AACO Fuel Forum. Luis Felipe de Oliveira (IATA) Dubai, August 20 th, Presented by. Regional Head Airport Infrastructure and Fuel

Size: px

Start display at page:

Download "AACO Fuel Forum. Luis Felipe de Oliveira (IATA) Dubai, August 20 th, Presented by. Regional Head Airport Infrastructure and Fuel"

Roland Harrell
6 years ago
Views:

1 AACO Fuel Forum Dubai, August 20 th, 2013 Presented by Luis Felipe de Oliveira (IATA) Regional Head Airport Infrastructure and Fuel

2 Air transport is critical to the global economy We are a US$ 594 billion industry connect 2,8 billion people 46 million Tons of goods supports the employment for 56.6 million people Global economic impact of aviation US$2.2 trillion Source: ATAG Aviation beyond borders 2012

Aviation is an engine for the economy One daily International long haul flight generates: 60.

3 Aviation is an engine for the economy One daily International long haul flight generates: passengers 880 employees $26 million on GDP $10 million in salaries $ 4 million in taxes Source: ATAG

4 Connectivity is important for business Connections are a key asset for the Middle East Economy Facilitate the flow of tourists, commerce and direct investment.

5 Connectivity is important for business KSA Jordan Lebanon

6 Jet Fuel in the world Most important operational cost for an airline As a world average represents 33% of the operational costs For cargo airlines the operational cost could reach 44% Prices in Middle East and North Africa does not follow international standards Lack of transparency

8 Each US$1 increase in the crude oil The cost for the aviation industry increases by US$1.6 Billion

9 1 Cent USD increase in the fuel prices represents: US$ 700 million in the world In Middle East 1 Cent USD per gallon represents: US$ 49 million for the industry

Fuel Consumed x Fuel Costs Million USD 210000 180000 150000

10 Fuel Consumed x Fuel Costs Million USD Million AG Fuel, $m Year Fuel consumed, MAG

11 Operational costs Billions USD % Operational Costs Years Fuel Costs Operational costs %

12 Last 10 years 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Years Revenue Expenses Passenger Cargo Fuel Cost Source: IATA

13 Aviation cost evolution last 10 years Key factors Source: IATA

14 Fuel costs

15 5-10% in volume

16 Kerosene molecules are also used in Gasoline and Diesel adds more pressure on price Diesel 15 Gasoline 10 5 Kerosene 0 Number of Carbon Atoms in Chain

17 How do airlines around the world pay for their Jet fuel Most of the countries use the published prices as a base price for the Jet fuel. There are 3 providers in the market: Platts, OPIS and Argus. These companies collect the data for the public Jet fuel transactions and publish the average on daily basis. The most used publication is Platts with around global market 85 % of the Platts collect and publish the data in 11 region in the world, USGulf, US LA (Los Angeles), US San Francisco, US New York, US Chicago, Rotterdam, MEDAV Italy, NWE (North West Europe), Middle East, Singapore and Japan

18 How do airlines around the world pay for their jet fuel For Midlle East in all countries the publication used for the price basis is Platts Arab Gulf or MOPAG Fuel supply contracts between oil companies and airlines include specific clauses with which public prices will be used as a basis price for each location/airport. Examples: Singapore Platts Singapore, Miami Platts USGulf, Amsterdam Platts Rotterdam, Frankfurt Platts NWE, etc Platts prices include the cost of the crude oil, refinery costs, handling and storage costs and refinery margin. The oil companies already make a profit using Platts quotations.

19 Example Arab Gulf pricing Transport cost to the refinery Example Arab Gulf Pricing Crude Price Final Arab Gulf Price include: Crude cost Transport Cost Refining cost Refinery margin

20 Prices in MENA are higher than Arab Gulf Difference Prices in Latin America are much higher than US Gulf Difference include: Margin premium Taxes and fees Import parity costs Fuel concession fees ITP costs Public prices Arab Gulf MEN Price

22 Connectivity linked with Government policies Example from LA From 2006 to 2011 Passengers PTY 142% Connectivity linked with Government policies LIM 109%

23 Panamá Hub development Panamá Hub development Fuel consumption increased 74% Fuel consumption increased 60%

24 Fuel price policies must be applied US Gulf Fuel concession fee Tax (domestic only) Differential Fuel price policies must be applied (storage, Transport and and ITP) Final Price

25 Importance of a clear cost line item US Gulf Airport fee Differential (storage and ITP) Transport cost Importance of a clear cost line item TRANSPARENCY!!!!! Final Price

26 Airlines are key generators of economic activity and tourism Effective infrastructure and cost efficiency will generate enormous economic benefits This is in line with region s perspective of grow

27 We are working hard Cutting costs Renewing the fleet with more efficient aircraft Discussing Jet fuel price policies with Governments Alliances and partnership agreements

28 The best way to work: Governments Airline Associations Oil Companies Airports Airlines Objective Common Recognition Common Support Growth

29 a win-win situation A strong industry is in all of our best interests

Thank You! Visit: www.iata.org www.benefitsofaviation.

30 Thank You! Visit: Contatc: Luis Felipe de Oliveira

Sustain Aviation Growth Under Air Transport Economic Regulations

Sustain Aviation Growth Under Air Transport Economic Regulations Ebtesam Al Shamlan Air Transport Director Ministry of Transport and Telecommunications 2nd AIRPORTS ARABIA CONFERENCE 10-11 OCTOBER 2017