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Turbofan Engines, 3 Have Exited Historical category analysis HARRISON XUE MGMT 731 – TECHNOLOGY STRATEGY, FALL 2015 PROFESSOR KARL ULRICH Executive summary 12 companies have manufactured commercial turbojet engines, since the first turbofan engine was produced in 1941 and jet engines were invented in in the late 1930s ◦ 5 manufactures are joint ventures between other leading players, combining best-in-class technology ◦ Few companies have exited the space, likely because the massive investment required limits entrants Both the number of airline passengers and the number of aircraft in service has increased steadily from the 1960s to the present, driven by a growing middle class that can afford air travel The high-bypass turbofan engine is the dominant design of commercial jet engines and follows a performance S-curve, measured in energy output per unit fuel (foot lb. hours per lb. fuel) ◦ The current design displaced turboprops due to superior performance at high speeds and altitudes Turbofan manufacturers large, diversified companies with strong staying power Country of Exit Manufacturer Parent companies Entry date Disposition orgin date Avic Commercial Aircraft Engines - China 2026 Current Current Aviadvigatel - Russia 1963 Current Merged with Perm Engine Group CFM International 50:50 JV between GE and Safran France, United States 1982 Current Current Engine Alliance 50:60 JV between GE and Pratt & Whitney United States 2008 Current Current General Electric - United States 1971 Current Current Honeywell - United States 1992 2003 Exited category International Aero Engines Pratt & Whitney, Rolls Royce, MTU, JAEC US, UK, Japan 1989 Current Current Ivchenko Progress - Ukraine 1974 2004 Exited category Lycoming - United States 1983 1995 Exited category Power Jet 50:50 JV between Snecma and NPO Saturn France, Russia 2011 Current Current Pratt & Whitney - United States 1960 Current Current Rolls Royce - United Kingdom 1964 Current Current Source: “Commercial Engines: Turbofan Focus,” Flight Global, 2015, “List of aircraft engine manufacturers,” Wikipedia, https://en.wikipedia.org/wiki/List_of_aircraft_engine_manufacturers 12 companies manufactured commercial turbofan engines, 3 have exited Number of commercial turbofan engine manufacturers over time 1960-2030 (forecast) Number of companies Number of companies 10 Number of active manufacturers 12 9 Cumulative entrants 10 8 Cumulative exits 7 8 6 5 6 4 4 3 2 2 1 0 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Source: “Commercial Engines: Turbofan Focus,” Flight Global, 2015, “List of aircraft engine manufacturers,” Wikipedia, https://en.wikipedia.org/wiki/List_of_aircraft_engine_manufacturers Number of commercial airline passengers maintained a ~6% CAGR for 1970-2014 Commercial airline passengers carried, billions 1970-2014 Number of passengers carried (Billions) Aircraft manufacturers, airlines and passengers 25 may all represent turbojet “users,” number of passengers shown here to illustrate penetration 20 of turbojet-powered transportation +6% 15 10 +5% 5 +7% 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 Source: “Air transport, passengers carried,” World Bank, 2015 Number of commercial jet aircraft in service has grown exponentially to ~23,500 in 2014 Number of commercial jet aircraft in service, 1960-2026 For assessing product performance vs. cumulative investment, investment assumed Number of commercial to be proportional to the number of aircraft jet aircraft in service in service, a key revenue driver 35,000 30,000 25,000 2014-2019 turbofan jet engine investment projected to be $1.4 BB annually 20,000 15,000 10,000 1960-2026 investment estimated from $1.4 5,000 BB, proportional to aircraft in service 0 ◦ Cumulative investment calculated from 19601965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 estimated annual investment Note: Analysis involves extrapolation of yearly data from 1995 to 2014 Source: “Statistical Summary of Commercial Jet Airplanes Worldwide Operations: 1959-2014,” Boeing, 2014, “Jet Airplanes in Service,” Jet Information Services, 2014 Source: http://www.thestreet.com/story/12851078/1/how-will-ge-ge-stock-respond-to-35-billion-aircraft-engine-investment.html, http://www.geaviation.com/company/aviation-history.html Commercial turbofan efficiency has improved approx. +80% from 1941-2010 For passenger aircraft, efficiency gains Efficiency gain of commercial turbofan engines separated into gains from engine over time improvement vs. gains from aircraft design Fuel efficiency (hr*lbf/lb fuel) ◦ 59% attributable to engines 2.0 ◦ 41% attributable to aircraft 1.8 Engine efficiency difficult to measure 1.6 ◦ Efficiency varies by application, e.g. wide vs. narrow-body 1.4 ◦ Performance characteristics vary by environment 1.2 e.g. temperature, pressure, humidity 1.0 Specific full consumption (SFC) in lbs. fuel per 0.8 hour * foot lb. force is a general measure that can be converted to approximate efficiency in 0.6 Year work per lb. fuel 1940 19501960 1970 1980 1990 2000 2010 Source: “Guide to Aviation Efficiency,” Air Transport Action Group, 2010, “Air Transport and Energy Efficiency,” Transport Papers, 2012, “Air Freight: A Market Study,” World Bank, 2009 Turbofan efficiency S-curve demonstrates diminishing returns from current investment Efficiency gain of commercial turbofan engines versus Curve combines efficiency over time with cumulative investment Fuel efficiency (hr*lbf/lb fuel) estimated cumulative investment ◦ Each year on the time graph converted to the 2.0 corresponding cumulative investment 1.8 Investment before 1960 difficult to estimate 1.6 ◦ Lack of commercial applications before the BAC 1.4 Comet-4 ◦ Military and government investment difficult to 1.2 quantify and sensitive to inflation assumptions Turbofan engines are a mature technology that has followed a ◦ Total R&D before 1960 assumed to be 3x cost of 1.0 US Air Force F-22 program performance s-curve when accounting 0.8 for government investment Cumulative 0.6 investment ($ BB) 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Source: “Guide to Aviation Efficiency,” Air Transport Action Group, 2010, “Air Transport and Energy Efficiency,” Transport Papers, 2012, “Air Freight: A Market Study,” World Bank, 2009 High-bypass turbofan design maintains domination of commercial jet engines Dominant design centered around combination of a large fan upfront with a relatively small jet engine ◦ High-bypass design includes large fan portion with a much higher bypass ratio than other types of jet engines ◦ Fan and diffuser designed for high volume air flow to minimize exhaust velocity and reduce waste ◦ Exotic alloys are used for turbine blades with vane cooling technology to allow higher temperatures ◦ No afterburners in the exhaust nozzle Modifications further improve the dominant design ◦ Multi-spool compressors allow higher compression ◦ Geared turbofans increases maximum efficiency envelope ◦ Ceramic matrix composites used to allow even higher temperatures Source: “Turbofan,” Wikipedia, https://en.wikipedia.org/wiki/Turbofan With evolution of air travel, ramjets and propfans may displace turbofans Best jet engine technology is application-dependent Turbofan engines are themselves a disruptive technology, replacing the turboprop ◦ Turboprops cannot match turbofan efficiency at high altitudes, speeds ◦ For turboprops, a gas turbine drives a propeller blade and exhaust gases provide negligible thrust ◦ Shift in airline industry towards longer routes made propellers less efficient due to low pressure at high altitudes and inefficient and turbulent flow at high fan blade speeds Ramjets and un-ducted turbojets (propfans) may displace turbojets ◦ For supersonic speeds, ramjets do not require a compressor or fan blades and can potentially be more efficient ◦ For speeds below 450 mph, un-ducted turbojets combine the performance of a turbofan with the fuel economy of a turboprop Source: “Turbofan,” Wikipedia, https://en.wikipedia.org/wiki/Turbofan, “Propfan,” Wikipedia, https://en.wikipedia.org/wiki/Propfan, “Ramjet,” Wikipedia, https://en.wikipedia.org/wiki/Ramjet.
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