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The Valhalla Project

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This preliminary design study was originally written by Matthew Kronborg circa 2007. …

This preliminary design study was originally written by Matthew Kronborg circa 2007.
The aim was to explore the technical and economic feasibility of using hydrogen, produced via renewable energy, to power air cargo transportation and to develop an optimal pathway towards commercialisation of such a system.

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  • 1. THE VALHALLA PROJECT
  • 2. TheValhallaProject Preliminary Design Study Figure 1: TheValhallaProject conceptual design components
  • 3. Printed on 100% Recycled Paper -1- Preface This preliminary design study was originally written by Matthew Kronborg circa 2007. The aim was to explore the technical and economic feasibility of using hydrogen, produced via renewable energy means, to power air cargo transportation and to develop an optimal pathway towards commercialisation of such a system. Your feedback and contributions to evolve this concept are welcome. Please send to matt_kronborg@hotmail.com Key words Aviation, Air Cargo, Association of South East Asian Nations, Regional, Hydrogen, Renewable, Energy, Mega-scale, Infrastructure, Economic Development, Innovation, Commercial, Environment, Climate Change, Solutions
  • 4. Printed on 100% Recycled Paper -2- Contents Executive Summary....................................................................................................................4 Vision Statement .........................................................................................................................4 Mission Statement ......................................................................................................................4 BUSINESS SUMMARY Introduction ..................................................................................................................................5 Service Features ..........................................................................................................................7 Market Summary.........................................................................................................................8 Marketing Strategy Outline.....................................................................................................8 Key Objectives and Financial Overview .............................................................................9 Financial Overview.................................................................................................................. 10 Market Analysis ........................................................................................................................ 11 Air Cargo Transport Service ................................................................................................ 11 Airfreight Logistics Process ................................................................................................. 12 System Design Considerations............................................................................................ 14 Energy transformation process: fossil-free hydrogen generation........................ 18 Location ....................................................................................................................................... 19 Technical Feasibility Review ............................................................................................... 20 Initial Route Network............................................................................................................. 29 SWOT Analysis .......................................................................................................................... 30 Early Business and Organisational Structure ............................................................... 32 Management and Ownership............................................................................................... 32 Key Milestones.......................................................................................................................... 34 Indicative Timeline.................................................................................................................. 35 Financial Information............................................................................................................. 36 Core service revenue .............................................................................................................. 38 Ancillary service revenue...................................................................................................... 42 Triple Bottom Line Benefits................................................................................................. 43 General Comments .................................................................................................................. 44 Final Point................................................................................................................................... 45 APPENDICES
  • 5. Printed on 100% Recycled Paper -3-
  • 6. Printed on 100% Recycled Paper -4- Executive Summary This is an initial evaluation paper of a business concept titled theValhallaProject; considering technological and financial feasibility. TheValhallaProject is a synergy of the latest aerospace, automation and clean energy technology that seeks the design, construction and implementation of a next generation air cargo network system to service the needs of the ASEAN region. This revolutionary concept will achieve zero flight crew labour costs, zero fossil fuels use, and produce zero net emissions, all at an operational unit cost (freight tonne cost per kilometre) an average of 15% below that of the current fossil jet fuel powered air cargo network system. Vision Statement To be the preferred air cargo provider in the ASEAN region Mission Statement The mission of theValhallaProject is to create an innovative, sustainable, rapid, safe and secure regional airfreight system for our modern globalised world. • To provide the lowest price air cargo solution in the ASEAN region • To evolve the air cargo industry through game changing innovation • To provide an air cargo service driven by customer needs • To handle air cargo safely, securely and efficiently • To further the economic and social development of the ASEAN member countries • To be an ASEAN ‘nation building’ project that strengthens the relationships between ASEAN nations • To be driven by economic, social and environmental purpose • To provide our employees with satisfying and enjoyable careers • To be a triple-bottom-line sustainable company • To develop a business through strategic partnerships • To deliver strong and sustainable returns to our shareholders
  • 7. Printed on 100% Recycled Paper -5- -Business Summary- Introduction The global air transport network efficiently connects people and goods, facilitating the global economy and creating immense societal benefit. Annually it transports over 3 billion passengers, 50 million tonnes of cargo and supports over US$2.2 trillion in economic activity whilst directly providing 57 million jobsi. There is a cost however; every single minute of every day, over 3,300 barrels of conventional fossil-based jet fuel are combusted to power this networkii. This equates to a contribution of more than 700 million tonnes of CO2-e to our atmosphere every year. The obvious solution to this climate change driver is an airline industry-wide transition to a clean energy supply. Would such a transition be simple? No. Technically achievable? Yes. Required? Definitely. Sustainable Aviation Fuels provide the ideal step change towards a lasting solution. This concept explores the feasibility of the other renewable energy solution for regional air cargo transportation, renewably sourced hydrogen, and considers the best pathway towards commercialisation. Mega-trends: The global market is changing and adapting as certain mega-trends increase in impact: • The price for conventional fossil-based jet fuel will continue its inevitable rise over the long term1 on the back of increasing demand, finite absolute supply and punitive carbon regulation that will forcefully reduce its competitiveness compared to renewable energy alternatives. • Fuel and labour continue to be the two largest, and growing, operating costs for airlines; at around 50% of all direct operating costs2. • Globalisation will continue to expand the demand for airfreight services particularly intra-Asia3. • Manufacturers of high value goods will continue to shift towards Just-In-Time supply chain management. • Public awareness and acceptance of the science and risks of anthropogenic climate change will continue to rise. This will increase pressure on industry to reduce the net greenhouse emissions of products and services. This is especially so for the global warming ‘black sheep’; the aviation industry, due to its publically visible nature. In 2007 the CEO of the International Air Transport Association, the industry’s peak body, set a bold goal for the aviation industry to reduce annual emissions to zero4. 1 Refer Appendix I 2 Refer Appendix V 3 Refer Appendix II and Appendix III 4 Refer Appendix IV
  • 8. Printed on 100% Recycled Paper -6- The Opportunity: TheValhallaProject recognises these global mega-trends and seeks to take advantage of the opportunity they create through a revolutionary and commercially viable, large- scale and long-term business concept. TheValhallaProject seeks the design, construction and implementation of a revolutionary regional air-cargo network utilizing unmanned high-capacity next generation lighter-than-air aircraft. These will be inflated by inert-helium and powered by purely renewable energy means. The wind and the sun’s energy will be converted to electrical energy at ground-based stationary renewable energy generation facilities. This electrical energy will be combined with water to create hydrogen through a simple environmentally friendly process known as electrolysis. This hydrogen will in turn be transferred to safe and secure tanks aboard theValhallaProject aircraft. These next-generation automated airships, known as Valkyrie’s, will be the key airborne assets of the system. Each Valkyrie will have a 100 tonne air cargo capacity, a cruising airspeed of 200km/h and a range of 2,000km. The hydrogen onboard will feed fuel-cell technology to convert it back into electrical energy and in turn mechanical energy for propulsion via electric engines. This renewable energy transfer process completely eliminates the requirement for conventional fossil-based jet fuels. As such, the Valkyrie’s thrust system produces zero net greenhouse gas emissions and in doing so provides a solution to the global transport industry's dead-end reliance on fossil fuels. This initial evaluation indicates theValhallaProject concept is highly competitive with the current jet powered air-cargo network from an operational cost perspective. The significant development capital costs associated with this project are in similar magnitude to those incurred to set-up the Airbus aircraft manufacturing company. The entirety of this airfreight transport system will be fully automated; from cargo loading/unloading and refuelling, right through to the flight operations themselves which will utilise cutting edge Unmanned Aerial Vehicle (UAV) technology. All operations will be controlled and monitored from a central ground-based command centre, thus requiring zero operational ground crews or flight crews. TheValhallaProject network will serve the Southeast Asian region on open over-water routes. Once theValhallaProject’s integrity and value is proved from a community perception perspective it may begin serving destinations across landmasses. TheValhallaProject solution is most competitive over regional-scale short to medium haul sectors due to inherent design considerations of airships, therefore it will begin by replacing air cargo jet services that would normally take a block time of up to three hours, with theValhallaProject sector time of around eight hours; still completing the flights comfortably to provide a 24-hour premium express post service demanded by the highest yielding air cargo customers. TheValhallaProject aligns with the vision and goals of the Association of South East Asian Nations (ASEAN) Secretariat. TheValhallaProject will partner with identified leading cargo logistics firms to implement and manage its air cargo operations.
  • 9. Printed on 100% Recycled Paper -7- The technical success factors for which the project aims:  Zero outgoing fossil fuel costs  Zero operational flight crew and ground handling labour costs  Zero net greenhouse gas emissions Service Features TheValhallaProject will offer an ASEAN regional air cargo service that is 15% cheaper than the jet network providing the region with an economic competitive advantage. Primary Service Features:  Lower cost – This air cargo service is cheaper per unit (freight tonne per kilometre) on average than the jet network due to >15% lower operational costs, primarily as a result of zero outgoing fossil fuel costs and zero operational labour costs  Same on time performance – All air cargo goods carried by theValhallaProject network arrive within the same 24 hour premium express post timeframe of the existing jet network  Environmentally sustainable – This air cargo service consumes only renewable energy by design thus producing zero operational net emissions whilst being a catalyst to enable the industrial scale adoption of renewable energy and the hydrogen economy in the host countries. Secondary Features:  Regional renewable energy and hydrogen supply – Excess renewable electricity and renewable hydrogen produced by theValhallaProject will be supplied to in-country markets across the ASEAN region, assisting to kick-start the renewables sector and hydrogen economies of several such countries. Figure 2: The main component of the theValhallaProject System is the Valkyrie aircraft. Full implementation will see a fleet of Valkyrie’s plying the world’s regional air cargo routes, in doing so providing an operational step-cost reduction and significantly reducing the aviation industries environmental impact.
  • 10. Printed on 100% Recycled Paper -8- Market Summary Fundamental changes in the global market that make theValhallaProject concept increasingly favourable:  Conventional crude oil prices will rise exponentially over the long term due to finite supply and accessibility  Globalisation will continue to grow the world’s international cargo market  Manufacturers will continue to prefer Just-In-Time supply chain management to be most efficient and competitive  Rapid economic and social development of ASEAN nations is expected  Sustainable business models will be increasingly favoured to please stakeholders Marketing Strategy Outline For Air Cargo Customers TheValhallaProject will offer an air cargo transport service at a price that is on average 15% cheaper than the cost floor of competitors (the jet powered air cargo network) and as such this will be theValhallaProject’s primary differentiator. Emphasis will also be placed on the facts that air cargo will be delivered door-to-door within the same ‘24- hour premium express post’ timeframe of normal jet air cargo transport and also in a far more environmentally friendly manner. Most air cargo customers view freight transport as a commodity service and as such are not overly swayed by brand reputation, they simply want the cheapest means to transport their goods from point A to point B safely, securely and rapidly - theValhallaProject will provide this solution. TheValhallaProject will use the standardised containerised airfreight system so that any Unit Load Devices can be interoperable and loaded from other aircraft straight into theValhallaProject freight system without need for manual repacking of goods. Figure 3: TheValhallaProject’s primary saleable service is the provision of airfreight capacity at a cost substantially lower than that possible using the incumbent jet network. Each Valkyrie will have a 100 tonne payload capacity with a volumetric capacity similar to the inside of the Boeing 767 freighter as seen here.
  • 11. Printed on 100% Recycled Paper -9- Key Objectives and Financial Overview Key objectives for pre-commercial success 1) Evaluate concept 2) Explore market appetite 3) Establish application of technology 4) Establish relationship with ASEAN secretariat 5) Identification and initial discussions with potential key partners 6) Identification and agreement to R&D funds 7) Identification and agreement to initial venture capital funds 8) Research and development of prototype 9) Identification and agreement to commercialisation funding 10) Full engagement of key partners. Crucial Government Partner  ASEAN Secretariat (Including all ASEAN nations) The ASEAN Secretariat's mission is to initiate, facilitate and coordinate ASEAN stakeholder collaboration in realising the purposes and principles in the ASEAN Charter. The ASEAN Secretariat's core function is to provide for greater efficiency in the coordination of ASEAN organs and for more effective implementation of ASEAN projects and activities. The ASEAN Secretariat will be crucial to the success of theValhallaProject. Industry Partners The following industry partners are proposed. They will be key to the success of theValhallaProject. Technology research, development and deployment:  The Boeing Company - Aerospace technical expertise and manufacturing  General Electric - Propulsion systems  Aeroscraft - Airship envelope manufacture  Honeywell Systems - Avionics and fleet management system  HorizonFuelCell - Hydrogen components  Sunpower - Commercial scale solar PV farm deployment  Goldwind - Commercial scale wind farms deployment  Industrial Services Inciii - Desalinisation Components Operations and Cargo Logistics:  FedEx  UPS  DHL
  • 12. Printed on 100% Recycled Paper -10- Financial Overview Initial financial modelling has been completed. Using the most likely scenario, the initial capital investment requirement is US$9.47 billion. This will cover all R&D, prototyping, construction and deployment of Phase One of theValhallaProject. Phase One includes a core platform of ten ground ports and an operating fleet of ten Valkyrie aircraft. Worst- case revenue in the first year is projected from US$0.962 billion through to best-case US$9.62 billion. Direct jet fuel energy expenses typically make up 30% of an airlines total operating costsiv. Whist labour typically makes up 20% of an airlines total operating costsv. Vertically integrating the energy system to produce the simple hydrogen in-house will cut out the middlemen, protect against price volatility and insulate against supply disruptions, which will dramatically slash fundamental energy costs compared to the incumbent competition. Equally, by fully automating all of the handling of containerised cargo and by operating all flights as unmanned aerial vehicles this will eliminate significant labour costs. It is estimated that these savings combined will give theValhallaProject greater than a 15% operational cost advantage over the incumbent jet network. Due to the cost favourable nature of theValhallaProject coupled with the high barriers to market entry (due to high initial investment cost, IP and ASEAN Secretariat relationship affording a geographic pseudo-monopolistic position) the forecast long-term profitability of this project is very favourable. Figure 4: Bottom-view of a Valkyrie aircraft
  • 13. Printed on 100% Recycled Paper -11- Market Analysis Air Cargo Demand Overview Global: Air cargo transports goods worth in excess of $6.4 trillion on an annual basis. This is approximately 35% of world trade by value. The sector itself generates nearly $70 billion every year and is an important component of the aviation industry, which collectively supports 57 million jobs worldwidevi . This is expected to further multiply in coming decades as globalisation continues and air cargo becomes ever increasingly preferred for the rapid transport of high-value goods. Globalisation leads to many positive economic and social benefits: it brings the world closer together as international trade barriers decrease and international communications build which ultimately increases stability and reduces the risk of conflict between nations. To further strengthen these bridges between nations a revolutionary sustainable air cargo network has a pivotal role to play in the modern era. Intra-Asia: Vast distances, wide expanses of open water, and minimal ground transport alternatives make air cargo essential to the development of international markets within Asia. The intra-Asia air cargo market constitutes 14.7% of the world’s air cargo traffic by tonnage and about 7.4% in tonne-kilometres. Nearly half of Asia’s total exports represent trade among countries within the region, of both finished goods and their components. Strong regional economic growth, coupled with continuing demand from North America and Europe for finished goods, is projected to sustain a healthy long-term annual air cargo growth baseline of 6.9% p.a. through 2031.vii The Boeing World Air Cargo Forecast shows that there are minimum 8.3 million tonnes of cargo flown between ASEAN nations every year5. The current global fleet of operating cargo aircraft is 16,800 and Boeing estimates this to expand to 35,300 by 2024. Air cargo demand in Southeast Asia is growing in excess of 6% per annum, a trend expected to continue well into the future.viii Air Cargo Transport Service The transport of high-value air cargo (such as computer equipment, jewellery, pharmaceuticals, perishables or air mail) between the major cities in the ASEAN region will be the core revenue driving service offered by theValhallaProject. The business intends to initially partner with a world leading cargo transport logistics companies (such as FEDEX, UPS or DHL) who will integrate theValhallaProject air cargo transport solution into their service offering. They will conduct all freight sales, cargo management, organisation, ground transport, container packing (utilising standard air cargo containers) and related logistics. As theValhalaProject’s cargo capacity grows it is expected that this partner will seek to solely using theValhallaProject as their ASEAN regional air cargo solution due to the cost advantages involved. This cornerstone partner will always be treated preferentially. However, theValhallaProject will not have an exclusive cargo logistics partner, rather, due to its highly competitive cost base, it will auction cargo capacity on each route via multi-year capacity off-take agreements with any last minute remaining capacity sold at a premium to this. 5 Refer Appendix III
  • 14. Printed on 100% Recycled Paper -12- Airfreight Logistics Process TheValhallaProject will utilise the globally standardised air cargo container system instead of creating a new air cargo container in order to minimise the costs and complexity to the air cargo logistics industry and provide the ability to interline the containers and pallets. This will allow the cargo to use multiple airline carriers to reach destinations beyond the bounds of the ASEAN region without the need to unpack and repack cargo into different size and shape containers. The airfreight process is simple: 1) The cargo partner companies will truck the fully packed air cargo containers (current global airline standard containerised 747 Unit Load Devices) via ground transport trucking to the nearest respective ground port where they will be unloaded and inserted into the fully automated cargo handling system of theValhallaProject. Figure 5: Dimensions of a typical Boeing 747 belly-hold standardised air cargo container (Unit Load Device) Only interoperable standard airfreight containers will be used in theValhallaProject. 2) The air cargo containers will be managed at theValhallaProject’s respective ground ports by way of fully automated systems similar to those currently in use at the world’s leading air cargo facilities, such as HACTL Super Terminal 1 at Hong Kong International Airport.
  • 15. Printed on 100% Recycled Paper -13- Figure 6: Air cargo containers are already handled with full automation and HACTL Hong Kong to reduce costs and improve operational efficiency 3) The fully laden air cargo containers will be collected and automatically loaded inside the designated cargo pod according to its destination. The freight cabin of the air cargo pod will be designed in a similar layout to current generation airfreight aircraft cabins so that it fully integrates with the current standard containerised airfreight system. Figure 7: Inside a Boeing 747 freighter manually loading standard containerised airfreight 4) Once full the cargo pod will move utilising a rail type conveyor system to a separate area where its tanks will be safely refuelled with high-pressure liquid hydrogen and oxygen. Water ballast will be added if required. 5) The automated rail system will then transport the cargo pod out along the main pier to a secured and tethered awaiting Valkyrie aircraft for loading. 6) When ready for departure the Valkyrie will release and climb away. As a fully automated unmanned aerial vehicle it will climb to its optimum altitude, depending on winds, of several thousand feet and cruise at an airspeed of approximately 200kph. Upon arriving at the destination several hours later a reverse of this process will occur to automatically disgorge and deliver the cargo into the hands of the cargo partner.
  • 16. Printed on 100% Recycled Paper -14- Figure 8: TheValhallaProject cargo container handling process is fully automated to eliminate labour costs, improve safety and efficiency System Design Considerations The global aviation industry finds itself under ever escalating pressure to reduce its environmental impact due to its colossal rate of consumption of fossil fuels and immense greenhouse gas emissions. Rising oil prices6 and the enlarged awareness that this finite resource is going to be exhausted, or potentially regulated out of the energy mix, at some stage over the next one hundred years, are pushing air cargo transport costs upwards. In 2003, the cost of jet fuel surpassed labour for the first time as the largest operational cost of the average global airline7. Both fuel and labour costs as a percentage of airline total operating costs are trending upwards over time. Meanwhile renewable energy costs are trending downwards over time. 6 Refer Appendix I 7 Refer Appendix V
  • 17. Printed on 100% Recycled Paper -15- Figure 9: Long term mega trends show that underlying cost drivers will inevitably increasingly favour renewable energy (theValhallaProject air cargo network) in preference to the finite fossil energy sources (the fossil jet-powered air cargo network) The global demand for air cargo transport is growing. The world’s ‘factory’, Southeast Asia is the largest and fastest growing regional air cargo market8. Goods manufacturers’ consider marine shipping as slow and unreliable when compared to the efficiencies afforded by high-speed air cargo transport services. The main competition to theValhallaProject comes from the fossil fuel powered jet air cargo network. However, by offering the exact same service at a price well below the cost floor of these airlines, theValhallaProject will maintain a sustainable cost- differentiating position. Those who try to implement a similar system to theValhallaProject in the ASEAN region will find it exceedingly difficult due to the extremely high-cost barrier to entry, plus theValhallaProject’s ownership of the vital infrastructure such as cargo facilities. Not to mention theValhallaProject’s contracted partnerships with critical stakeholders including the ASEAN governments, aviation industries heavyweights (individuals and corporations) and cargo logistics partners. Renewable Energy Each ASEAN nation that signs up to theValhallaProject will receive a ~US$350 million renewable energy infrastructure package that includes the construction of a large-scale solar and wind powered stationary renewable electricity generation facility of approximately 250MW in size to provide for the project’s energy requirements for that country. This being the first time that many of these ASEAN nations will have invested in large scale renewable energy infrastructure will allow these facilities to be constructed in the most preferred of locations seeking optimal renewable energy resources within each respective country, giving this asset a permanent early-mover advantage. The generation facilities will be connected to the respective national electricity grids at the nearest suitable grid tie-in point. The airship ground ports will draw the energy off the electricity grids at their separate locations, likely to be co-located with major airports. This negates the need for the construction of new private power lines linking the two locations and provides for excess electricity to be sold on the local energy market. In addition, over time theValhallaProject could seek to become a renewable energy supplier by capitalising on the initial market entrant leading position, favourable geographic locations and government support. Equally, if the project ceases to be viable for any reason these renewable energy assets will not be stranded. 8 Refer Appendix II and Appendix III
  • 18. Printed on 100% Recycled Paper -16- For illustration this could be compared to the similar magnitude 250MW Lincs Wind Farm off the coast of Lincolnshire in Englandix that has 75 three-blade 3.6MW Siemens wind turbines, or the 206MW Collgar Wind Farm in Western Australiax that has 111 three-blade 2MW Vestas wind turbines. The worlds largest wind farm is the Gansu Wind Farm in China with over 5,000 MW installed. Figure 10: The offshore 250MW Lincs Wind Farm In addition to these ground-based sources of renewable energy, the Valkyries’ upper external surfaces will be covered in embedded solar photovoltaic panels that will provide additional, but not essential, electrical energy for thrust during daylight operations, conserving hydrogen. When the main thrust electrical motors are used for engine braking on decent they can act as regenerative electricity sources (generators) also conserving hydrogen. Figure 11: Birds-eye of a Valkyrie aircraft Note the Solar PV covering the upper surfaces
  • 19. Printed on 100% Recycled Paper -17- High Quality Desalinated Water TheValhallaProject will require relatively small amounts of high quality desalinated water at each airship port (approximately 313,538 litres of desalinated water per day) for the fossil-free creation of hydrogen using electrolysis. The electrolysis process is a simple method used to create hydrogen, simply uses electricity to split fresh water into its base elements; hydrogen and oxygen. The water required will be produced using small, specialised desalinisation plants drawing seawater from the nearby sea or unusable ground water brine. Excess high quality water produced could be sold at premium prices for scientific and medical purposes as an ancillary revenue source. By producing its own fresh water theValhallaProject will consume nil terrestrial fresh water supplies needed by local peoples. Figure 12: Desalinisation is a simple and widely used process to create fresh water from seawater xi Figure 13: Inside a typical industrial-scale desalinisation plant
  • 20. Printed on 100% Recycled Paper -18- Energy transformation process: fossil-free hydrogen generation The vast majority of the world’s hydrogen supply is currently produced directly from fossil fuels, which is unsustainable. Instead, theValhallaProject will create its own hydrogen at each airship port using electrolysis of fresh water. This hydrogen will be used as the primary liquid energy transport and storage medium. The full renewable energy chain of theValhallaProject, as outlined in the diagram below, is simple: 1) Electricity (provided by renewable energy means) is created. 2) The electrical current is passed through water H2O to split it into its base elements; hydrogen and oxygen. 3) The hydrogen and oxygen is captured, compressed, liquefied and stored in large tanks at the airship ground ports. 4) When a Valkyrie docks at the airship ground port this hydrogen and oxygen is used to refuel the vessel. 5) Onboard, this hydrogen and oxygen is used to power hydrogen fuel cells 6) The fuels cells create electrical current. 7) The electrical current powers all on board systems, including the main propulsion electric motors to deliver thrust. Figure 14: Basic diagram of the energy transformation process of theValhallaProject
  • 21. Printed on 100% Recycled Paper -19- Location Why the ASEAN region is proposed as the location of the initial route network:  The ASEAN average regional route sector distances (500km-2000km) are technically optimal for theValhallaProject transport solution.  The island-type geographic nature of the ASEAN region is ideal for this solution. The geographic advantage is in the fact that the initial route network will predominantly cross open ocean which provides two benefits; one, it is expected to be easier to gain airworthiness approval from the relevant authorities if the perceived risk to people and property below flight paths is negated, and two, the network’s point-to-point services will bridge locations that road and rail cargo transport services cannot reach in a 24 hour window.  The air cargo market demand within the ASEAN region is strong and growing rapidly (8.3million tonnes of intra-ASEAN trade in 2006, growing at 6% p.a9.  The ASEAN Secretariat (the ASEAN governing body) has a strong history of supporting large-scale special transport projects which enhance ASEAN regionalism and give the territory a competitive advantage over the global market. In recent years the ASEAN Secretariat has invested in massive transport projects including rail networks, airports and seaports. TheValhallaProject is a true ‘nation building’ project that would fit well within this portfolio.  The ASEAN Secretariat ‘Special Major Project Consideration Process’ has the foresight to give fair evaluation opportunity to game-changing projects such as theValhallaProject.  The ASEAN Vision 2020; a document written by the ASEAN Heads of Government, states the long-term goals of the ASEAN group. This document makes a number of declarations that favour a bold, revolutionary theValhallaProject type transport scheme. By means of: 2. “developing a integrated and harmonised trans-ASEAN transportation network”, 3. “promoting open sky policy”, 4. “facilitating goods in transit”, 5. “fully implementing the ASEAN Free Trade Area”, and; 6. “pledging to sustain ASEAN's high economic performance by building upon the foundation of existing cooperation efforts, consolidating achievements, expanding collective efforts and enhancing mutual assistance”; all of which should pursue the vision for , 7. “a clean and green ASEAN with fully established mechanisms for sustainable development.”10 9 Refer Appendix III 10 Refer Appendix VII for full explanation of excerpts
  • 22. Printed on 100% Recycled Paper -20- Technical Feasibility Review An initial technical feasibility review that was conducted indicated that all technologies required for theValhallaProject are either currently developed and commercialised, or, currently proven, under development and soon to be commercialised. The critical technologies and high-level numbers are here explored to test the technical robustness of the concept. 1.1 Introduction and Summary of Factors Effecting Structural and Systems Design 1.2 Envelope Capacity Relating to Buoyancy 1.3 Power Requirements Relating to Drag 1.4 Fuel Requirements and Systems 1.4.1: Fuel Cells 1.4.2: Hydrogen Storage 1.5 Primary Propulsion Systems 1.6 Other Factors 1.6.1 Weight of Envelope 1.6.2 Weight of Structure 1.6.3 Weight of Cargo Bay 1.6.4 Weight of Extra Components 1.6.5 Hydrogen Production 1.7 Summary and Conclusions
  • 23. Printed on 100% Recycled Paper -21- 1.1 Introduction and Summary of Factors Effecting Structural and Systems Design A project as technically complex as theValhallaProject requires sophisticated modelling and detailed statistical summary beyond the scope of this initial conceptual evaluation paper for proper analysis. For this initial report regarding the feasibility of such a project and what a potential design solution may look like please note the following key assumptions. Core to theValhallaProject is the Valkyrie aircraft, in this case a modern airship. The design of any aircraft considers the four forces of flight; Thrust, Drag, Lift and Gravity (weight). Figure 15: The four forces of flight Gravity (weight) is particularly important to airships as it directly affects the amount of gas (in this case, primarily helium, due to safety concerns regarding hydrogen) required to provide lighter-than-air buoyancy. Knowing the average gross weight and gas characteristics being used to provide this lift, we can accurately estimate the volume of gas required; a major design consideration. Also key to the design is the target airspeed of 200kph for cruising and a target payload capacity of 100 tonnes of commercial freight. This speed (very fast for an airship) means it is imperative drag is minimised in order to manage power and thus fuel requirements – both extra power and fuel lead to greater weights, leading to a lesser cargo capacity. If we are to require more than the targeted 100 tonnes commercial freight capacity, this would mean that the gross weight increases, the volume of gas required to provide lift increases, the drag increases and thus the power and fuel required to maintain at least 200kph cruising airspeed increases, further increasing the weight of our craft…potentially a self-perpetuating issue. To determine a feasible solution using currently available technology, the following variables were considered: Total estimated weight of the craft (including cargo) Cruising speed of the craft Range Estimated mechanical efficiencies of components Fuel cell power-to-weight ratio Electric motor power-to-weight ratio generating a number of outputs: Volume of gas required to provide lighter-than-air buoyancy Craft dimensions Drag
  • 24. Printed on 100% Recycled Paper -22- Power requirements Quantity of fuel required Resultant estimated weight of systems Knowing the weight of the systems required to drive a craft with an assumed total weight, the residual weight for cargo can be determined; theValhallaProject is targeting 100 tonnes. 1.2 Envelope Capacity Relating to Buoyancy As mentioned, aiming for a 100 tonne cargo capacity, it is reasonable to estimate a gross weight, including all systems, to determine the total weight these systems require. Helium has been selected as the source of lift, due to being favourably much lighter than air. Additionally, helium is non-flammable unlike, somewhat infamously, hydrogen, as demonstrated by the Hindenburg disaster. How much helium does it take to lift a given weight? At sea level, helium has buoyancy of approximately 1kg/m^3: a balloon with a cubic meter of helium in it could lift a mass of 1kg. Assuming a cruising altitude of 7000ft AMSL for our airship, helium can lift approximately 0.859 kg/m^3. As this is a conventional propeller driven craft there is no propulsive efficiency benefits from climbing to the higher cruising altitudes used by jet aircraft. The craft will typically operate below 10,000ft AMSL at the altitude that is optimum when taking into consideration winds, weather, air traffic, terrain and other considerations. We will neglect intricate temperature-related effects on the buoyancy of helium in air, and assume that the gasses approximately expand and contract at an equal rate within our operating temperature and thus the relative buoyancy remains constant. However, the helium will expand due to the decrease in atmospheric pressure- actually meaning Valkyries will enjoy somewhat increased buoyancy, despite this the worst-case scenario is considered. To properly design the envelope, the effects of frontal area vs. drag vs. structural implications of the design on the weight of the craft are modelled. Ideally, theValhallaProject would aim to minimize all three of these factors: however in design of such a structure there is an interesting paradox: Some required volume needs to be maintained, so reducing the frontal area will result in an increase in the length of the craft. In turn, this increase in length of the craft will increase the surface area of the craft with respect to volume, and increase the weight of the craft. To lift this extra weight, additional gas is required, resulting in an increased volume of the envelope, and greater dimensions; including frontal area. A sphere is the most efficient shape in terms of optimizing structural weight with respect to volume; however there is an unacceptable level of frontal area and drag associated with such a shape.
  • 25. Printed on 100% Recycled Paper -23- Considering this, it is recommended that nominated approximate dimensions remain proportional to one another with respect to an increasing volume of helium in the envelope. These are estimated to give an optimal frontal area-to-drag-to-weight ratio. The craft is 1/5th as wide as it is long The craft is 1/5.67th as tall as it is long (it is important to reduce the height in order to minimize the forces associated with cross-directional winds in both cruising and delicate landing manoeuvres) Therefore we know the relation of length to volume can be calculated (as length x width x height = volume) and we can generate an initial conceptual design of the dimensions of the craft for a given lift capacity. It is likely that given the ideal performance shape will be highly aerodynamic and literally “cut corners” from the design, so the height and the width will increase correspondingly. To calculate the frontal area integral to the drag, power and fuel figures, multiply the length by the width further by a factor of 1.1 to account for canard wings and required attachments. Table 1: Quantity of Helium Required: Unit Total Weight of Craft: 231,708.000 kg Lifting Capacity of helium at 7000 ft: 0.859 kg/m3 Volume of helium required: 269,742.000 m3 Table 2: Dimensions of Craft: Volume of helium required: 269,742.000 m3 General proportions: Length: 197.010 m Width: 39.400 m Height: 34.740 m Frontal Area: 1,369.140 m2 Corrected Frontal Area: 1,506.0540 m2 Block surface area: 31,905.14 m2 1.3 Power Requirements Relating to Drag Having obtained a general envelope volume and frontal area, the amount of drag and corresponding power required to meet our 200kph cruising airspeed speed can be examined. Once again, drag is modelled in a highly simplified manner incorporating safety factors. Outside of a computer simulation or wind tunnel testing, drag can be estimated using the formula found below. Further, to find the mechanical power required to maintain such a speed, the speed of the craft (in m/s) is multiplied by this limiting drag. There are a number of losses that must be taken into account, including line losses (both electrical and fuel-line related), inefficiency of the hydrogen fuel cells, the motor and the
  • 26. Printed on 100% Recycled Paper -24- propellers themselves. Making an estimate of these (multiply 1.35), the chemical energy required to eventually produce the required speed can be determined. Table 3: Power required: Target velocity (m/s) (@200kmh) Fd = Drag Force (kN) Power (kW) Total Power Required (kW, taking into account efficiency losses) 55.55 463.037 25,721 34,723 - Fd is the force of drag (in Newtons) - ρ is the density of the fluid (in kg/m3): We use an average-case evaluation here, and assume that the density of air at 7000ft is approximately 1kg/m3. - v is the velocity of the object relative to the fluid (in m/s): Our velocity at 200kph is 55.56m/s. - Cd is the drag coefficient (dimensionless): We estimate a reasonable value for our drag coefficient of 0.20 for a craft of this approximate shape. As a reference, the average automobile would record a value somewhere between 0.28 and 0.35. - A is the frontal area (in m2): we estimate a total frontal area of 1500m2 For reference a single Rolls Royce Trent 900 jet engine used on an Airbus A380 can produce 320kN, compared to this 463kN needed from four motors combined. 1.4 Fuel Requirements and Associated Systems Integral to the design of the airship itself, and thus the infrastructure required to maintain and supply the airship, are the power and fuel requirement to meet the stated speed and range goals. Having found the power requirements, and knowing the length of the average flight (7.42 hours @ 200kph), we can estimate our total energy usage through cruising, and knowing that hydrogen in a fuel cell yields approximately 86MJ per kilogram (whilst hydrogen’s specific energy is around 120MJ/KGxii) the total average hydrogen requirement can be estimated. @200kph: 34,723 kW = 34,723 x 7.42 = 257,644 kWh Table 4: Average weight (kg) of hydrogen fuel per flight: Total energy required (kJ) Total energy required (MJ) Total hydrogen required (tonnes) Plus 10% hydrogen fuel reserve (tonnes) 927,518,400 927,518.4 10.785 11.863 1 Kilowatt Hour = 3,600 Kilojoules 1MJ = 1,000,000 J 1.4.1 Fuel Cells Current fuel cell design does not place huge importance on lightweight efficiency and data regarding cells with the highest power-to-weight ratio is not widely available. To determine the total weight of the fuel cells required we have used the assumption we are using commercially available fuel cells at 1W per gramxiii, however we anticipate a significant improvement upon this figure as design of fuel cells further focus’ on weight reduction for mobile applications. As far as costing the US Department of Energy estimates fuel cell costs of $30/kW by 2017 (currently US$47/kw)xiv.
  • 27. Printed on 100% Recycled Paper -25- Table 5: Weight of Fuel Cells: Power Required* (kW) Assume 1W per gram Total Weight (kg) Fuel cell cost per Valkyrie (US$ million) 34,723 kW 34,723,000 units 34,723 kg 1.041 *@200kph 1.4.2 Hydrogen Storage Hydrogen is not a dense substance (0.08988 g/L), and in unpressurised gaseous form at ISA ~12.5 tonnes (Assumes some additional fuel reserve on 11.863 tonnes) of hydrogen occupies a volume of approximately 139,074 cubic meters. To store this fuel a pressurised tank is therefore obviously required. Similarly to the state of fuel cell design, commercial hydrogen storage systems are not optimized for lightweight mobile applications and huge reductions of weight can be expected. Currently however, the most advanced pressurised hydrogen storage systems can store approximately 13 kg of hydrogen per 100kg of system weightxv at a maximum pressure of around 10,000psi (700 bar). Table 6: Weight of Fuel Tank: Hydrogen % per kg total weight 0.13 Hydrogen required 12,500kg Weight of Fuel + Storage System 108,653 kg 1.5 Primary Propulsion Systems The hydrogen fuel cells produce electricity, so it follows that an electric motor will be used to drive some form of propeller. Ultra-modern, high efficiency electric motors achieve a power density of 4.0kW/kgxvi, and we can thus calculate the weight of our electric motor. Advanced blade element theory is beyond this initial report; however we estimate a total weight of 3 tonnes for the propeller and components. Low weight ‘sprayed on’ Solar PV panels integrated into the upper surfaces of the airship will create additional electric current to boost thrust during operations that occur during daylight hours but are also disregarded for this early stage modelling. Table 7: Weight of Electric Motors: Power Density (kW/kg) Total power required (kW) Weight of all engines (kg) 4.0 34,723 8,680
  • 28. Printed on 100% Recycled Paper -26- 1.6 Other Factors: 1.6.1 Weight of Envelope Block modelling the structure can determine a rudimentary factor for surface area based on the length, width and height of the craft. At this initial stage it appears the most appropriate covering for the craft is doped nylon polymer, with an approximate weight of 0.211kg per square meter. Table 8: Weight of Envelope: Surface area (m2) Corrected surface area (m2) Mass of membrane (kg) 31,955 22,825 4,816 1.6.2 Weight of Structure Without further advanced structural analysis, we again assume a general value of 0.001 cubic meters of carbon fibre per square meter of surface area. Linking this figure to the surface area of the craft is appropriate for the reasons mentioned in section 1.2 of this technical analysis. Table 9: Weight of Structure: Surface area (m2) Corrected SA (m2) Volume CF (m3) Mass CF (kg) 31,955.79 22,825.56 22.82556 39,944.73 1.6.3 Weight of Cargo Pod and Locking We assume a total empty weight of 4 tonnes for the hardware required to secure and support the payload. 1.6.4 Weight of Extra Components As well as the weights of the major components discussed above, there are a multitude of systems required to maintain control over the Valkyrie in various flight situations: Thrust vectoring on primary propulsion Canard wings Low-speed manoeuvrability systems Avionics and electronics Docking hardware The precise weight of these systems is extremely difficult to estimate accurately, however we assume these would account for a very low percentage of the overall weight in comparison to the fuel, power systems and structure itself.
  • 29. Printed on 100% Recycled Paper -27- 1.6.5 Hydrogen Production TheValhallaProject system calls for the in-house production of hydrogen fuel for its airship fleet using ground-based stationary renewable energy sources. To calculate the highest possible hydrogen fuel requirements for the initial core fleet of ten Valkyrie aircraft we will assume that they operate at cruise power settings 24 hours a day providing 100% asset utilisation with nil down time. First the hourly average hydrogen fuel consumption at cruise power per Valkyrie is determined: 10,785 / 7.42 = 1,453 kg/hr per airship Following this the tonnes of hydrogen required each year to fuel the entire system as proposed can be calculated: 1.45 tonnes per hour x 24 hours x 365 days x 10airships = 127,020 tonnes This is equivalent to 348 tonnes per day total or 34,800 kilograms of hydrogen per ground port per day. By comparison the USA currently produces around 11 million tonnes of hydrogen per yearxvii, mainly from fossil fuel sources. Using current technology, in order to create 1 kg of hydrogen through water electrolysis requires around 50 kWh of electricityxviii. 34,800 kg hydrogen x 50 kWh = 1,740,000kWh per day per ground port Therefore, direct electricity requirements are 1,740MWh per day per ground port to produce the required hydrogen using fresh water electrolysis. As all the water used in the process is from seawater desalinated in-house we should also consider the energy requirements of the electricity intense desalination process. Based on the atomic properties of water, 1 kg of hydrogen gas requires about 9.01 litres of desalinated water as feedstockxix. Energy consumption of seawater desalination is 3 kWh/m3 xx. As a conservative requirement of 34,800 kg of hydrogen per day per ground port has been determined, this will therefore require 313,538 litres of desalinated water per day; adding an additional 939kWh (~1MWh) electricity requirement to each ground port each day. It is discovered that this energy requirement is non-material compared to the energy needed for electrolysis. Multiplying this electricity need of 1,741MWh per day by 1.25 to account for line losses and other efficiency considerations gives a total electricity requirement of 2,176MWh per day per ground port, equivalent to 794,240MWh per year (794,240,000kWh annually). It is presumed that suitable solar and wind resources are available in the ASEAN region. It is beyond the scope of this report to explore solar and wind resource availability in the ASEAN region in depth or to explore the optimised solar/wind ratio mix. To illustrate a ballpark consideration of the required stationary renewable energy farm magnitude and costs let us assume for simplicity at this stage that all energy will be provided by wind generation. We will assume average annual output of the wind farm at 35% capacity factor in-line with typical industry averagesxxi.
  • 30. Printed on 100% Recycled Paper -28- 794,240MWh per year required x 2.857 capacity losses / 365 days / 24 hours = 259MW yy MW nameplate capacity x 365days x 24hours x 0.35capacity factor = zz MWh per year required zz= 794,240MWh yy= unknown This indicates that ~259MW of wind nameplate capacity will need to be installed for each ground port. In 2012 the costs for a utility scale wind turbines in 2012 average about US$1.3 million per MW of nameplate capacity installedxxii. This indicates that 259MW of wind nameplate capacity would cost US$336m. Coincidentally, ~250MW is approximately the average size of a modern wind farm, such as the Lincs Wind Farm mentioned earlier. 1.7 Summary and Conclusions Using today’s commercially available technology, we would expect to see a craft with specifications similar to these: Table 10: Valkyrie Aircraft Specifications Cruising Airspeed: 200 kph Average Sector Distance (Singapore Hub): 1,486 km Typical Flight Time: 7.42 hrs (445mins) Typical Sector Range: 1,500 km Target Gross Weight: 250 tonnes Length: 197 m Weight: 39.4m Height: 34.7 m Payload Capacity: 100 tonnes Weight of Structure: 39.9 tonnes Weight of Envelope: 4.8 tonnes Weight of Empty Cargo Pod: 4 tonnes Typical Fuel Load (hydrogen): 12.5 tonnes (10.780 tonnes usable) Fuel Cells*: 34.7 tonnes Fuel Tank*: 96.1 tonnes 4 x Main Electric Motors: 8.6 tonnes total weight Hydrogen Fuel Used: 0.4 kg/second Internalised Hydrogen Fuel Cost (~$1.80 per kgxxiii): ~USD$0.10 per tonne cargo per km Helium required: 269,742 m3 Note: Airspeeds equal assumed ground speeds during these early calculations * Significant potential for technology improvement reducing weight The main areas for improvement in this specification are optimization of the power-to- weight ratio of hydrogen fuel cells and the hydrogen storage tank weight. These are issues of hydrogen power applicable to transport in general, as it is likely that a proportion of future vehicles will use hydrogen as their power source. Assuming the energy used to create the hydrogen itself is obtained from renewable sources, the environmental advantages of such a craft are difficult to ignore.
  • 31. Printed on 100% Recycled Paper -29- Initial Route Network The initial route network would connect a major city from each one of the ASEAN nations based on a hub and spoke network design around the core trading port of Singapore. In time this network will grow to span regional networks around the globe. Figure 16: The Initial route network plan based around major trading port of Singapore The initial ten major cities proposed for theValhallaProject ASEAN network will be: 1. Singapore (Singapore) 2. Bandar Seri Begawan (Brunei) 3. Phnom Penh (Cambodia) 4. Jakarta (Indonesia) 5. Vientiane (Laos) 6. Kuala Lumpur (Malaysia) 7. Yangon (Myanmar) 8. Manila (Philippines) 9. Bangkok (Thailand) 10. Hanoi (Vietnam)
  • 32. Printed on 100% Recycled Paper -30- SWOT Analysis A brief summary of the SWOT Analysis with most important considerations: Strengths 1. The project will revolutionise the air cargo industry, including a step reduction in its cost base. 2. Although the concept is bold, large-scale and capital intensive it will have substantial revenue generation capacity and likely be hugely profitable in the long term. 3. The concept uses no fossil fuel energy only 100% renewable solar and wind derived energy. 4. All technology required for the project is developed or currently in development for other commercial purposes. 5. It provides an alternative to the current ‘dead end’ of fossil fuel burning jet aircraft. 6. This solution provides an air cargo service with a >15% lower cost base than its competitors. It is not likely that any other company will be able to enter the market in the ASEAN region using a similar solution due to the nature of theValhallaProject’s vertical integration, government support and other high barriers to entry. 7. Being fully vertically integrated closes out many of the ‘middle men’ rife in aviation. 8. Being in close partnership (quasi-nationalised) with the ASEAN Secretariat will protect theValhallaProject from competitors. 9. The project will send out a clear message that even the most polluting industries of the past can become environmentally sustainable, inspiring other industries to do the same. 10. The project provides the ASEAN region with a nation building project that will provide cheaper air cargo for the region, providing further development benefits. Weaknesses 1. The extremely high-cost barrier to market entry, risks and a forecast several years before profitability will make the project difficult to finance using traditional means (bank loans, equity etc), so it will likely need direct government support (i.e. funding and loan guarantees). By way of example; the world leading Airbus company which manufactures’ airliners only formed as a result of the help of European government support once the nationalistic benefits were made clear, enabling it to compete with the American backed Boeing Aircraft Company. It is hoped that TheValhallaProject Company could be supported in a similar means by the ASEAN government. 2. This project is ambitiously grandiose and complex in its vision. 3. The time from project approval to first returns will be approximately 5 years due to the degree of research, design, construction and development that needs to occur. 4. The grandiose vision of the concept itself may frighten away those who are afraid to dream and are of the conservative anti-innovation ilk. 5. The ‘moon shot’ level of complexity of the project may make comprehension of theValhallaProject’s massive long-term benefits difficult to embrace at first glance.
  • 33. Printed on 100% Recycled Paper -31- 6. This project will create a large scale economic and development improvement opportunity creating numerous jobs whilst improving the smartness of the ASEAN region however due to the automation that this project brings there will be fewer jobs required in air cargo handing and flight crew operations. Opportunities 1. The ASEAN region is perfectly placed for this concept to be a commercial success. 2. Excess hydrogen, desalinated water or renewable energy produced could be sold on to local markets. 3. Although this concept will begin operations with single region network, South East Asia has the definite long term potential to grow to span regional networks (short to medium distance operations) around the globe. 4. The technology developed for the project could be used for other economically beneficial and environmentally friendly commercial applications. Threats 1. Current incumbent jet aircraft manufacturers may lobby governments and their agencies to prevent giving the project support, as it will reduce the demand for such aircraft. The project will need to ensure a public image that garners strong public support and build close personal relationships to government leaders (due to the Guanxi-style cultural business practices within the ASEAN region). 2. Similarly, current freight airlines may lobby governments and their agencies to prevent giving the project support, as this project will step-change outcompete them. The project will need to ensure a public image that garners strong public support and build close relationships to government leaders (due to a different standard in cultural business practices within the ASEAN region). 3. Although unlikely it is possible a completely unexpected discovery is made that revolutionises the air cargo industry beyond anything that has been foreseen by science as being possible in the near future. This, however, is possible in any industry at any time. 4. Optimal operating flight paths that are lower than the jet network and hydrogen tanks may make theValhallaProject a potential terrorism target for groups whose motives are difficult to understand. Research and design changes, including anti-missile systems may be required to negate this threat. 5. Unknown risks that may affect the global market and in turn the international air cargo industry such as a great and extended economic depression or a large scale ASEAN regional conflict. 6. The project should be developed carefully in a ‘stage gate’ manner to control for real and perceived risks.
  • 34. Printed on 100% Recycled Paper -32- Early Business and Organisational Structure This project will be world’s largest venture initially conceived around an altruistic purpose. Initially, during the feasibility exploration phase, theValhallaProject will be advised by a small board of entrepreneurial professionals and reputable concept ambassadors. They will assist to oversee the project during its infancy which will involve small teams of subject matter experts each investigating different technology and commercial challenges whilst developing the strategies and partnerships needed to achieve the vision of theValhallaProject. During this time it will be important to promote the concept to government, the community and other stakeholders. A stage-gate project approach will be taken and as certain goals are met, a proven aerospace industry management team will be appointed to join first in advisory roles and progressively into larger management controlling roles. After this infancy stage the project will accelerate towards full-scale development as feasibility is proven, technology prototyping completed, commercial partners are established, ASEAN government support is agreed and funding is approved. Management and Ownership Strategic Control All core stakeholders will have a position whereby they can influence key decisions, however, an executive management team made up of reputable proven business professionals will be given the primary decision making power. They will have core skills covering aviation, energy, freight, finance, marketing, government relations, safety, sustainability and law. The majority of project funding is expected to come from traditional debt and equity providers with remaining backing to come from the ten individual governments of the ASEAN region. The ASEAN governments will provide government guarantees on the commercial financing. This will give them ownership rights over the project and in turn ‘final say’ over executive management and direction. It will operate in a way whereby management control is given to the TheValhallaProject board of executives whilst the ASEAN Secretariat (in consultation with ASEAN governments) will sign off on any major changes to the overall strategic mission of the project, for instance if feasibility or insolvency were to arise. The ASEAN governments will be a source of funding as, out of all nations, it is this region that stand to gain the most from theValhallaProject type initiative. All ASEAN governments will collectively sign up to theValhallaProject because any nation that does not will know it will miss out on the major economic, social, and environmental competitive benefits. In time this nationalised nation building project will be privatised, fairly remunerating taxpayers for their investment.
  • 35. Printed on 100% Recycled Paper -33- Operational Control The cornerstone cargo logistics company, (ie FedEx, UPS or DHL) will guide and forecast air freight demand and strategy using their prior strength in this field. The cornerstone company will receive a ‘first dibs’ access to ongoing capacity. TheValhallaProject command centre will have the physical control over the theValhallaProject system and manage the fleet to best meet the requirements of the cargo logistics companies in a fair and transparent way. The cargo logistics companies will bid for capacity and compete with one another to attract air cargo customers, in turn keeping their prices down. Equally they could compete with one another to maximise payment to the theValhallaProject per tonne/km in order to maintain freight priority over one another. Once in the system, it would not feasible for them to move back to solely relying on the fossil fuel jet powered network as they would lose their cost advantage. Ownership Once operations are successful and normalised it can be foreseen that company ownership will continue to be a private-public partnership appearing to be partially nationalised: 75% Government owned (ASEAN governments) 25% Publicly owned (listed on the Singapore Stock Exchange) Moving from fully nationalised towards a percentage that is privately owned will give initial commercial backers the opportunity to eventually crystallise value from their initial investment and give theValhallaProject the semblance and competitive business culture of a normal company. Revenues will be distributed as dividends amongst all shareholder including governments, at a similar level and in a similar way to a regularly listed company. Around year ten government guarantees will be lifted and the project will progressively be privatised as governments potentially sell down their stake.
  • 36. Printed on 100% Recycled Paper -34- Key Milestones Technical Aspects 1. High level concept scoping 2. Initial techno economic feasibility study 3. Comprehensive feasibility study (full business case) and first technology sourcing 4. Research and design 5. Prototype and pilot operations 6. Full scale development and deployment Overall Key Business Development Hurdles 1. Proof of concept 2. Application of technology 3. Establishment and protection of IP 4. Identification and initial discussions with potential key partners 5. Identification and agreement to R&D funds 6. Identification and agreement to initial venture capital funds 7. Identification and agreement to full commercialisation funding 8. Full engagement of key partners. Major Stages 1. High level concept scoping review 2. Initial techno-economic feasibility study 3. Comprehensive feasibility study (full business case) 4. Submission and negotiations with potential partners for support 5. Research and design 6. Prototyping 7. Commercial production (Valkyrie and ground facilities) 8. Implementation and operations 9. Breakeven / Profit (commercial success) 10. Further development of technology and expansion into other regions
  • 37. Printed on 100% Recycled Paper -35- Indicative Timeline 5 Years: Initial research, design, proving and development stage 5 Years: Pre-commercial operational prototyping. Major funding approved. Full-scale development and implementation 2018-Future: Fully Operational Near Term Action Plan 1. Develop online communications platform and strategy 2. Promote to high level technology publications, the aviation publications and foreign policy publications 3. Seek pro-bono subject matter experts to complete scoping review 4. Seek endorsement from reputable aviation, freight and sustainability thought leaders 5. Continue to investigate and evolve concept 6. Seek private grants to develop concept 7. Pursue early stage government grants 5 Years Initial Development 5 Years Implementation Operational
  • 38. Printed on 100% Recycled Paper -36- Financial Information This section explains the key assumptions used in the initial financial model. Capital Development Costs Similar to all large and complex projects of this nature, capital development costs for theValhallaProject at this early stages are challenging to forecast. Whilst apparently conceptually sound from an engineering standpoint, much of the technology proposed by theValhallaProject is still rapidly evolving. In doing so this is bringing costs down. Capital development costs are split into those relating to airborne operations and those relating to ground operations. Air operations consider the research and development of the Valkyrie aircraft and the construction of an initial fleet of 10 such aircraft. Calculations indicate that these aircraft can be produced for approximately US$243m each; this is less than the cost of an Airbus A380 at approximately US$350million per unit. Ground operations consider the research, development and construction of the 10 Ground Ports including automated freight facilities, stationary renewable energy production facilities, desalinisation facilities, hydrogen production facilities and the technologically advanced software to power this system. Costs are amortised over 20 years. Table 11: Capital Development Costs Operations domain Component Cost (million US$) Refer Appendix Air Valkyrie aircraft R&D 1,625 XIV Air Valkyrie aircraft manufacture ($243m x 10 units) 2,430 XIV Ground Ground port ($532m x 10 units) 5,320 XIII Ground System software 100 XIII TOTAL COST 9,475 Operational and Maintenance Costs The financial competitive advantage of theValhallaProject lies in the substantial reduction of the two most significant outgoing operational costs involved with the movement of air cargo; fuel and labour. Fuel: The hydrogen fuel used in theValhallaProject is produced in-house using the electrolysis of freshwater via wind and solar PV stationary electricity generation facilities. The ownership of the vertically integrated energy supply chain cuts out intermediaries with a target to reduce this internal cost to less than $1.00 per kilogram hydrogen. It is aimed that this cost per unit of energy will be substantially lower than that of conventional jet fuel. As a rule of thumb a kilogram of hydrogen contains a similar amount of energy as a kilogram of conventional jet fuel. Other benefits that stem from this vertical integration include locking in long-term supply at a fixed price, protection from energy cost volatility and the minimisation of operational energy security risk. Jet fuel expenses typically make up 30% of an airlines total operating costsxxiv. Labour: Fully automating the ground handling of containerised air cargo combined with the full automation of the flight operations themselves will save labour costs
  • 39. Printed on 100% Recycled Paper -37- significantly. Electric motors have lower maintenance requirements than combustion engines further reducing labour costs. Labour typically makes up ~20% of an airlines total operating costsxxv. In theValhallaProject system the operation of lighter-then-air Unmanned Aerial Vehicles plus the fact that they only carry immobile freight and fly predominantly over the sea substantially reduces physical risks to the aircraft itself and to people and property on the ground when compared to the conventional jet network. This reduced risk will lead to cost savings especially in regards to insurance. The recurring annual cost relating to the airships is for the maintenance of hardware11. In modern airlines, maintenance is required at regular intervals and is broadly divided into Line maintenance and Heavy maintenance. Whilst Line maintenance will occur at each of the 10 Ground Ports the Heavy maintenance will be conducted at a special Maintenance, Repair and Overhaul facility. Compared to normal airline industry standards, a conservative estimate of 1 day and 12 days to complete these respective checks is given, with cost per maintenance check also considered12. A conservative buffer of 10% is applied to line maintenance tasks. The fleet of 10 Valkyries is expected to be fully operational for 300 days per year. The annual operating costs relating to the maintenance of ground facilities ground software are assumed to be a function of the initial development costs13. It will be valuable to include improved software as it becomes available to improve the efficiency and profitability of the operation. Table 12: Operational and Maintenance Costs Operations domain Item Cost (million USD) Refer Appendix Air Maintenance for Valkyrie aircraft (10 units) 195 XV Ground Software maintenance 30 XII Ground Ground based hardware maintenance 57 XII ANNUAL COST 282 At this initial stage of this project, tax, depreciation and inflation rates have not been considered. Inflation will differ across the respective countries and is a function of the management of monetary policy from the respective governments. Predictions vary widely and incorporating this unpredictable element has been ignored for purposes of simplicity. Whilst domiciled in Singapore theValhallaProject spans several countries and may be subject to specific legislation. As mentioned earlier, it can be expected that a large portion of the capital required will come from the governments of ASEAN nations, their return on investment will be derived from taxes, dividends and share sales. Depreciation is assumed at the industry standard of 25 years for stationary renewable energy generation facilities and 25 years for aircraft. Revenues The revenue of theValhallaProject will be derived from the core service (air cargo transport) and ancillary services (renewable electricity, hydrogen and desalinated water production). 11 Refer Appendix XVI 12 Refer Appendix XVI 13 Refer Appendix XV
  • 40. Printed on 100% Recycled Paper -38- Core service revenue TheVallhallaProject will aim to sustainably undercut the incumbent jet-powered air cargo network by an average of 15%. To calculate an initial estimate of the average revenue per tonne kilometre and inturn the forecast annual revenues we must consider the pricing of the three largest air freight providers in the ASEAN region: DHL, FedEx and UPS and find the lowest average revenue per tonne kilometre. Due to the several global players in this market place it is be assumed that efficient competition is taking place with pricing driven by underlying fundamental costs and that only a small profit margin (1-10%) is being derived as is the usual case in the airline industry. These three companies each have a public facing online calculator and rack rate sheet for potential customers to estimate the price to ship goods between cities. These calculations show the project has immense revenue potential, including a forecast revenue of US$962m for the first year of operation with just 10 Valkyrie airships covering the ASEAN nations route network. Figure 17. Association of South East Asian Nations Region ASEAN countries highlighted in yellow
  • 41. Printed on 100% Recycled Paper -39- Table 13: Average Flight Distances Flight Distances (km) Bandar Seri Begawan (Brunei) Phnom Penh (Cambodia) Jakarta (Indonesia) Vientiane (Laos) Kuala Lumpur (Malaysia) Yangon (Myanmar) Manila (Philippines) Singapore (Singapore) Bangkok (Thailand) Hanoi (Vietnam) Bandar Seri Begawan (Brunei) 0.00 1327.00 1467.00 1987.00 1448.00 2434.00 1315.00 1253.00 1860.00 2063.00 Phnom Penh (Cambodia) 1327.00 0.00 1971.00 752.00 993.00 1108.00 1774.00 1140.00 536.00 1054.00 Jakarta (Indonesia) 1467.00 1971.00 0.00 2710.00 1180.00 2797.00 2779.00 889.00 2311.00 3011.00 Vientiane (Laos) 1987.00 752.00 2710.00 0.00 1640.00 696.00 1999.00 1849.00 517.00 481.00 Kuala Lumpur (Malaysia) 1448.00 993.00 1180.00 1640.00 0.00 1623.00 2466.00 317.00 1178.00 2027.00 Yangon (Myanmar) 2434.00 1108.00 2797.00 696.00 1623.00 0.00 2669.00 1909.00 575.00 1123.00 Manila (Philippines) 1315.00 1774.00 2779.00 1999.00 2466.00 2669.00 0.00 2391.00 2211.00 1754.00 Singapore (Singapore) 1253.00 1140.00 889.00 1849.00 317.00 1909.00 2391.00 0.00 1426.00 2195.00 Bangkok (Thailand) 1860.00 536.00 2311.00 517.00 1178.00 575.00 2211.00 1426.00 0.00 985.00 Hanoi (Vietnam) 2063.00 1054.00 3011.00 481.00 2027.00 1123.00 1754.00 2195.00 985.00 0.00 Average Trip Distance (km) 1683.78 1183.89 2123.89 1403.44 1430.22 1659.33 2150.89 1485.44 1288.78 1632.56 The great circle distances in kilometres between each city pair on the proposed route network TheValhallaProject route design provides that Singapore will be the centre of the network hub thus the estimated average revenues per tonne kilometre are based from this central location. Table 14: DHL Pricing Origin Destination Distance (km) Transit time (hours @200kmh) DHL Zone DHL quote per 1000kg (SGD) DHL quote per 1000kg (US$) VP 15% under-cut (US$) Revenue (US$ per 100 tonne cargo sector) Revenue (US$ per KM per 100 tonne cargo) Singapore Bandar Seri Begawan (Brunei) 1253 6.25 2 $12,620 10,853 9,225 922,500 736 Singapore Phnom Penh (Cambodia) 1140 5.70 6 $31,120 26,763 22,748 2,274,800 1995 Singapore Jakarta (Indonesia) 889 4.45 2 $12,620 10,853 9,225 922,500 1037 Singapore Vientiane (Laos) 1849 9.24 6 $31,120 26,763 22,748 2,274,800 1230 Singapore Kuala Lumpur (Malaysia) 317 1.58 1 $7,440 6,398 5,438 543,800 1715 Singapore Yangon (Myanmar) 1909 9.54 6* $31,120 26,763 22,748 2,274,800 1191 Singapore Manila (Philippines) 2391 11.95 2 $12,620 10,853 9,225 922,500 385 Singapore Bangkok (Thailand) 1426 7.13 2 $12,620 10,853 9,225 922,500 649 Singapore Hanoi (Vietnam) 2195 10.97 3 $13,480 11,592 9,853 985,300 448 Averages N/A 1,486.44 7.42 N/A N/A N/A N/A 1,543,166 1,042 DHL pricing in the ASEAN region to give average sector revenues Assumptions:  *DHL doesn’t presently ship to Myanmar so assumed similar to Cambodia  FX rate between SGD and USD is assumed to be SGD$1 = USD$ 0.86 Quote specifications:  1000kg non-document by 9am next business day (Express 9am Service)  Using conservative lowest revenue calculation methodology  Prices calculated from the listed DHL freight rack rates. http://www.dhl.com.sg/content/dam/downloads/sg/express/shipping/dhl_express_rate_and_transit_sg.pdf  Uses the ‘Non-Document above 30kg multiplier rate’ per kg: ZONE 1: (1000kg x 7.44) = $7,440 ZONE 2: (1000kg x 12.62) = $12,620
  • 42. Printed on 100% Recycled Paper -40- ZONE 3: (1000kg x 13.48) = $13,480 ZONE 6: (1000kg x 30.12) = $31,120 Table 15: FedEx Pricing Origin Destination Distance (km) Transit time (hours @200kmh) FedEx quote per 1000kg (SGD$) FedEx quote per 1000kg (US$) VP 15% under-cut (US$) Revenue (US$ per 100 tonne cargo sector) Revenue (US$ per KM per 100 tonne cargo) Singapore Bandar Seri Begawan (Brunei) 1253 6.25 16,960 14,585 12,397 1,239,700 989 Singapore Phnom Penh (Cambodia) 1140 5.70 35,568 30,588 25,999 2,599,900 2280 Singapore Jakarta (Indonesia) 889 4.45 9,243 9,948 8,455 845,500 951 Singapore Vientiane (Laos) 1849 9.24 35,560 30,581 25,993 2,599,300 1405 Singapore Kuala Lumpur (Malaysia) 317 1.58 7,020 6,037 5,131 513,100 1618 Singapore Yangon (Myanmar) 1909 9.54 35,568 30,588 25,999 2,599,900 1361 Singapore Manila (Philippines) 2391 11.95 9,240 7,946 6,754 675,400 282 Singapore Bangkok (Thailand) 1426 7.13 9,240 7,946 6,754 675,400 473 Singapore Hanoi (Vietnam) 2195 10.97 9,240 7,946 6,754 675,400 307 Averages N/A 1,486.44 7.42 N/A N/A N/A 1,258,177 1,074 FedEx pricing in the ASEAN region to give average sector revenues Assumptions  Using 50kg freight packages and lowest price publicly available freight rack rate  *FedEx doesn’t presently ship to Myanmar so assumed similar to Cambodia  FX rate between SGD and USD is assumed to be SGD$1 = USD$ 0.86 Quote specifications:  50kg non-document by 9am next business day x 20 = 1000kg  Using conservative lowest revenue calculation methodology  Prices calculated from the listed FedEx Singapore freight rack rates.  https://www.fedex.com/ratefinder/standalone Table 16: UPS Pricing Origin Destination Distance (km) Transit time (hours @200kmh) UPS quote per 1000kg (SGD$) UPS quote per 1000kg (US$) VP 15% under-cut (US$) Revenue (US$ per 100 tonne cargo sector) Revenue (US$ per KM per 100 tonne cargo) Singapore Bandar Seri Begawan (Brunei) 1253 6.25 8,600 7,396 6,286 628,600 501 Singapore Phnom Penh (Cambodia) 1140 5.70 44,100 37,926 32,237 3,223,700 2827 Singapore Jakarta (Indonesia) 889 4.45 8,600 7,396 6,286 628,600 707 Singapore Vientiane (Laos) 1849 9.24 44,100 37,926 32,237 3,223,700 1743 Singapore Kuala Lumpur (Malaysia) 317 1.58 5,400 4,644 3,947 394,700 1245 Singapore Yangon (Myanmar) 1909 9.54 44,100 37,926 32,237 3,223,700 1688 Singapore Manila (Philippines) 2391 11.95 8,600 7,396 6,286 628,600 262 Singapore Bangkok (Thailand) 1426 7.13 8,600 7,396 6,286 628,600 440 Singapore Hanoi (Vietnam) 2195 10.97 18,400 15,824 13,450 1,345,000 612 Averages N/A 1,486.44 7.42 N/A N/A N/A 1,485,022 1,113 UPS pricing in the ASEAN region to give average sector revenues Assumptions  *UPS doesn’t presently ship to Myanmar so assumed similar to Cambodia  FX rate between SGD and USD is assumed to be SGD$1 = USD$0.86 Quote specifications:  1000kg freight rate  Using conservative lowest revenue calculation methodology  Prices calculated from the listed UPS Singapore freight rack rates.  https://ups.com/content/sg/en/shipping/cost/download.html
  • 43. Printed on 100% Recycled Paper -41- The above calculations show that FedEx currently has the lowest average sector revenue per 100 tonnes of air cargo on the proposed route network of theValhallaProject: US$1,258,177 A 15% reduction on this gives a best-case average sector revenue for theValhallaProject of: US$1,069,459 Given that the rates used above are the public commercial rack rates of these air cargo providers we will assume a worst-case average sector revenue 10 times lower than this: US$106,945 We will assume 300 operational days per year. The number of operational days was determined allowing for scheduled maintenance and a conservative buffer for unforeseen delays, for example due to severe weather such as typhoons sometimes found in the region. The Valkyrie aircraft are intended to operate 24hours per day as theValhallaProject automated concept allows for quick turnaround times, thus enabling an average of three eight-hour trips per day. Fundamental to the profitability of this project these aircraft only earn money when airborne so high utilisation rates are important. Capacity growth for theValhallaProject is given at a steady ten additional airships per year to catch up to current levels of intra-ASEAN air cargo demand by the tenth year of operations. It is assumed that the high levels of demand growth predicted by IATA forecasts for the ASEAN region will occur. As such the optimistic revenue calculations includes a rapid fleet growth for the number of airships used in the network. According to IATA forecasts the demand for intra-ASEAN air cargo transport is expected to have grown 320% from 2007 levels by the proposed tenth year of operations in 2028, leaving substantial unmet demand. Therefore, assuming:  US$106,945 worst-case revenue per sector  3 sectors per Valkyrie aircraft per day  10 Valkyrie aircraft  300 operational days per year Indicative core revenue in Year 1 of operation is calculated as: = US$962,513,100 Transporting 900,000 tonnes of air cargo Core service revenue potential is substantial. Worst-case first 10-Year Accumulated Core Revenue: US$9,625,131,000
  • 44. Printed on 100% Recycled Paper -42- Ancillary service revenue By the time theValhallaProject is implemented the demand for hydrogen sourced from renewable means is predicted to be significantly larger. TheValhallaProject can sell excess hydrogen onto the market. Whilst hydrogen is currently priced around ~$1.80 per kgxxvi, due to the unknown nature of the long term hydrogen price and the unknown nature of excess supply no estimations for revenues from this potential ancillary business have been considered. The project will also be able to sell excess renewable electricity and desalinated water. Operations will be optimised for the highest profitability. These ancillary revenues options using the foundation ground infrastructure means that if flight operations of the Valkyrie network are suspended for whatever reason the ground-based infrastructure will still deliver a return on investment rather than being stranded assets.
  • 45. Printed on 100% Recycled Paper -43- Triple Bottom Line Benefits Economic 1. As theValhallaProject uses no fossil fuel it will improve the ASEAN regions’ balance with OPEC nations improving the balance of trade. This current trade deficit is driven on the back of a significant cash outflow to pay for crude oil needs. This will keep money in the ASEAN economy, where it will be improving the standards of living of the ASEAN peoples. 2. It will inject a wealth of technological knowledge into the region, leading to innovative new technology businesses. 3. It will improve the facilitation and flow of goods around the ASEAN region providing economic benefits. 4. It will reduce the cost to transport goods around the ASEAN region. 5. It will reduce the flow of air cargo revenues back to the multinational home countries beyond the ASEAN borders. Social 1. TheValhallaProject improves regional interdependence (the countries involved increasingly depend on each other for trade and as a result increasingly communicate with one another) which promotes regional peace and stability. 2. It will create numerous jobs due to its development scale, and because it will lower the cost of regional goods transportation and in turn lower the cost of manufacturing high value products in the ASEAN region more manufacturing will occur, producing more jobs. 3. Creates local sources of high quality desalinated water (which can be used for local scientific and medical purposes or as a source of clean drinking water) with health benefits. 4. Creates local sources of renewable hydrogen which will be a catalyst driver of the transition towards the ASEAN hydrogen economy. 5. Creates local sources of renewable energy which will help drive further renewable sources. Environmental 1. It reduces the amount of greenhouse gas being released into the atmosphere by eliminating the requirement to burn jet fuel to move each tonnene of air cargo. 2. The renewable energy infrastructure package needed for each airship port will establish a renewable energy sector in each ASEAN country which will transition the region away from dirty fossil fuel.. 3. Establishes a base market supply of hydrogen from which hydrogen economies (for instance hydrogen fuel cell ground transport fleets) can be grown reducing the need for batteries made out of rare earths that can be dangerous to health and the environment if disposed of incorrectly.
  • 46. Printed on 100% Recycled Paper -44- General Comments Today’s growing worldwide awareness and acceptance of climate change science and the foreseen need for sustainable market transformation will change our way of life. At the same time as mankind are becoming aware of the implications of global warming, fortunately fossil fuel oil costs are continuing to trend upwards (as a result of diminishing supply and accessibility) whilst renewable energy costs continue to trend downwards (on the back of improved technology). Continuing compounding world economic growth has set up a market that is becoming increasingly willing to investigate and adopt game changing technologies to pursue increased business growth, even more so if it has the side effect of improving sustainability. This venture is similar to all such commercial aviation projects – it is incredibly ambitious and capital intensive. It is said “you need a small fortune to make a large fortune in the aviation industry”; theValhallaProject is an ideal example. This project will provide a first leap in achieving a workable large-scale solution to the global air transport energy conundrum and provides significant steps towards achieving the aviation industry aspirational goal set by Giovanni Bisignani, President of the International Air Transport Association in 2007 for a “zero emissions” aviation industryxxvii. All of the individual technologies proposed in this document have been proven and development is ongoing14. There is no reason to suspect that the rate of development of these technologies will slow in the future, rather the opposite as investment in these areas increases, reducing costs. As a result we anticipate further avenues to improve upon the stated aims of theValhallaProject. TheValhallaProject does not suggest any concepts for which a solution has not previously been proven; it is, however, the first to propose a synergy of many technologies in a creative and feasible way. This technology integration combined with a workable implementation strategy will lead to highly favourable returns and wider community benefits. The scope for major spin off ventures from technology synergies proven by theValhallaProject, such as unmanned hydrogen fuel cell powered freight train networks, is considerable. In 1961 one person proposed a revolutionary mission statement which became the mission statement from which Airbus, the world’s leading aircraft manufacturer, would grow ; “For the purpose of strengthening European co-operation in the field of aviation technology and thereby promoting economic and technological progress in Europe, to take appropriate measures for the joint development and production of an airbus.” Last year Airbus’ revenue exceeded $100billion. TheValhallaProject seeks similar bold goals to that of Airbus, and raises the benchmark even higher with its noble vision. We need a revolutionary ‘clean’ trade conveyor belt system for our globalized world… theValhallaProject will be it. 14 Refer Appendix IX
  • 47. Printed on 100% Recycled Paper -45- Final Point Implementation of theValhallaProject is in the best interests of all stakeholders; the shareholders, the governments involved, the world, and you. “…for the benefit of all mankind”
  • 48. Printed on 100% Recycled Paper -46- Appendices CONTENTS PAGE Appendix I 46 Appendix II 47 Appendix III 48 Appendix IV 49 Appendix V 50 Appendix VI 51 Appendix VII 53 Appendix VIII 54 Appendix IX 55 Appendix X 56 Appendix XI 57 Appendix XII 58 Appendix XIII 60 Appendix XIV 61 Appendix XV 63 Appendix XVI 65
  • 49. Printed on 100% Recycled Paper -47- Appendix I) Crude oil prices will continue their inevitable trend upwards over the long-term
  • 50. Printed on 100% Recycled Paper -48- Appendix II) Airfreight between Asian countries (including ASEAN members) continues to be a rapidly growing
  • 51. Printed on 100% Recycled Paper -49- Appendix III) Airfreight between Asian countries (including ASEAN members) continues to be substantial
  • 52. Printed on 100% Recycled Paper -50- Appendix IV) IATA Calls for a zero emissions future “A growing carbon footprint is no longer politically acceptable-for any industry. Climate change will limit our future unless we change our approach from technical to strategic. Air transport must aim to become an industry that does not pollute - zero emission.” - International Air Transport Association CEO Giovanni Bisignani, 4 June 2007
  • 53. Printed on 100% Recycled Paper -51- Appendix V) Labour and Fuel are the two single largest total operating costs items of the air transport industry “Based on a sample of the financial reports of 45 major global airlines, fuel accounted for 25.5% of total operating costs, whilst labour accounted for 23.3%. Therefore, it can be said that jet fuel and labour make up 48.8% of total operating costs of the average airline.” -International Air Transport Association (IATA), June 2007 Economic Briefing
  • 54. Printed on 100% Recycled Paper -52- Appendix VI) Fossil Jet Fuel Saving Analysis: Example Route: Average Sector Length for Initial Route Network 1,486.44 KM (1,000.29 NM) Aircraft: 747-400F Structural limit payload: 112,630kg (112 tonnes)15 Cargo Capacity (cubic metres) Main Deck: 604.5 Lower Deck: 173.3 Total= 777.8m³ Source: the Boeing Company Max Jet Fuel Capacity: 21,6840litres Source: the Boeing Company Engines: Model: CF6-80C Thrust (per engine): 264kn (59,000lbs)16 Jet Fuel And Times17 Block Fuel 1000nm 20,090kg Block Fuel 2000nm 39,970kg Block Fuel 4000nm 77,770kg Block Time 1000nm 149minutes Block Time 2000nm 272minutes Block Time 4000nm 516minutes THEREFORE: Interpolated: Approx 20kg jet fuel combusted per nautical mile 20 x 1000 ≈ 20,000 kg combusted on average route Jet Fuel Prices: Spot Price Singapore: 198.07 cents per gallon18 Conversion: JET A1 AVTUR 1 US Gallon equal 3 kg 20,000  3 = 6,666.66 US Gallon 6,666  198.07 = US$ 13,203.34 US Gals  Cents per gallon= cost of combusted flight fuel 15 The Boeing Company 16 The Boeing Company 17 ACAS May 2007 18 US Dept. of Energy, August 2007
  • 55. Printed on 100% Recycled Paper -53- 13,203.34  112,630 = US$0.117 per kg US$ flight fuel divided by max payload kilograms = fuel cost per kilogram Jet Fuel Cost Per Tonne of Freight: US$117.22 Current cost of airfreight per tonne Sydney-Auckland (similar route sector distance of 1300nm) $800-$1000per tonne19 Ergo: The elimination of jet fuel outgoings and labour costs would indicatively enable theValhallaProject to undercut jet-powered incumbent competitors pricing by ~15%. In addition: - As fuel prices increase the above percentage will increase further - The jet fuel ‘spot price’ was not the record high, simply a recent random sample. - This example is prior to considering money saved by not having a flight crew or reloading/refuelling crew expected to be approximately another ~10%. - Savings as a result of nil carbon liability will even further improve percentage. Time/Distance comparison: Assume zero winds and optimum flight levels on a typical 1400km theValhallaProject flight sector where Singapore is the hub. Jet Aircraft (747freighter): 755 kph – 12.5km per minute Valkyrie: 200 kph – 3.3km per minute Sea Shipping: 37 kph (20kts) - 0.6km per minute Jet Aircraft: 1400km divide by 12.5= 112 minutes = 1.87 hours Valkyrie: 1400km divide by 3.3 = 424 minutes= 7.07 hours Sea Shipping: 1400km divide by 0.6 = 2,333 minutes = 38 hours (≈1.6days) Ergo: TheValhallaProject can conduct this route comfortably within the 24 hour premium ‘express post’ timeframe and therefore is on an equal footing with jet transport. 19 Source: DHL Website
  • 56. Printed on 100% Recycled Paper -54- Appendix VII) - ASEAN Secretariat, 1997xxviii
  • 57. Printed on 100% Recycled Paper -55- Appendix VIII) The etymology of the terminology “Valhalla” and “Valkyrie” TheValhallaProject derives its name from Norse mythology, in which ‘Valhalla’ is similar to the western interpretation of a place called ‘Heaven’, and where a ‘Valkyrie’ is the equivalent of an ‘Angel’. - Valhalla, (1896) by Max Brückner - Valkyrie (c. 1905) by Emil Doepler
  • 58. Printed on 100% Recycled Paper -56- Appendix IX) The technologies critical to this project are proven: Solar hydrogen fuel cell system http ://www.youtube.com/watch?v=SIlWE5LeMQs Thrust Augmentation Model http ://youtube.com/watch?v=TogmLM2ACrc Solar Airship Model http://youtube.com/watch?v=0VBTKEPAzvA High Speed Airship Model http://youtube.com/watch?v=gANM4lduB-w Auto-land http://youtube.com/watch?v=uYB4NOv_I7Q Fuel Cell http://youtube.com/watch?v=oy8dzOB-Ykg Fuel Cell Aircraft (prop driven) http://youtube.com/watch?v=s4NSUA-soKs UAV(Unmanned aerial vehicle) http://youtube.com/watch?v=bsowPKvcIxo http://youtube.com/watch?v=KLTK_xwPAl0 ADS-B(Traffic management) http://www.airspacemag.com/issues/2006/october- november/how_things_work.php Highway-In-The-Sky (HITS)(Air navigation) http://www.urf.com/madl/papers/Dascpaper.pdf Model Airship company http://hyperblimp.com/ Leading photo voltaic companies http://www.conergy.de/en/desktopdefault.aspx http://www.csgsolar.com/pages/product.php?lang=en Cheap flexible solar panel research http://www.research.uky.edu/odyssey/winter07/green_energy.html Wind Turbines http://www.roaring40s.com.au/home.html Automatic Air-to-Air refuelling(For airship docking/landing system) http://www.youtube.com/watch?v=4W8CofT9-kE Predictive rather than reactive landing system using Doppler wind radar. http://mirror.bom.gov.au/products/IDR02I.loop.shtml?looping=0&reloaded=0&to pography=true&locations=true&range=true#skip Spray on Solar Panels http://www.research.uky.edu/odyssey/winter07/green_energy.html
  • 59. Printed on 100% Recycled Paper -57- Appendix X) The electrochemical process of a hydrogen fuel cellxxix
  • 60. Printed on 100% Recycled Paper -58- Appendix XI) A diagram of the global distribution of average solar insolation factors that indicates the suitably of the ASEAN region for solar photovoltaic stationary energy generation farms. It indicates that the ASEAN region could have reasonable solar resources available to it. Global solar insolation averages xxx
  • 61. Printed on 100% Recycled Paper -59- Appendix XII) Initial costing for each airship port ground facility At this stage costs are assumed based upon technical intuition. Item US$ Land 50,000,000 Hydrogen Production & Storage 10,000,000 Desalination Plant 10,000,000 Solar Farm 150,000,000 Wind Farm 150,000,000 Ground based cargo handling facility for 150 ULD units 46,875,000 Cargo pod loading 50,000,000 Airship docking & launch site 10,000,000 Valkyrie MRO Facility 50,000,000 Ground based sensor equipment for flights 1,000,000 Local Control Centre 1,000,000 Total $532,000,000 Comments/Assumptions for Capital Items: Land purchase: TheValhallaProject will purchase the land and surrounding water for constructing the various ground facilities and well as land for the solar/wind farms. It is expected that the success of theValhallaProject is based on getting the governments of the ASEAN countries on board. The ASEAN Governments own the land and a nominal price estimated for the use of this land so this land cost is conservatively excessive. Hydrogen Production & Storage: The renewable hydrogen production facility will split the purified water from the desalination plant into Hydrogen and Oxygen gas, pressurising and liquefying it. This is an assumption for the cost of developing such a production facility. No data is available to make a comparison as no similar facility could be found. This will include the respective storage tanks for hydrogen before being loaded onto the airships. Desalination Plant: To service the hydrogen fuel requirements desalinated water is demanded. Approximately 313,538 litres per day are required. A desalinization facility to service this demand will cost in the order of US$10 million. Solar Farm / Wind Farm: As was established in the initial technical feasibility review each ground port will require approximately 794,000MWh per year which will require a wind farm of about 259MW. In 2012 it currently costs about US1.3 million per MW of installed capacity so it can be presumed that the Solar Farm / Wind Farm will cost around US$300 million per ground site. Total installed capacity required per ground port ~260MW US$ million Solar Farm (50%) 150 Wind Farm (50%) 150 TOTAL COST 300
  • 62. Printed on 100% Recycled Paper -60- Ground based air cargo-handling facility: The worlds’ largest fully automated air cargo collection and distribution facility currently in operation is the HACTL development located at Hong Kong airport. TheValhallaProject intends to implement a similar facility but scaled down to suit more modest freight demands, although allowing growth for increased demand. For costing purposes, HACTL cost US$1bn to buildxxxi and has capacity for 3200 ULD units; we have expected demand for 150 units and have proportioned the cost to give US$46 million per facility. This includes the costs associated with developing the systems that are now already being used. The final cost should be lower than this, but we will ignore this for further financial analysis. Ground based cargo handling facility HACTL development cost Cost per unit capacity HACTL 3200 ULD units capacity US$1billion $312,500 Water based cargo pod loading: To transport the cargo pod from the cargo facility to the airship launch site will require a permanent bridge and a rotatable docking platform. No easy comparison could be made so an estimate is made to cover the design and production of such a structure Airship docking & launch site: An assumption for the cost of the launch and dock facility is made at this stage. Valkyrie MRO Facility: A cost comparison is made to a current large-scale modern Maintenance Repair and Overhaul (MRO) facility is made. Boeing, one of the largest aircraft manufacturers has recently invested in India to provide an MRO. This cost is scaled down by 50% for theValhallaProject as the number of airships is fewer with less stringent maintenance requirements as they are cargo only, not passenger operations. Boeing’s MRO site is US$100million.xxxii Realistically a MRO will not be required at every ground port but are included here for worst-case consideration. Ground based sensor equipment for flights: The appropriate ground based sensors used for ascertaining weather for low level airship movements, arrivals and departures is another assumed cost at this stage. Incorporated will be optical infrared sensors, humidity, pressure, temperature and predictive wind equipment. Local Control Centre: In order to house all the computing power and keep it water and weather proof and in good working order, an enclosed building needs to be provided with appropriate cooling fans etc. This will allow for the command and coordination centre to integrate all the automated process from the wind/solar farms to the loading/un-loading of cargo and exact flight path to be taken by the airships. Total: This is the estimated cost of the total ground hardware per airship port facility. Ten of these ports are intended to be in action from day one operations.
  • 63. Printed on 100% Recycled Paper -61- Appendix XIII) Software development costs for ground facility This will form the software development element for the ground-based facilities of theValhallaProject. Since this software is going to be very advanced, a generous estimate + buffer is given for the various categories below. There is a one-off software development cost for each item. Only one total development cost for this software should be incurred in the financial considerations of theValhallaProject. At this stage costs are assumed based upon ballpark technical intuition. Item US$ Cargo Loading / Link 10,000,000 Ground-Air / Link 20,000,000 Airship Flight Control 50,000,000 Automated Refuelling 10,000,000 Automatic Hydrogen/Wind/Solar Control 10,000,000 Total $100,000,000
  • 64. Printed on 100% Recycled Paper -62- Appendix XIV) Airship R&D cost and manufactured unit cost At this stage costs are assumed based upon ballpark technical intuition. Category Item US$ m Hardware Airframe & Envelope 500 Helium storage and lines 100 Automated cargo and docking hardware 250 Integrated solar PV panels 50 Control surfaces and linkages 25 Avionics and servos 25 Impact resistant under-belly 25 Regulatory approval and flight testing 50 Total 1,000 Power system Buoyancy control 60 Hydrogen storage tanks 120 Engine and fuel cell design 40 Engine approval and testing 10 Thrust vectoring 80 Total 310 Software Auto-docking/launch 100 Thrust control unit (FADEC) 50 Predictive Doppler Weather Radar 35 Automatic Flight Control 50 Automatic Buoyancy Management 25 Ground-Air Data Link 40 Traffic Collision and Avoidance System (TCAS) 5 Global Positioning Satellite (GPS) 5 Ground Proximity Warning System (GPWS) 5 Total 315 Total Valkyrie Airship R&D 1,625 Valkyrie Airship Unit Cost Subsequent indicative manufactured unit cost of airship in full scale production Optimistic 10 % $162,500,000 Likely 15 % $243,750,000 Pessimistic 20 % $325,000,000 TheValhallaProject includes airships as the chosen mode of transport to facilitate this revolutionary air cargo network. As such significant capital will be required to develop a suitable design and prove the flight envelope. It can be expected that the current cost of development of a world airliner, will be far greater than our airship as we do not need to cater for passenger requirements. An appropriate comparison can be made to the US$350million A380 designed by Airbus, this had a reported research and development cost of US$11 billion. A conservative assumption based upon this ratio of R&D cost to manufactured unit cost drives the indicative manufactured unit cost
  • 65. Printed on 100% Recycled Paper -63- Technology used in the Valkyrie will be off-the-shelf wherever possible (such as the software and hardware used in modern airliners to drive TCAS, GPS, GPWS, Auto-pilot and Flight Directors) however, much of the technology and system integration will be new and complex which could lead to cost unknowns.
  • 66. Printed on 100% Recycled Paper -64- Appendix XV) Recurring annual ground site costs These are the annual costs with maintaining each ground based airship port. This is the summary of a sensitivity analysis. At this stage costs are assumed based upon ballpark technical intuition. These costs are assumed to be a percentage function of the original development capital costs. HARDWARE ITEM % of Original development cost Original development cost per ground port US$ Maintenance cost US$ p.a. Hydrogen Production & Storage 10,000,000 Optimistic 10 1,000,000 Likely 15 1,500,000 Pessimistic 20 2,000,000 Desalination 10,000,000 Optimistic 10 1,000,000 Likely 15 1,500,000 Pessimistic 20 2,000,000 Solar Farm 150,000,000 Optimistic 5 7,500,000 Likely 10 15,000,000 Pessimistic 15 22,500,000 Wind Farm 150,000,000 Optimistic 5 7,500,000 Likely 10 15,000,000 Pessimistic 15 22,500,000 Automated cargo handling 50,000,000 Optimistic 10 5,000,000 Likely 15 7,500,000 Pessimistic 20 10,000,000 Airship cargo loading 50,000,000 Optimistic 10 5,000,000 Likely 15 7,500,000 Pessimistic 20 10,000,000 Airship docking & launch site 10,000,000 Optimistic 10 1,000,000 Likely 15 1,500,000 Pessimistic 20 2,000,000 MRO Facility 50,000,000 Optimistic 10 5,000,000 Likely 15 7,500,000 Pessimistic 20 10,000,000 Weather sensors 1,000,000 Optimistic 10 100,000 Likely 15 150,000 Pessimistic 20 200,000 Control Centre 1,000,000 Optimistic 10 100,000 Likely 15 150,000
  • 67. Printed on 100% Recycled Paper -65- Pessimistic 20 200,000 Total Optimistic 33,200,000 Likely 57,300,000 Pessimistic 81,400,000 SOFTWARE ITEM % of Original development cost Original development cost US$ Maintenance cost US$ p.a. Cargo Loading Link 10,000,000 Optimistic 20 2,000,000 Likely 30 3,000,000 Pessimistic 40 4,000,000 Ground-Air Link 20,000,000 Optimistic 20 4,000,000 Likely 30 6,000,000 Pessimistic 40 8,000,000 Airship Flight Control 50,000,000 Optimistic 20 10,000,000 Likely 30 15,000,000 Pessimistic 40 20,000,000 Automated Refuelling 10,000,000 Optimistic 20 2,000,000 Likely 30 3,000,000 Pessimistic 40 4,000,000 Auto Hydrogen/Wind/Solar Control 10,000,000 Optimistic 20 2,000,000 Likely 30 3,000,000 Pessimistic 40 4,000,000 Total Optimistic 20,000,000 Likely 30,000,000 Pessimistic 40,000,000
  • 68. Printed on 100% Recycled Paper -66- Appendix XVI) Recurring Valkyrie Aircraft Maintenance Costs Maintenance Checks/year Cost/check Cost/airship US$ Aircraft Total maintenance US$ million Line Maintenance (‘A Check’) 25 20,000 500,000 10 5 Heavy Maintenance (‘C Check’) 2 200,000 400,000 10 4 Total Maintenance cost 9 Safety and on-time performance is very important to theValhallaProject, as such appropriate maintenance will need to be regularly carried out. For simplicity we will broadly apply the same maintenance checks as carried out by conventional fixed-wing regular passenger transport operations. Airliners have periodic 'line checks' (A-Check) every 400 flight hours and a more intensive heavy maintenance (C-Check), normally 4000 flight hours. It is estimated that A-Checks will take 1 day to complete and C-Checks will take 12 days. This will need to be allowed for in scheduling, when determining total days of operation. A Check: approx every 400 hours with a 10% buffer = every 360hrs; roughly equivalent to every 15 days, 1 day required. C Check: every 4000 hours, every 6 months; 12days required An A-Check includes the daily check, opening of access panels to check and service certain items of equipment. Some special tooling, servicing and test equipment is required. A C-Check is a more detailed check of individual systems and components for serviceability and function. Requires detailed inspections and checks; a thorough visual inspection of specifies areas, components and systems. Involves extensive specialised tooling, test equipment and special skill levels. Includes the lower checks; A and daily. There little room for variance amongst the optimistic, likely and pessimistic scenarios here. It is a will be policy and a legal requirement to conduct regular comprehensive maintenance. As per the ground station software, the airborne software element will have an annual service cost estimated to be 20% of the estimated US$650m initial development cost. Software updates/renewal % of initial development cost p.a. US$ million Optimistic 20 130 Likely 30 195 Pessimistic 40 260
  • 69. Printed on 100% Recycled Paper -67- i Tyler, T (2013) Climate change is a top global priority, and the aviation industry takes its responsibility seriously, International Air Transport Association, viewed 1 July 2013, http://www.iata.org/pressroom/Documents/OpEd-Climate- change-is-top-global-priority-February2013.pdfprotection/Documents/STATEMENTS/AccraGhana_IataPresentation.pdf ii Pond, S (2013) Sustainable Fuels for the Global Aviation Market, United Stated Studies Centre, viewed 20 June 2013, http://aisaf.org.au/sites/aisaf/media/21.pdf iii Industrial Services Inc. A potential industrial desalinisation partner http://www.desalt.net/ iv Airline Fuel Costs Fact Sheet 2011, International Air Transport Association, viewed 1 July 2013, http://www.iata.org/pressroom/facts_figures/fact_sheets/pages/fuel.aspx v Airline Labour Cost Share 2010, International Air Transport Association, viewed 1 July 2013, http://www.iata.org/whatwedo/Documents/economics/Airline_Labour_Cost_Share_Feb2010.pdf vi Air cargo market overview, International Air Transport Association, viewed 15 February 2013, http://www.iata.org/whatwedo/cargo/Pages/index.aspx vii World Air Cargo Forecast 2013, Boeing Commercial Airplanes, viewed 17 March 2013, http://www.boeing.com/commercial/cargo/wacf.pdf viii World Air Cargo Forecast 2013, Boeing Commercial Airplanes, viewed 17 March 2013 http://www.boeing.com/commercial/cargo/wacf.pdf ix Lincs Wind Farm Key Statistics, 4offshore, viewed 25 June 2013, http://www.4coffshore.com/windsfarms/lincs-united- kingdom-uk13.html x Collgar Wind Farm Key Statistics, Collgar Wind Farm, viewed 25 June 2013, http://www.collgarwindfarm.com.au xi Diagram: Desalinisation, h2oz, viewed 1 September 2012, http://www.h2oz.org.au/_uploads/30105image001.jpg xii Hydrogen characteristics, Hypertextbook, viewed 20 August 2006, http://hypertextbook.com/facts/2005/MichelleFung.shtml xiii Aerostack, Horizon Fuel Cells, viewed 17 January 2013, http://www.horizonfuelcell.com/#!aerostacks-200w- 1kw/c1n6l xiv Hydrogen and Fuel Cells Forecast, U.S. Department of Energy, viewed 7 March 2013, http://www1.eere.energy.gov/hydrogenandfuelcells/accomplishments.html xv Quantum achieves world record for lightweight hydrogen storage tanks, PR Newswire, viewed 25 June 2013, http://www.prnewswire.com/news-releases/quantum-achieves-world-record-for-lightweight-hydrogen-storage-tanks- 76142332.html xvi High performance electric motors, PM Flight Link, viewed 12 July 2013, http://www.pmlflightlink.com/motors/hipa_drive.html xvii U.S. current hydrogen production – hydrogen economy, Wikipedia, viewed 24 June 2013, http://en.wikipedia.org/wiki/Hydrogen_economy#Perspective:_current_hydrogen_market_.28current_hydrogen_econo my.29 xviii Electrolysis of water – current technology, Wikipedia, 13 June 2013, http://en.wikipedia.org/wiki/Hydrogen_economy#Electrolysis_of_water xix Hydrogen production from water, Phys, 1 June 2013, http://phys.org/news111926048.html xx Desalinisation, Wikipedia, viewed 14 June 2007 http://en.wikipedia.org/wiki/Desalination xxi FAQS, Wind Energy America, viewed 22 June 2013, http://www.windenergyamerica.com/faqs.html xxii How much do wind turbines costs, Wind Industry, viewed 5 September 2007, http://www.windustry.org/resources/how-much-do-wind-turbines-cost xxiii Hydrogen fuel cost vs gasoline, Heshydrogen, viewed 18 May 2013, http://heshydrogen.com/hydrogen-fuel-cost-vs- gasoline/ xxiv Airline Fuel Costs Fact Sheet 2011, International Air Transport Association, viewed 1 July 2013, http://www.iata.org/pressroom/facts_figures/fact_sheets/pages/fuel.aspx
  • 70. Printed on 100% Recycled Paper -68- xxv Airline Labour Cost Share 2010, International Air Transport Association, viewed 1 July 2013, http://www.iata.org/whatwedo/Documents/economics/Airline_Labour_Cost_Share_Feb2010.pdf xxvi Hydrogen fuel cost vs gasoline, Heshydrogen, viewed 18 May 2013, http://heshydrogen.com/hydrogen-fuel-cost-vs- gasoline/ xxvii Aviation’s zero emission future, International Air Transport Association, viewed 5 September 2007, http://www.iata.org/pressroom/pr/Pages/2007-06-04-02.aspx xxviii ASEAN Vision 2020, ASEAN Secretariat, viewed 16 July 2006, http://www.asean.org/news/item/asean-vision-2020 xxix Diagram: Electrochemical process of a hydrogen fuel cell, Western Australian Government, viewed 30 February 2007, http://www.dpi.wa.gov.au/ecobus/1206.asp xxx Diagram: Global solar factors, Thinkprogress, viewed 20 April 2013, http://thinkprogress.org/tag/australia/?mobile=nc xxxi HACTL Superterminal 1, Hong Kong Air Cargo Terminal Limited, 23 December 2007, http://www.hactl.com/en/service/facility.htm xxxii Boeing opens maintenance repair and overhaul facility, Boeing Commercial Airplanes, viewed 27 April 2013, http://www.boeing.com/news/releases/2006/q3/060829a_nr.html