I know this isn’t entirely about the traveler experience, but I thought it would be a very interesting way to close the week nonetheless. I had the chance to speak with British Airways’ Head of Environment, Jonathon Counsell, yesterday. We spoke about a new program they’ve launched in cooperation with Rolls-Royce that will enable alternative fuels to be tested using engines on BA aircraft.

Basically, they’re inviting fuel suppliers to bring alternative fuels that are scalable and won’t have a negative impact on food, land, or water. Once they’ve got those narrowed down, they’ll run ground tests on the fuel and then eventually air tests as well. BA has always been very accessible, and I gladly took the chance to speak with them about this initiative. Read below for our discussion.

Cranky: What sort of interest have you seen from fuel suppliers to date?

Jonathon: We’ve had an ongoing debate with major fuel companies, so pretty much all the majors are interested. Three or four additional companies have approached us as well. We’re drawing up a short list of up to about a dozen companies.

Cranky: Other airlines, notably Virgin Atlantic and Air New Zealand, have run tests of biofuels recently. Would either of those fuels be eligible for testing in this program or do they not meet the criteria that you have set forth?

Jonathon: We’re not being overly prescriptive in terms of a particular fuel. It has to be what we call a drop-in fuel, meaning it has to work with existing technology. It has to be able to power the engines without modifying them, and it must work with existing supply technology. Also, it can’t compete with food, land or water supplies. I believe the Virgin fuel may not qualify because it competed for food crops. Apart from that, we’re not going to overspecify. We’ve intentionally called it alternative fuel instead of biofuel because it will be difficult for biofuel to meet those conditions because of the conflict with food or rainforest devastation. That being said, we’re not ruling out biofuel.

Cranky: Are there any incentives being offered to encourage fuel suppliers to participate? Is there a prize of some sort?

Jonathon:The big incentive is that any company that can supply fuel meeting the criteria will have a massive prize. Every airline around the world will want to buy it.

Cranky: What will you consider to be a successful test? Are there specific levels of fuel economy and emissions that must be reached for you to deem this a success?

Jonathon:We will lay out broad performance criteria. It needs to be commercially viable but we haven’t specified what that means yet.

Cranky: Are there any partners in this study beyond you and Rolls Royce? Have you involved any third party scientific organizations to oversee the data collection and interpretation?

Jonathon: No. Currently it’s just Rolls-Royce and ourselves. There will be a joint assessment between us. We’ll look at whether we need external experts on this or not. Rolls works with a number of universities, and so do we, and we’ll be looking at a number of contacts in the scientific field.

Cranky: You say testing will be complete by March 2009, but how long do you expect it to take before the results are finalized?

Jonathon:Quite shortly afterwards. Testing will start in January and it will take 4 to 6 weeks. Published results will be available shortly after the end of March.

Cranky: Will you be sharing the results of your study publicly?

Jonathon: Yes, we will be making the results public.

Cranky: What sort of response have you had from the community so far?

Jonathon: It’s been a very positive response from the community. We deliberately launched this prior to Farnborough and it’s certainly been a big topic of discussion.

Cranky: Have you spoken to any of your other partners about participating, like American Airlines?

Jonathon: Yes, we’ve had a couple of early conversations with American Airlines and certainly we’ll pick up on those.

So there you have it. It’s an interesting way to put this together. The idea is basically to say, “Hey, you got some good fuel? Come talk to us and we’ll let you test it on one of our engines for free.” I’ll be looking forward to seeing the results.

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The price of fuel continues to rise, but I don’t think it’s easy for most people to really grasp how devastating this is, because it’s rarely put in normal terms. $125 a barrel? What the heck does that mean in reality? JetBlue, when they pulled out of LAX before even starting, gave us a number to work with. They say that it now costs more than $15,000 to fly a plane across the country. So let’s do a little math.

Each A320 they fly has 150 seats. Let’s say they fly with 85% of their seats filled on average. That means 127 seats are filled. If you take that $15,000 cost and divide it over 127 people, each person has to fork over $118 each way just to cover fuel.

Seriously. Remember those days of $99 each way across the country? That wouldn’t even cover fuel these days. And that $15,000 estimate came out when fuel was lower than it is now. If you find a low fare, be thankful. They’re going to continue to become more scarce.

It’s earning season, and most airlines are doing their best to mask their weak fourth quarters. It’s hilarious to see the headlines talking about what a great year it was. Then they bury their fourth quarter loss down below.

Just today, we saw US Airways and Alaska talking about how fuel prices are choking them. US Airways said, “Our fourth quarter results were materially impacted by increases in fuel prices. Had our fuel price per gallon simply remained at last year’s fourth quarter levels, our 2007 fourth quarter fuel expense would have been approximately $230 million lower.” And Alaska? “The loss was driven primarily by skyrocketing fuel costs combined with fares that have not kept pace.”

Just in case you’re a visual person, let’s take a look at some graphs showing what’s happened to fuel. Once again, I turn to government data for the answers. This time, it’s Schedule P-12A. Oh man, just the name makes me think it’s going to be interesting . . . riiiiiight.

Anyway, I isolated 16 of the airlines and graphed them below. Unfortunately, government data only goes up through September 2007 so far, but you get the point.

As you can see, they all follow the same trend . . . up, up, up. I know some of the colors are light, but with the exception of some early spikes by Hawaiian and a couple other airlines I’ll talk about in a second, they all moved together. Prices hovered below $1 a gallon until early 2004 at which point they took off like an empty 757 in a headwind. (Maybe I should stay away from the analogies.) Prices passed $2 toward the end of 2005 and except for a couple of dips back, they’ve stayed there. Ouch.

Let’s focus in on some of the exceptions. I’ve taken the 16 lines and put them into an average. Then I’ve highlighted Southwest, Allegiant, and Skybus.

As you can see, we’re looking at these airline for different reasons. Starting in 2004 when fuel prices took off, Southwest kept them low. How? They bought a bunch of fuel hedges keeping their future cost of fuel less than they’d have paid normally. Though the prices have continued to climb, they have continued to keep their prices lower than average, and that is pretty much why they’ve continued to be profitable. With average fuel costs, I believe Southwest would have been break-even at best last quarter.

In case you’re wondering, they’ve continued to hedge fuel. It looks brilliant when prices keep rising, but when (if) they fall, Southwest will be stuck paying more than others. Personally, I think that’s fine. It’s worth having some certainty in your fuel costs even if you end up paying a little more.

The other two airlines, on the other hand, are highlighted for paying way above the average. Allegiant seems to be paying through the nose for fuel. Considering that they operate fuel thirsty MD80s, this is really costing them dearly. The fact that they remain profitable is even more impressive with that knowledge.

Then we have Skybus. They seem to be paying the most of all. They like to call themselves an ultra-low cost carrier, but, um, this clearly shows otherwise. I’m not sure why they’re paying so much. It can’t be because they’re new - Virgin America is new and they fall into the pack. Maybe it’s all these small airports they fly where nobody else goes. Come to think of it, they share that characteristic with Allegiant. Hmmm.

Well at least the trends look good, right? Of course not. You see the average fuel cost in that graph was maybe around $2.10 or so. Well just to give you some numbers . . . Alaska paid $2.48 in the fourth quarter. US Airways paid $2.56. And it doesn’t look better elsewhere.

So just remember, if you’re complaining about your ticket price being too expensive . . . pipe down. It should probably cost you even more than that.