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Thursday, Mar 28, 2024

Flying Around High Fuel Costs

Mike Ross stands in bright sunshine outside the hangars and offices of The Air Group at Van Nuys Airport looking into a bucket filled with a clear liquid. Inspecting the fuel before its gets pumped into one of the corporate jets The Air Group manages in this case a Hawker jet is standard for the company, a check for impurities or water or age. “What we like about the white bucket test is you can smell the fuel,” Ross said. “It has a distinct odor. If it smells like turpentine then it’s old gas.” With fuel costs being one of the highest expenses if not the highest expense it’s understandable that Ross and others in the corporate aviation world keep close tabs on what goes into their clients’ planes. At Van Nuys and Bob Hope airports, fixed-based operators, the firms providing fueling, ground services, maintenance and repairs, air charters, do what they can to make the price hit easier on their clients. Fuel prices at Van Nuys are about $1 cheaper than at other airports because there are so many suppliers, said Harold Lee, owner of Million Air, which has facilities at both Van Nuys and Bob Hope. At The Air Group, Ross, the senior director of special projects, came up with the SmartFuel program for the company’s corporate clients. The Air Group buys its fuel directly from oil companies and wholesalers and negotiates with fixed-base operators on the into-plane fee the charge to pump the fuel from a truck into the aircraft. If an airport has multiple FBOs, The Air Group negotiates with only one of them, Ross said. The more the firm uses that particular facility for fueling, the lower the into-plane fee charged the client, he added. The average price of jet fuel has gone up about 45 percent since December but Air Group’s clients have seen an increase of about 5 percent, Ross said. “We’ve been able to take a good part of the sting out of that,” Ross said. The Air Group uses 140,000 gallons a month just to get the planes off the ground at Van Nuys and about 1 million gallons a month worldwide. Nationally, corporate aviation clients are using various methods to get around paying high fuel costs, said Dan Hubbard, spokesman for the National Business Aviation Association, a trade group. Some options Some association members choose to fly into airports with more than one fixed-base operator so as to get the best price on fuel; others buy fuel at an inexpensive location and then “tanker” or carry it as a plane makes its travels; while others are deciding to forego with live meetings and meet via teleconferencing instead, Hubbard said. “They are trying to be resourceful and are not impervious to the cost,” Hubbard said. Companies such as Million Air are sensitive about the cost of the into-plane fee, which is how the fixed-base operators make their profit, Lee said. For private owners, a $30,000 fuel bill versus a $40,000 fuel bill will not make or break them, Lee said. “It’s the charter companies that can be hard hit by the high cost of fuel, but they can adjust their charter rate or surcharge like the commercial airlines do for the fuel,” Lee said. Since aircraft management companies provide similar services, the SmartFuel program gives added value to clients for being with The Air Group, Ross said. For the management firms to stay competitive they have to do better and smarter as clients are concerned where their dollars are going, said Ken Combs, The Air Group’s senior vice president and director of operations. “A few years ago nobody cared about the price of gas; flying airplanes, driving cars, it didn’t matter,” Combs said. “Now it has become the most important economic factor.”

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