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Make Your Fuel Fly Farther:
Strategies That Can Save You Money
Chief pilots, flight department managers, CFOs and owner/pilots throughout the business aviation community sighed with relief when prices for petroleum crude fell back from the peak reached in July 2008. As one chief pilot quipped, "We had been filing for Flight Level Ten-Zero-Zero so we could see over the top of our fuel bills."
The 2008 fuel-price spike turned people away from nonessential use of all modes of business transport – cars, trucks and airplanes.
Two years later, the continued emphasis on controlling fuel expenses is evidence of a permanent shift toward minimizing aircraft operating costs.
As a result, operators turn increasingly to fuelsaving programs, strategies and tools available to help manage flight expenses – both for the longterm, and on a trip-by-trip basis.
Minimizing fuel expenses holds huge appeal, regardless of market conditions, given that fuel can account for 20 to 25 percent of a turbine operator's costs. Employing available tools can at least help a flight department assure itself of the lowest-available fuel price relative to market fluctuations.
But it takes whole-trip analysis to ensure that buying at the lowest fuel price also supports the goal of achieving the lowest overall trip costs.
Discount & Reward Programs vs. Fuel Contracts
Maybe it's cash; maybe it's meals, deals or free loaner wheels. For many rewards programs, a fixed percentage fuel-price discount combines with points or some other use-accounting system to generate "loyalty" rewards for pilots and flight departments and ensure a steady stream of business for the fuel supplier.
These reward programs exist in many forms and are available from most of the mainline fuel suppliers and a large swath of the fixed base operators (FBOs) catering to business aircraft. The programs may even include a tool to help you search for the best price among a number of airports and FBOs.
Discounts tend to be in the 5 percent range – worth a quarter on $5-per-gallon fuel or $0.35 per gallon at the $7-per-gallon level, for example. If you burn thousands of gallons a year, the savings can add up. For an operator that consumes 80,000 gallons a year, the quarter discount would add up to $20,000 – solid evidence of the reason why even modest programs hold such strong appeal.
How do the fuel rewards programs work? Many issue a special card that operators swipe through a digital tracking and accounting system. Accrue enough points, and you can shop online at a virtual redemption center.
Some of the rewards include iPads, iPods, MP3 players and even portable GPS navigators. Other programs reward the loyal customer with a debit card loaded with a cash reward.
With fuel contracts, the price is the reward. In certain contracts, the price can vary as the supplier's raw costs fluctuate. But thankfully, nothing bars operators from enrolling in multiple programs. So no matter where they fly, they usually can find discounted fuel.
"With several programs and contracts in place, we have a better chance of hitting a place where one of our contracts applies," explained one light-jet operator.
A turboprop owner echoed that approach: "My main contract is at my base field, and it applies at two of my repeating destinations. At its current level, the discount covers dinner costs for three people any night I've flown more than 500 miles; it covers dinner for two if I've flown only 350 miles."
Both operators said they first looked for options available under their favored contracts.
"Sometimes all it takes is a little deviation off route – and 100 miles is a little deviation to me – to save a bunch of bucks," the light-jet owner explained.
Some operators are happy reaping the benefits of the lower prices in reward programs and letting crew divvy up any rewards. Other companies, particularly those with multiple aircraft, may want rewards to be credited to a single account, with the rewards coming back to the company or, at least, the flight department.
And accountants caution that some rewards programs and how they are handled may create tax questions for the people involved. Rewards, if channeled through a company entity to an individual, may need to be declared as income on an employee's W-2 tax form.
Fuel discounts and contract pricing, however, trigger no similar issues; in those cases the business-to-business agreements are treated like any other transactions between a supplier and a consumer.
Your company accountants are best equipped to answer any such questions.
Shopping for Fuel Takes Time
Fuel programs may save a flight department thousands. One operator suggested that annual total fuel savings could equate to the cost of an additional pilot, if managed properly by a large flight department with three or four jets. On one trip alone, the decision to tanker 7,000 pounds of fuel saved his company more than $1,500. "It adds up fast," the pilot explained.
But spending too much time searching for deals can be counterproductive, noted Kevin Wilkerson, a member of NBAA's Schedulers & Dispatchers Committee, from Colt International. He offered three tips:
- Avoid spending so much time shopping that you wipe out savings. "Saving $70 on an uplift is irrelevant if it takes four hours to shop and arrange."
- Avoid wasting "thousands of dollars outsourcing a process that shouldn't be so complicated" by keeping control of the process in-house.
- Audit fuel invoices, on-site and promptly again at the office, and do so regularly.
To Tanker or Not
The chief pilot at one multi-aircraft Fortune 500 company explained how he employs a comprehensive approach to weigh ramp fees and fuel prices at the locations where he's shopping for fuel.
"If it makes sense to buy more [fuel] and avoid a $500 ramp fee, buy what it takes and tanker to the next stop; if prices are greatly lower at the next stop, buy the minimum needed and pay the fee," the chief pilot explained.
A simple spreadsheet, set up to show fuel costs at numerous FBOs available, with ramp fees and the fee-waiver fuel-purchase level, makes the effort easier.
"The goal is to control total trip costs," he continued. "If fuel is a quarter higher at one place, but the ramp fee is waived on what you need, it beats paying less and getting hit with a big ramp charge that wipes out your savings."
Employing one of today's online flight-planning tools can perform the same job of gauging whether it's cheaper to tanker, while adding routing tools to minimize fuel burned en route.
The time invested to set up special preferences within such software and the costs of the programming can be easily offset in one stop. Remember the chief pilot who saved his company $1,500 by opting to tanker 7,000 pounds.
"If I can do it, others can, too," he said.
Fuel Saving Tools
- Fuel Supplier, FBO and Flight Department Fuel Quality Control Management
- Free Online Flight and Fuel Planning Resources
- Minimize Fuel Costs – Fuel Plan, Not Just Flight Plan
Fuel Price Survey
Find out what fuel costs are at locations across the country in the survey results complied monthly by ARGUS International, Inc. View the survey results.