A new start for the aviation industry as airlines move toward environmentally friendly biofuels

Analyst Commentary, Miller Chu: On April 18, 2012, the Boeing Company (NYSE:BA) and All Nippon Airways (ANA) successfully flew a 787 Dreamliner, fueled by a biofuel and jet fuel mixture, across the Pacific Ocean from Evert, Washington to Tokyo Japan. With the rising cost of fossil-based fuels and increase in environmental awareness, the aviation industry is actively testing the viability of using biofuels as a substitute for traditional jet fuels. The action strongly supports the development of the biofuel industry across the globe and is likely to lead to increased demand in the biofuels market. In fact, the biofuel production in the United States for 2011 only accounts for 65% of the total U.S. jet fuel demanded.

We do not believe biofuel will immediately replace jet fuel, however biofuel demand has been primarily from the automotive sector as an additive to gasoline. With airlines beginning to look at biofuel as an additive to jet fuel, we believe biofuel producers will not only benefit from the increased demand but the whole biofuel industry will benefit from further innovation and investment as the acceptance of biofuels grow.

Our Canadian Porter Airline is leading the Canadian aviation industry in testing biofuels. The company launched a test program in 2010 and has recently concluded with its first biofuel and jet fuel mixture powered commercial flight in Canada from Toronto to Ottawa. The journey marks a new start for the Canadian aviation industry and we see the trend to continue strongly going forward.

Source: Boeing (Apr 18), Ottawa Business Journal (Apr 17)

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