SANTIAGO -(Dow Jones)- The global airline industry wants stronger government efforts to promote using biofuels, with new regulations and economic incentives for its production. It is working to meet the growing air-passenger demand without a proportional increase of carbon emissions, industry executives said Thursday. As global air traffic is expected double in the next 15 years and the demand for new passenger jets is seen reaching some 30,000 units worth nearly $4 trillion, the challenge for the aviation industry continues to be reducing pollution and, by doing so, costs. At the 7th Wings of Change conference organized by the International Air Transport Association, or IATA, at Santiago's FIDAE 17th biannual Air and Space Show, industry executives said the legislative framework, the still-high costs of biofuels and the availability of raw materials are the main challenges to broadening the use of biofuels. According to Gilberto Lopez, director at Mexico's Aeropuertos y Servicios Auxiliares, ASA, governments must offer legislation on biofuels and also offer incentives. He added that for some countries, the use of biofuels represents a national security issue as it allows them to reduce their dependence on oil and fight poverty by promoting the production of biofuel raw materials such as the jatropha plant. "The airline industry efforts don't seem to be enough. [Governments] need to generate more incentives for this to become a reality in the short and medium term," Lopez said. It is key to use incentives to not increase ticket prices when using biofuels. Fuel represents 30% to 45% of a flight operation costs and although the use of biofuels is 20% lower compared to jet fuel, its cost is still high. Currently, the airline industry uses 65 billion U.S. gallons of fuels per year, worth $4 billion per week, said Peter Turner, Rolls Royce customer vice president. "By reducing CO2 emissions not only will we be helping the environment, but industry productivity will also increase," Turner said. For his part, German Efromovich, Avianca Taca (PFAVTA.BO) controller, believes that if the industry targets expanding the use of biofuels to 1% by 2015 and to 50% by 2040, the cost issue must be addressed. "If we add biofuels [to flight operations] the ticket costs will increase," he said. The world's two largest aircraft manufacturers, Boeing Co. (BA) and Airbus, say their newer planes are biofuel ready. "The switch from traditional jet fuel to biofuel should be absolutely transparent," Randy Tinseth, Boeing's vice president of marketing for commercial airplanes, told Dow Jones Newswires while showing reporters the cabin of the company's latest star, the 787 Dreamliner on display at the air show. It is as simple as switching from regular to special gasoline at the pump, he added. In Latin America, Aeromexico and Lan Airlines' (LFL, LAN.SN) Chile unit have successfully operated commercial flights using biofuels. Although Enrique Guzman, head of LAN's environmental unit, described LAN's biofuel flight "full of bio labor pains", he is in favor of working along with governments to promote its use. He also called for government regulation based on the efficiencies reached by airlines that have already made progress in that front. "LAN already is 20% more efficient than the industry average. We ask governments not to regulate to a level lower than what has been achieved. They should consider what has been already done," Guzman added. Giovanni Bisignani, representative from the World Economic Forum, said the main challenge the industry faces is governments' willpower. "This is the only sector that has implemented a strategy that has saved $20 billion in fuels. This strategy should motivate governments and oil companies to take biofuels seriously." -By Cristina Molina, Dow Jones Newswires; +56-2-715-8939; cristina.molina@dowjones.com --Carolina Pica contributed to this article.
