others will undercut you as soon as they can with cheaper fuels, cheaper tickets. The traveling public will be one of the first consumer groups to get a price advantage.” (October 24, 2011)