The Fuel Procurement Game

How will you locate and negotiate the best value aviation fuel?

Andre Fodor  |  13th November 2015
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Andre Fodor
Andre Fodor

With a focused approach on global excellence and creativity, Andre Fodor has managed flight operations...

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Aircraft Refueling

Fuel accounts for a large part of a Flight Department’s budget, but how can you get the best value and even reduce the current costs? Andre Fodor, Vice President - Aviation for Johnsonville Foods offers some of his top tips…

Something that you may have learned about me from my previous blog is of my keen interest in my own self-preservation and job longevity. My kids seem to outgrow their shoes on a weekly basis and their many must-have extracurricular activities don’t come cheap.

I also love the complexities of running a finely-tuned flight department and wish to do it for a very long time. So, in aviation management parley, this translates into me providing unequaled, high-quality service, with attention to detail and a lean, cost-efficient operation.

Fuel represents a large percentage of my budget with the usage of 1.6 million pounds of jet fuel in the past 24 months. Granted, we are all getting a momentary relief where fuel is cheap and our operational budgets are getting a break, but let’s be realistic – that is not going to last too long as fuel is a non-renewable resource and Flight Departments use a lot of those dead dinosaurs! So, managing fuel procurement is crucial.

I always forecast higher fuel costs in my budget. I feel much better when I can use my highlighter to show savings while presenting our balance sheet to our financial team.

Paying retail prices or accepting exorbitant fuel prices does not fit the vocabulary of a professional manager and there are techniques that help us get the best bang (pun intended) for the buck; let’s discuss a few…

Tip #1: The Home FBO

It starts with your home airport and the FBO that supports you. With them, you need to discuss what I call ‘core pricing’. The home FBO is the place where you typically start and end 60% of your trips and from whom you will purchase outbound fuel.

• Be ready to describe your annual fuel purchase potential, and the number of hours flown from the home-base to instill value in your buying power to their bottom line.

• You might think progressively and discuss a tiered discount that increases as you purchase more volume.

• Negotiate ground support services such as lavatory and potable water servicing, GPU and tug usage to be absorbed as goodwill for your patronage.

Having a fuel provider that procures fuel for you is crucial.

I know that many operators utilize several fuel services but I prefer to establish a strong, long-term relationship with one provider where I will have great bargaining power and preferential treatment.

I’d always advise to invest in long-term relationships. These services have a large network and bulk buying power. They directly bill the fuel you purchased allowing your quick turns to be shorter and more efficient while eliminating the need for high-limit credit cards or cash to be carried on board.

Tip #2: Plan Ahead

Every one of our trips starts with a phone call to the FBOs. We find out what is the minimum fuel uplift to eliminate the dreaded facility fees, and ask if there’s a price advantage if we pay directly.

With that pre-determined information, we can decide if it makes sense to tanker fuel and pay for the facility fee; to buy only the minimum required fuel; or to fill the tanks.

Tip #3: Smile!

Now please hear this, a smile and great attitude will take you far! I can tell you of many times that I got a super discount because I took the time to greet, praise or just acknowledge the FBO staff (and to discuss how we could deepen our discounts).

Build relationships, learn names and get to know the people. In every case, positive attitude wins over the cranky pilot who will invariably pay more for the same kerosene.

Tip #4: Freedom to Choose

Educate your principal to the fact that you need the flexibility to choose the right FBO for your trip, and to have the option of staying away from airports with a single FBO that rips you off by charging exorbitant fuel prices and facility fees.

Share your Thoughts…

As aviation managers we need to be on the lookout for new opportunities and to think outside the box. We need to share ideas and tips on how to provide a corporate aviation that makes sense. At the bottom of this blog there is a comment box where you can also share your ideas and insights; please use it.

We want to be more effective in our operation and to show efficiency over cost; that goes a long way when I discuss expansion and higher aircraft utilization in our Flight Department. After all, our principals are savvy business-minded people and they appreciate value. Value is what we need to show to preserve our professional longevity, which - at least in my opinion - fulfills my deep instinct of self-preservation just fine!

What are your tips? Join the conversation via the Comments box below

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