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Special Report Fuel - Slick Oil

Special Report - SafetyThe quality and reliability of aviation’s fuel supply must constantly improve to ensure safer, more efficient operations.

In 2012, the airline fuel bill is expected to reach near $200 billion. That’s more than 30% of total operating costs.

Unfortunately, the fuel challenge doesn’t stop there. That extraordinary cost doesn’t even buy the seamless service airlines need. With only 5% of world oil production earmarked for jet fuel, availability and quality are key areas that have come under scrutiny.

Disruptions to normal fuel availability come with considerable additional costs, and safety risks arising from low fuel quality have also hit the headlines. Given that traffic will continue to grow, and that only 190 airports account for 80% of world passenger traffic, the risk of fuel supply problems ocurring at one of these key gateways is becoming more accute.

Anecdotal evidence suggests fuel disruptions are on the increase. A plethora of factors are involved, including facilities reaching the end of their lifespan, with new suppliers still learning the ropes. “It is hard to get the investment necessary to build new infrastructure at the moment,” confirms Hemant Mistry, IATA Director for Industry Charges, Fuel and Taxation.

And cost is not the only obstacle: many big oil companies are moving away from downstream activities. Shell has moved out of Ghana and ExxonMobil withdrew from Sydney. New companies are stepping in, but their learning curve is steep and service levels therefore prone to change.

Depending on the specific disruption, airlines can stand to lose seven figure sums as a result of fuel problems. The 2005 fire at the Buncefield fuel depot in London cost some long-haul carriers flying from Heathrow an extra $20,000 a day to transport fuel from other locations. And that’s not including the cost of delays and cancellations, customer compensation, and crew and aircraft expenses.

“In most of the cases it is difficult to identify who has to be held responsible for the disruption,” says Thorsten Lange, Lufthansa Director for Fuel Procurement. “We lack a proper tracking and monitoring system. Once we have such a system in place, relevant paragraphs can be added to the current contracts. Until then we would have to find an interim solution, like standard values for certain scenarios.”

There are passenger rights regulations to cover situations where airlines fail to deliver the service expected. The industry could benefit from a fuel regulation that grants airlines similar rights—present service level agreements rarely cover financial compensation.

Safety, always the industry’s priority, is an even bigger concern. Two incidents stand out. In April 2010, Cathay Pacific flight 780 from Surabaya had to make an emergency landing at Hong Kong International Airport. One of the Airbus A330’s engines had stopped working and the other had frozen at 70% power.

This meant a much faster approach than usual and subsequently a hard landing. Excellent airmanship saved the day and only one serious injury occurred. Fuel contamination was identified as the culprit. And in May 2011, tainted fuel at Tel Aviv Ben Gurion Airport caused all flights that had used the suspect supply to be grounded. Both incidents are still being investigated.

It is surprising that such cracks appear given that thorough annual inspections are carried out on fuel facilities throughout the world. Airlines can inspect fuel services at airports individually or via the IATA Fuel Quality Pool. Fuel suppliers also inspect their own facilities or use the Joint Inspection Group.

As strong as these processes are, the high number of bodies and regulations involved is contributing to the challenge. Duplication and inconsistency, not to mention confusion about how to resolve problems, can creep in easily.

“The industry has worked hard on this and ICAO will have guidance material on fuel quality out very soon,” confirms Mistry. “There are also steps to create a database that will allow a faster and more comprehensive understanding of fuel disruptions. Airlines, airports, and fuel suppliers are all set to contribute, which shows all the partners are on the same page.”

$200 billion should buy you the product and service you require.

 

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