Shipping is one of the most cost-effective and environmentally sustainable modes of transportation. Given that approximately 60% of a typical ship’s propulsive power is used to overcome frictional drag, implementing practices to reduce this resistance stands to yield substantial economic and environmental benefits, (Larsson & Raven, 2010). A promising drag reduction technique for a ship is air lubrication. Damen Shipyards Group is currently making this technology commercially available as the Damen Air Cavity System (DACS). The system reduces the frictional resistance of a ship by creating stable air cavities on the bottom hull of a ship. The air cavities cause a reduction in friction drag by decreasing the wetted area of a ship’s bottom. During the development of the DACS system, it was observed that air cavities also change the inflow into the propeller. Both the changed inflow and the frictional drag reduction affect the propulsive efficiency and required propulsive power of the vessel. This thesis aims to provide a better understanding of how the propulsive performance of a ship is affected by air cavities. Additionally, a key application for air lubrication systems is on inland waterway vessels, which frequently operate in shallow waters. However, the impact of shallow water conditions on the performance of the air cavity system is currently unknown. The research goals of this thesis are investigated with the help of computational fluid dynamics (CFD). A literature review identified the most feasible method to model a ship with air cavities i.e. representing the cavities as surfaces with a slip boundary condition. The influence of the air cavities on propulsive performance is investigated by studying the change in nominal wake field, thrust deduction, and propeller efficiency. Three ships were investigated: a cargo ship, a cruise ship, and an inland ship. The CFD results of the cargo ship were compared to sea trial data. Model test data was available for comparison of the cruise ship results. First, a grid convergence study and a sensitivity analysis were performed to investigate the accuracy of the numerical simulations and the power predictions. The biggest source of numerical uncertainty arose from the pressure drag. From the sensitivity analysis, it was found that the uncertainty of the power prediction is mainly affected by the uncertainty of the thrust prediction, followed by the uncertain propeller geometry for the cargo ship. For the cargo ship, it was found that the air cavities cause a significant frictional drag reduction. It was also found that the air cavities caused a decrease in pressure drag because they decreased flow separation at the stern. Furthermore, a strong decrease of the nominal wake fraction was observed for this ship, because the air cavities change the boundary layer on the bottom of the ship. A change in propeller efficiency was also observed because the propeller working point changes. The magnitude of the change was larger than for the other ships because this ship has a controllable pitch propeller running at a fixed rpm. When comparing sea trial data to the CFD results, it was found that CFD underpredicts the power, especially at higher speeds. Next to this, CFD predicted a larger reduction in power than measured during the trials. The prediction of the cavity length was identified as the most likely cause for the difference. A good comparison between model tests and CFD results was found for the cruise ship. It was found that the drag reduction and change in propulsive performance could be predicted reasonably accurately by modeling the air cavities as surfaces with a slip boundary condition. Furthermore, it was observed that the air cavities caused little change in propulsive efficiency on this ship. This is because the propellers of the cruise ship are located further away from the boundary layer of the ship and the wake field is therefore only slightly affected by the air cavities. On the inland ship, it was observed that the pressure drag and flow separation at the stern were influenced due to the air cavities. However, no comprehensive conclusions could be made due to scatter in the data. This is most likely due to the uncertainty present when modeling flow separation. Furthermore also for this ship, a decrease in propulsive efficiency was found because the air cavities decreased the wake fraction of the ship. Additionally, CFD simulations were conducted for the inland ship at varying water depths to assess how shallow water conditions impact the performance of the air cavity system. Since the ship’s frictional drag increased in shallow water, the total drag reduction from the air cavities also increased. Next to this, a change between pressure and flow separation when comparing air on and air off was observed. Also here, no strong conclusion could be made due to scatter in the data. Lastly, it was found that the change in wake field caused by the air cavities is larger in shallow water than in deep water. ii Based on the results of the three ships studied it can be concluded that an air cavity system affects the propulsive performance of a ship. It was found that an air cavity system reduces the wake fraction of a ship because it limits the growth of the boundary layer on the bottom of a ship. The reduction increases for ships with a high block coefficient and a large air-covered area. For a twin screw ship, the change of the wake field is less significant. The change in propeller efficiency depends on the resistance reduction, possible change of the wake field, and the original working point of the propeller. Furthermore, it was found that the thrust deduction effect is not affected by the air cavity system. It can also be concluded from the results of the cruise ship that the flow around a ship with air cavities can modeled reasonably accurately provided that the shape of the air layer under the ship is known. More research is recommended on how air cavities change the flow separation and pressure drag of a ship.