AirbusA350_Feb2016
An Airbus A350 flies past during a preview aerial display of the Singapore Airshow at Changi exhibition center in Singapore, Feb. 14, 2016. REUTERS/Edgar Su

European plane maker Airbus Group SE and German industrial conglomerate Siemens AG signed a deal Thursday to work on hybrid electric-powered small planes. The two companies plan to pool in technical know-how and engineers to demonstrate the feasibility of various hybrid electric propulsion systems by 2020, they said in a joint statement.

The companies said they are working with a team of 200 engineers to develop the project. Hybrid-electric propulsion systems can significantly reduce fuel consumption of aircraft and reduce noise.

"We believe that by 2030 passenger aircraft below 100 seats could be propelled by hybrid propulsion systems and we are determined to explore this possibility together with world-class partners like Siemens," Airbus Group CEO Tom Enders said in the statement.

Airbus and Siemens said they would develop prototypes for various propulsion systems with power classes ranging from a few 100 kilowatts up to 10 and more megawatts, which could be used in short, local trips with aircraft below 100 seats, helicopters or unmanned aerial vehicles.

While Airbus intends to extend its capabilities in making system technologies required for electrically powered planes, Siemens is determined to establish hybrid-electric propulsion systems for aircraft as a future business, the statement said.

Airbus, which predominantly builds planes with passenger capacities more than 100, has invested more funds and research in recent years in incorporating electric engines in aero planes to cut fuel consumption — one of the highest costs for airline companies.

Last year, the plane manufacturer created a prototype of an electric two-seater plane that successfully crossed the English Channel. The two-seat demonstration plane was powered exclusively by lithium batteries and took 36 minutes to complete the journey.