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IATA: Fuel prices remain 'worryingly high when measured against historical averages'

9-May-2013 9:42 AM

IATA director general and CEO Tony Tyler addressed (08-May-2013) the Aviation Fuel Forum in Berlin, stating that "jet fuel and the issues surrounding it are among our top priorities and biggest challenges". Mr Tyler credited the fuel industry with avoiding a repeat of the 2011 near disaster involving fuel contamination at Surabaya, but is "much less satisfied with the direction that fuel prices have taken since 2011". In 2012, the airline industry's fuel bill was USD209 billion, which was USD33 billion higher than in 2011. In 2013, the industry expects to pay an additional USD7 billion. Fuel represents 33% of the airline industry's operating budget and the consensus forecast in Mar-2013 was for jet fuel to average USD130 per barrel, USD3 more per barrel than in 200 "when our industry was nearly brought to its knees by the oil bubble" according to Mr Tyler. Despite an easing of prices in recent week, they remain "worryingly high when measured against historical averages".

  • Safety: Mr Tyler note the airline industry and fuel suppliers are working together through the IATA Fuel Quality Pool and Joint Inspection Group to identify synergies and increase transparency of jet fuel quality inspections. The industries "need to think carefully about how to move towards a global quality assurance scheme—built upon globally agreed quality assurance standards and criteria";
  • Reliability: Refinery closures in key markets and a lack of timely investments in supply logistics have resulted in longer and more complicated supply chains, with a corresponding impact on the potential for contamination, while the frequency and length of disruptions appear to be growing. IATA and airlines have been working with governments to address areas with persistent supply disruption problems. Constant monitoring of jet fuel supply will continue in 2013 as well as lobbying to get the solutions at key locations identified by the industry. In addition IATA and local airlines are working on improving the fueling services at airports to minimise flight delays;
  • Environment: Largest technology contribution from fuels will come from the introduction and widespread use of alternative low-carbon fuels, particularly sustainable biofuels. Developments so far "are reason for optimism" with certification and more than 1500 commercial flights using low-carbon alternative fuels, demonstrating biofuels are a "superb drop-in replacement, even slightly more efficient than conventional jet fuel". Despite this, the industry is "quite a ways away from being able to introduce them on an industrial scale". IATA needs governments to step forward with policies that will encourage and support industrial production of biofuels for aviation;
  • Efficiency: There are still opportunities in airline operations to improve fuel efficency, as well as that of infrastructure partners, particularly air navigation service providers;
  • Market-Based Measures: Infrastructure and internal efficiency gains will not be sufficient to meet the industry's CO2 commitments, and the arrival of biofuels in industrial quantities will take time. In the interim market-based measures will be an important stop-gap measure to achieve the objective of carbon neutral growth by 2020. [more - original PR]