RISK MANAGEMENT AND FEASIBILITY

Risk Management

Table of Contents

1.0 Introduction 3

1.1 Statement of Requirement for Green Aircraft 3

1.2 Market fot the Aircraft Design 4

1.3 Marketing Strategy 5

2.0 S.W.O.T Analysis 6

2.1 Market Issues / Drivers 6

2.2 Market Limiters 8

3.0 Innovative Technologies 10

3.1 Key Technologies 11

3.2 Key Operational Improvements 12

4.0 Cost Framework Model 13

185.0 Summary

6.0 References 21

1.0) Introduction

The main purpose of the project is to present an analysis of the risk management and feasibility of developing an aircraft through innovative characteristics. The feasibility report concerns the technical perspective maturity analyses to show the technical readiness of developing the aircraft through the innovative characteristics. Other factors to consider include the financial and product viability in the market and other environmental sustainability showing the technical readiness. The innovative characteristics to be included in the design of the aircraft such as fuel savings in per passenger nautical mile flown. Other innovations included taking off and landing to any existing airports in Australia and other regional airports. The third innovation to consider includes making the non-stop flights in the world. Thus, the main aim of the report is to present an aircraft design that meets the innovative characteristics including the issues in technology and green operations for the manufacturers. Thus, the project presents the potential of the proposed aircraft including the development of the green passenger aircraft.

Green aircraft is a necessity in the world as the passenger air traffic continue to grow. To accommodate the growth in the passenger aircraft’s, new designs must be developed while considering the emissions, fuel efficiency and noise pollution among others. Thus, the purpose of the project is to present the necessity of green aircraft for passengers in the planet.

    1. Statement of Requirement for Green Aircraft

Green Aircraft refers to the development of aircraft’s that mitigate the environmental impacts of aviation. The main purpose and requirement of the green aircraft is to reduce the fuel consumption of aircraft among other issues such as emissions and noise pollution. The main challenge and requirement are to include the fuel efficiency through burning less fuel. The requirement to develop green aircraft is linked to the challenge where in 2012 passenger aircraft burned about 10.6 billion gallons of fuel that summed to about $31.6 billion. In the year 2011, the cost was about 3 billion gallons of aviation of the jet fuel that totaled to about $10 billion. Another challenge was the pollution of fuel emissions as they release too much carbon dioxide into the atmosphere every year. The emission of co2 is devastating as it leads to the global warming and other gasses such as No2 leading to the creation of the ozone layer. More importantly, such emissions do not meet the environmental air quality standards. Thus, through the usage of green aircraft, reducing the emissions will be attained through reducing the fuel amount burned.

Additionally, there is the noise challenge where aircraft’s are regarded as the major dominant hindrance to the airspace system. The goal of using the green aircraft is to develop an aircraft that reduces the noise within airports in Australia. The noise that most passenger aircraft pollute while taking off and landing are much higher than the accepted airport boundary noise. Therefore, to apply the innovative characteristics provided above, the aircraft design will consider developing a new airframe technology that meets the challenges and goals of requiring the green aircraft. Thus, the feasibility report is important in presenting the requirement and solution of attaining the green aircraft.

    1. Market for the Aircraft Design

Aviation is one of the largest growing industries in the planet. The aviation industry contributes to about 2% of the greenhouse gas emissions that leads to global activity. Currently, air trafficking has encountered phenomenal growth despite the need to diminish the flying with the intention of managing the greenhouse gas emissions. Therefore, green aircraft market will have a high, ready and demanding market for the industry to succeed. That is; there is a sustainable green marketing to meet the anticipated growth in the aviation industry. The industry will be successful due to the attainment of the quality standards that promote and support the global environment wellness.

    1. Marketing Strategy

To meet the above needs, several factors have to be considered such as the proposed aircraft. The design of the aircraft been proposed stipulates the improvement of fuel efficiency among other developments. The design improves fuel efficiency through reducing the greenhouse gasses and other wastes. The changes have to also ensure the safety of the passengers and consider the reduction in air traffic that has been experienced and expected to grow over the years to come. That is; unless changes are as the proposed idea are developed, air traffic will continue to grow leading to major disappointments in the aviation industry (Sarkar, 2012).

Thus, the proposed design will use high technology engines, propeller competence, developed aerodynamics, and the resultant of fuel efficacy among others. To determine the significant fuel saving per passenger nautical mile will be attained through emissions that are environmental friendly. That is; the less fuel is consumed, the fuel saving process is attained leading to significant efficiencies. The proposed aircraft will accommodate 500> passengers. It can accommodate less than 500, but not more.

The target market is readily available and grows fast. According to statistics, through measuring transportation by passengers per nautical mile, the growth is very fast. That is; passengers traveling per kilometer as measured in 2010 was about 40 trillion passengers. The number by 2050 is anticipated to grow to 103 trillion passengers per kilometer (Argarwal, 2012). More importantly, the growth will linger to develop as air transportation demand increases. The Boeing market statistics present that the market for new green airplanes will linger to grow as it occurs in different sectors. For instance, single-aisles will grow at a 61% levels and others as presented (Argarwal, 2012, pg 432).

2.0) SWOT ANALYSIS

The main issues in the market are also the key drivers in the market that lead to the development of green aircrafts. More importantly, as presented below, the issues support the success of the green aircrafts in the aviation industry. However, there exists limiters also that may hinder or slow the success of the aircrafts in the market. The limiters are presented in the Weaknesses section.

2.1) MARKET ISSUES/ DRIVERS

  • High demand that leads to the need of developing green aircrafts that will provide consumers high satisfaction at a fair price.

  • Environmental issues are also a challenge in the market. The environmental standards and emission levels must be met to ensure the development of the aircrafts.

  • Burning of fuel is an issue in the market that steers to high prices per passenger nautical mile. Thus, the issue must be addressed for success in the market.

  1. High Demand of Cost-Effective Flights and a Ready Market

There is a growing demand in major developing countries on air transportation. Thus, the need for new airplanes is growing steadily stipulating that the market for the airplanes will be available. That is; new aircraft will be needed that lead to environmental stability. Others include replacement aircraft, as the need for aircraft with fewer emissions and noise pollution among others are needed. Noise pollution, fuel efficiency, and passenger growth demand a need for green aircraft utilizing the technological innovations in the world today. The costs per mile nautical and per passenger is less due to the fuel efficiency attained by the green aircraft.

Market and product opportunities are also present. The increase in passenger dealing with businesses and vacations will ensure the aircrafts have a ready market. The new green developments will be perceived as the advances in the aircrafts products, which will lead to new customers and markets improving the profits of the developments. Given that the newer aircrafts will engage in fuel efficiency per passenger nautical mile, the passengers will grow improving the success of the sector.

  1. Environmental Gas Emission Issues

Aircraft’s produce high co2 emissions, which leads to numerous environmental issues, such as lack of attaining corporate social responsibility. The emissions also influence the aircraft from meeting the accepted emissions in airports and on the air. Therefore, as the usage of green aircraft will reduce the co2 emissions leading to improved performance, demand and attainment of the quality standards. The need to reduce NOx, co2, and other gasses and ensuring fuel efficiency per passenger nautical mile is the strength that will support the success of using green aircraft. That is; it is the needed solution to the problems and challenges that the current aircraft face while burning so much fuel. More importantly, the green aircrafts will address the problem linked to noise pollution of aircraft, as the green project uses technology that ensures the noise pollution is handled.

Given that, the main benefits of green aircraft are low emissions & noise, fuel efficiency, and easy maintenance. The paybacks are the key targets those newer aircraft developments must meet. Thus, it occurs as a key opportunity to develop the aircraft as they provide advanced aviation research activities. The advances will ensure the environmental issues are met through greener air travels (Sarkar, 2012).

  1. Fuel Burning for Fair Flights Per Passenger Nautical Mile

The need and goal to improve the fuel burned also calls for green aircraft. Using green aircraft will ensure less fuel is burned. Thus, significant fuel savings per passenger nautical mile will be used. That is; about 70% savings will be encountered as it is the level anticipated of energy from other sources. When using technologies such as the conventional tube and wing, about 30% of fuel savings is encountered. On the other hand, the unconventional hybrid wing body will ensure about 40% fuel savings per passenger per nautical mile.

Green aircraft will attract numerous passengers due to low costs, as flying will be quicker and cheap. Using green aircraft will steer to the plane tickets price falling among other benefits. The aircraft will have the opportunities to penetrate different market segments in different cities. That is; they will at a low price due to fuel efficiency improve traffic flow and provide the customers with the convenience of flying at any location.

Biofuels are developing as a major innovative material to be used in saving fuel among aircraft. Therefore, taking into consideration the demand for aircraft that handle such a need; it is only vital that the aircraft are developed. The new aircraft developments will lead to market growth ensuring the green aircrafts dominate the aviation industry. More importantly, in reference to the cost advantage the green aircrafts provide to the passengers and the market, the green aircraft sectors shares will continue to grow. The increase in demand for green aircraft will continue to grow and possess a benefit for the manufacturers in some years to come (Argarwal, 2012, 462).

2.2) MARKET LIMITERS

  • Green aircrafts may encounter rejections as their main purpose of development is sustainability for corporate social responsibility rather than to lower the carbon and other gasses emissions.

  • It is a new technology in the market that may face numerous obstacles in the market such as few consumers willing to try the technology.

  • Competition is still an issue in the market.

  1. Corporate social responsibility issues may arise

Green aircraft may be perceived as a way of aircraft’s to attain sustainability rather than offsetting the carbon emissions. To succeed in the market, the aircrafts must first meet corporate social responsibilities in the society. Thus, green aircrafts may be developed for this sole purpose rather than the key issue hat challenges the market, which is lowering the gasses emissions in the market. Therefore, unless viable and authentic sources merge with the aviation industry to support the green aircraft, the success may be highly hindered. That is; it is highly true that green aircraft will reduce the greenhouse gasses emissions. However, unless the environmentalists among others also support that, the reduction is significant and important; the success of the project will be hindered.

  1. New Technology Faces Numerous Barriers in the Market

There is also the probability of environmentalist boycotting air travel. That is; the consumers among others may refuse to use green aircraft due to lack of guaranteed assurance from other users of green aircrafts. Thus, the cost of starting the green aircraft and ensuring they are functional is a key weakness. Thus, environmental challenges occur as a weakness since to succeed and have a go ahead in the construction of the airplanes, the planes must meet the accepted pollution level of gasses and noise (Argarwal, 2012, 432).

  1. Intense Competition

One of the major threats the green aircraft will face in the market is intense competition. Entry into the market for the aircraft will be challenging as markets due to the high start-up costs required. Other threats derive from other means of transportation such as buses, trains, and automobiles, which are also giving passengers increased satisfaction. Thus, to effectively deal with the issue, the green aircraft will compete on other factors such as cost, time and convenience. Substitutes are also available in the market such as net jets.

The availability of substitutes, as well as other means of transportation, threatens the success of green aircraft. Beyond other means of transportation, there is the threat of other materials for energy. That is; biofuels will compete strategically with solar, electric and hydrogen powered aircraft (Argarwal, 2012, 456).

3.0) INNOVATIVE TECHNOLOGIES

3.1) Key Technologies

  1. Advanced Composites

The technology of composites will also be utilized as it has matured and still maturing (Argarwal, 2012, 433). The innovative composites are lighter and stronger. For instance, consuming the airframe technology in the green airplanes will support it in addressing issues such as lightweight structures ensuring the composites used are stronger and lighter. The technology will also be used in improving the dynamics of the flight, including control that ensures reduced noise pollution and improved fuel burning. Additionally, the propulsion technology will be used, which focuses highly on the pressure engine core with the goal of reducing the harmful emissions caused by burning fuel.

More importantly, the new green aircraft composites will guarantee the aircrafts developed consume materials that brand them as lighter yet stronger in several sectors. The composites are under development, which will be used in several years to come. However, the development of maturation for the composites is great, and the resources such as improving the aluminium efficiency.

  1. Laminar Flow Wings

The laminar flow wing is an aircraft design technology that will lead to improved performance of the aircraft. The technology employs different materials and other suction technologies. To improve the fuel efficiency the, the key developmental issue to consider is the drag. The new laminar wing technology will reduce the drag, which eventually improves the fuel efficiency. To reduce the drag, which is generated from a lift dependent. To improve the drag, developments on computational fluids have to be considered during the design to minimize the drag and improve fuel efficiency.

Once the design ensures that the drag is life independent, more efficiency will be attained. The drag derives from the wings as they use most of the fuel. Thus, to improve the fuel efficiency on a scale of + / — 10 or 25%, which delays the laminar flow of the drag. Fuel efficiency is attained while designing the wing to lessen the shock strength where the drag will arise at a fast speed representing the improved cost of energy produced. The drag should be reduced by about 40% during the development of the aircraft (Commonwealth of Australia, 2010). The key benefit is that the aircrafts will fly farther on less energy. The technology has highly matured in the market as changes on the wings are already been advanced.

  1. Geared Turbofans

The geared turbofans are under testing currently. However, they exist as a technology that will assist in increasing efficiency of the engines in fuel burning. The innovation will improve the engines performance in reducing the fuel burned and emissions concurrently. That is; as engines are improved, the efficiency boosts them to intake more air leading to fuel burning advancement. In this case, the improvement will be on burning other materials such as biofuel and other fossil fuels for fuel efficiency and reduced gasses pollution/ emission. In the past, per passenger the fuel burned was around 4litres. Through using bio/ and fossil fuels the amount burned will be reduced completely. Thus, eliminating pollution while increasing fuel efficiency will be a major innovative development that the aircraft will present.

The green aircraft technology as presented above will effectively reduce the burning of fuel significantly. That is; the technology for the new aircraft is vital since the design should ensure that they burn about 30 percent less of the fuel compared to what planes burn today. Once the advancements have completely occurred, the use of green aircraft should at least include burning about 50 percent less of the fuel, where the number goes on lowering until the cost is reduced significantly.

3.2) Key Operational Improvements

  1. Air-to-air refuelling of airliners

It is the process of using the short-range airliners for long haul routes. The process includes ensuring an automated air-to-air refuelling, which leads to fuel efficiency of about 45% (Argarwal, 2012). The air refuelling process leads to cheap and faster green aircrafts transportation. The development of the planes will lead to the satisfaction of the key issues in the market, while managing the limiters. Instead of adding more airplanes that consume so much fuel to meet the demand of flights in the market. Thus, the process of air refuelling leads to a cheaper method of meeting the demand and travelling farther at a cheaper cost.

It reduces the take-off weight and noise pollution leading to environmental benefits. The benefits occur in that the lightness of the aircraft will steer to the consumption of less fuel per passenger nautical mile after a refuel. The efficiencies will linger to grow, where the aircrafts are lighter despite varying similar to past numbers of passengers at a cheaper price.

  1. Sustainable Power for Airports

Green airports will have numerous sources to generate power. For instance, the energy will derive from sources such as solar power sources, tidal, wind, wave and thermal solar power sources. The energy used or consumed per passenger will then decrease leading to fuel efficiency in the airport (Argarwal, 2012, 435). The sustainable power leads to consumption use efficiency of energy and reduces the emission of co2 among other gases. The operations of the airports will improve such as reduced emissions, environmental pollution, and improved maintenance of the airport components for heating and cooling.

  1. Advanced Air Navigation

The future systems will allow the green aircrafts to share the same sky through using advanced GPS among other international airspaces, which will reduce the delays and save fuel (Argarwal, 2012, 434). The airplanes will lead to improved satellite communication leading to more routings that are direct; thus, the aircrafts do not cross tracks. The efficiency in the routings will lead to an increase in saving fuels per passenger nautical mile.

4.0) Cost Framework Model

The designers have to consider the risks in the market, uncertainty, feasibility of the aircraft while designing the system. Some cost factors to consider include cost estimations, production costs, pricing, marketing, competitor’s costs, and subcontracting among others. However, the key cost model to consider in this project is cost estimation, as it will influence the accuracy related to other factors such as operations and production of the aircraft. Cost estimation process will consider the engineering economics to predict return and profitability rates. The model to be used in this process is the life cycle cost model (LCC). It is perceived as the model of building abstractions of the primary components of the systems life cycle. The process presents the interactions that the manufacturers and the aircraft have in components (Marx, et al., n.d.).

The primary components to consider include the non-recurring costs, operations costs, recurring costs and the support costs. The key objective of the LCC is to improve performance while engaging in the lowest production costs, as well as the costs of operation and support per hour. The life cycle of the aircraft has four stages of development. The conceptual design stage, preliminary design, detail design, and production stage. Therefore, some of the costs to consider include the production costs.

Production costs are estimated through using equations that generate the airframe component costs of manufacturing the aircraft. The engine costs will be based on thrust and the quantity attained. Others include the airframe propulsion, final assembly of the aircraft. The cost of the engine is also presented through an input parameter. The recurring production costs include the aircraft costs, the airframe and engine spares (Marx, et al., n.d.). They include the costs of the airframe, subsystems, avionics, propulsion and the development support.

The operation costs include the prices that the aircraft will earn to develop an ROI for the manufacturers. That is; after it has been sold, it has to earn an ROI for the manufacturer. Indirect operating costs to consider include the maintenance fees, the passenger services, and administrative costs. The breakeven will be attained on the yields calculated per the revenue of a passenger per mile. The breakeven is earned through

($ / RPM)= ($ / ASM / Load Factor)

RPM = Revenue per passenger Mile

ASM = available seat per mile

The operations and support costs are attained through the following elements:

Annual revenue = it is attained based on the average yields the aircraft makes depending on class sections, passengers capacity and load factors (Marx, et al., n.d.).

Net earnings = earnings before and after income tax

Net cash flow = Includes yearly annual payments for the principal balance plus interest on the invested capital. It also includes depreciation, which allows capital expenditures to be perceived.

Theoretically, the development of the green aircraft baseline estimation is $304 million. The first wing unit costs are estimated to occur at a total of $131 million. The estimated baseline of the aircraft is at $304 million. The sources of funds for the project will derive from grants from several factors such as the aeronautics department, civil and environmental engineering department, mechanical engineering depart, and chemical engineering among others. That is; several departments will come together in developing the aircraft to ensure it meets the goals of significant fuel efficiency, reduced noise pollution during landing and taking off, and convenience of flights at a cost effective cost per passenger nautical mile (Marx, et al., n.d.). The finances needed to start the project depend on the table below.

Estimated Costs of Development of Commercial/ Passenger Green Aircraft

Aircraft

Year of Service

Developmental costs $

Douglas Dc-3

4.3 Million

Douglas Dc-6

144 Million

Boeing 707

1.3 billion

Boeing 747

3.7 billion

Boeing 777

7.0 billion

Airbus A — 380

14.4 Billion

Based on the table above, the developmental costs of aircraft are twice higher every time a new aircraft is developed. Thus, based on the table the development of the green aircraft will cost about 30 billion dollars (Argarwal, 2012).

First unit of the aircraft production costs

Scale of the wing cost

Cost estimation of the first unit of the green aircraft

Factor scale of the FUC

$ in millions for the wing

$ in million for the aircraft

. The production costs regarding the aircraft development will occur as the following. (Marx, et al., n.d.)The variations in wing costs and the aircraft occur due to design alternatives including materials, assembly process and fabrication. The differences in the wing and aircraft variations do not affect the FUC system scales. The estimations are scaled on the baseline model of + / — 10% and + / — 25%. The scale baseline is due to the differences in the costs of the wing and the aircraft

Production

Base at -25%

Base at -10%

Base wing

Base at + 10%

Base at +25%

Operational vehicles

Airframe spares

Engine spares

Sustenance of engineering

Supporting tools

Ground backing equipment’s

Initial transport

Remuneration

Price ( $ M)

The total operating cost method is attained by adding the indirect and direct operating costs. The indirect operating costs per load factor include the passenger and cargo related. The direct operating costs include factors such as maintenance, fuel efficiency, and consumption among others (Argarwal, 2012). Thus, the design of the aircraft must consider reducing the fuel and other manufacturing costs.

The components to consider during the developmental stage include also biofuels, engines, climate, policy, and air traffic management among others. Engines need to be designed to accommodate stable combustion and performance, with reduced pollution. The risk of developing green engines that meet the goals stated occurs in that the fuel specification is of importance to the performance of the engine (Robinson, 2012). The biofuels will assist in reducing the greenhouses gas emissions, but also pose a risk to the manufacturers. That is; the biofuel market will meet high demand on meeting the environmental policy mainly regarding noise, which is a major pollution besides co2 and other gasses.

Thus, the green aviation aircraft must meet the goals of reducing the noise among other pollution it leads to improving and succeed in the market. Environmental challenges have the capability of posing threats to the expansion and construction of green aircraft if they cannot meet the reduced and accepted noise level pollution (Robinson, 2012). The gasses pollution issue will be handled through the usage of biofuels among others, thus, it will not be a problem for the market. However, the biofuel possesses an opportunity for the success of the green aircraft in the market.

5.0) Summary

Green aviation will develop into a major success in the market in the future. The success of green aviation lies on utilizing the technologies available such as biofuels and other designs to improve the performance of the aircraft and eliminate the major challenges that face aircraft today. Flying has developed into a major mode of transportation for people today. As a result, it demands more efficiency, cost effective responses and must meet its corporate social responsibility and environmental factors. Some of the features the new design of the aircraft will consider include improving the drag level to advance fuel efficiency (Robinson, 2012). More importantly, the benefits the green aviation will include the low emissions, noise, weight, and cost effective maintenance. Some of the airlines such as Boeing among others named above will work closely together to assist in the development of green aircraft that reduce the fuel burned and lower the workload, which will provide satisfaction tot to the customers by providing cost-expensive costs per mile and connections to other parts of the world. Boeing presents that per passenger, the costs per nautical mile savings would include about $950 while regarding fuel it would lead to about 40% reduction. Thus, the green aviation will steer to improved success of the aircraft in the market.

According to the SWOT analysis provided above, the aircraft will face several risks in the market. However, the benefits and opportunities that the market will encounter once the growth stage of the aircraft has occurred will be enormous. The profitability anticipated and return on investment will be the high figures stipulating success of the aircraft in the market. The reduced weight load anticipated will also assist in increasing the savings of burning fuel (Argarwal, 2012). The load factor of an aircraft as presented above will be attained through using developed and advanced composites. The composites reduce the weight of the aircraft through the wings fuel usage reducing the burning of fuel.

Consequently, the weight and fuel efficiency is attained. More importantly, the design of the wings among others needs to be changed to accommodate the goals presented. A reduction in the use of kerosene among aircraft is rising greatly as biofuels become the best alternative solutions. Though they will face competition in the market, the chances of the aircraft succeeding in the market are high. More importantly, the current innovations on airframes and engines are designed to accommodate fuel efficiency and improve performance. Biofuels will also face competition from other materials such as electric, solar and hydrogen powered aircraft (Argarwal, 2012).

The technical risk the project will encounter during early stages is limited sources of finance, and environmental challenges to approve its construction (Commonwealth of Australia, 2010). However, the feasibility of the project is high given the demand for aircraft to reduce pollution of gasses and noise and the growing demand for aircraft for commercial use. The growth and demand in the aviation market and the necessity to reduce the pollution while engaging in fuel efficiency will attain the project. That is; fuel efficiency will reduce the cost per passenger nautical mile while increasing sector services as customers can easily connect with the rest of the world. The project is attainable, and will guarantee success upon completion. The design would produce an aircraft with increased volume and a high level of flying efficiency.

References

Argarwal, K. R., 2012. Review of Technologies to Achieve Sustainable (Green) Aviation. Recent Advances in Aircraft Technology, Volume 19, pp. 427-.

Commonwealth of Australia, 2010. Technical Risk Assessment Handbook. DSTO: Scienve and Technology for a Secure World, pp. 1-36.

Marx, J. W., Mavris, N. D. & Scharage, P. D., n.d. A Hierachical Aircraft Life Cycle Cost Analysis Model. Aerospace Systems Design Labaratory, pp. 1-18.

Robinson, P., 2012. Green Aviation: Solutions for the Future. The History of Aeronautics at Imperial College London BOOKLET, pp. 1-26.

Sarkar, N. A., 2012. Evolving Green Aviation Transport System: A Holistic Approach to Sustainable Green Market Development. American Journal of Climate Change, pp. 164-180.