NASOCEANA
Topic Author
Posts: 277
Joined: Fri Jul 29, 2005 3:40 pm

When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 1:48 pm

I don't know if this has been discussed before. (So don't jump down my throat)

"I was wondering when do airlines pay the fuel companies for the cost of fuel?"

Any information would be greatly appreciated.

NASOCEANA
B777 greatest Airliner ever built!
 
jetdeltamsy
Posts: 2688
Joined: Tue Nov 14, 2000 11:51 am

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 1:54 pm

I don't know for sure how it is for EVERY carrier, but i think the "industry standard" is weekly remittance. When you're talking hundreds of millioins of dollars in fuel sales every week, a 30 day "float" is out of the question in most instances.

Some carriers have been required to pay in advance, a week at a time, when things are looking as bad as they are for Delta at the moment!

But i'm no expert on this. Just what i've heard through the years.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
UpperDeck79
Posts: 1062
Joined: Tue Feb 22, 2005 11:14 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 3:19 pm

This reminded me of a funny incident a few years ago. The Finnish national soccer team was to play against Albania at their home ground. The Finnish team chartered a Finnair MD-80 to fly the return journey to the Albanian capital Tirana.

As Finnair doesn't normally fly to Tirana, they asked the airport about how to pay for the fuel they would like to purchase while at Tirana. They were told that a credit card would do.

While in Tirana, they were told that only cash can be used. And just guess did the pilots have enough cash to pay for the fuel? Of course not, why would they. But a solution was found: They asked for the team to lend all their cash to pay for the fuel so that they could fly home! Big grin
AY and ANA rock!
 
LOT767-300ER
Posts: 8526
Joined: Mon Jan 01, 2001 12:57 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 3:53 pm

How do you pay for fuel for an MD-80 going from Tirana to Helsinki with a credit card? No preset spending limits?  Silly
 
Kerberos
Posts: 117
Joined: Sun Apr 18, 2004 1:47 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 4:33 pm

Along the same vein as the Finnish story, I seem to rememer reading about some incident in which a 737 had to divert because of weather. The airport it diverted to wasnt one that the airline serviced, hence they would not refuel the plane without payment on the spot. Even the airline "promising" to send payment was not enough. The captain apparently had to use his American Express gold card.

I can see it now...

A new 737 - 50,000,000
13000 lbs Jet A - $60,000 (I have no idea how much Jet A costs)
Earning millions of FF miles when you already fly for a living... priceless
This is your captain speaking. I’ve turned off the no-smokin’ sign. Hell, if the plane is smokin' why can't you?
 
stealthpilot
Posts: 502
Joined: Tue May 11, 2004 4:28 am

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 5:59 pm

Quoting Kerberos (Reply 4):

A new 737 - 50,000,000
13000 lbs Jet A - $60,000 (I have no idea how much Jet A costs)
Earning millions of FF miles when you already fly for a living... priceless

HAHAHAHAH that was awsome!  Smile
-Nikhil
eP007
 
CHRISBA777ER
Posts: 3715
Joined: Thu Mar 01, 2001 12:12 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 6:44 pm

Thats my area.

I work for a company that compiles credit reports for marine companies mostly. We do some business relating to airlines as well and i handle all that.

Generally, the airlines have a credit system in place. Generally they are on 20 to 30 day terms, and credit limits tend to be in the US$ Low seven figures even for modestly sized airlines. The really big ones like BA etc - have almost unlimited credit. New companies trade on cash terms or on a load over load basis until they are creditworthy.

The fuel companies supply them on a credit basis, and all their due-diligence credit report requirements are passed to us. I write a detailed report taking into account the operations, fleet, management, ownership, financial returns, credit references, and a business review - then i take everything into account and make a credit decision.
What do you mean you dont have any bourbon? Do you know how far it is to Houston? What kind of airline is this???
 
Pope
Posts: 3995
Joined: Thu Mar 24, 2005 5:57 am

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 7:28 pm

When the TWA flight was hijacked in the 80's a FA had to pay for the gas used to refuel the plane on her Shell credit card before the airport would deliver the fuel.
Hypocrisy. It's the new black for liberals.
 
Stoney
Posts: 199
Joined: Fri Jan 14, 2005 2:37 am

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 8:49 pm

Someone once told me that in the last weeks before the grounding of SR, the captains had a bag full of cash on board to pay for the fuel, because the fuel company (companies) didn't give credit anymore. Could that be true?

Must be strange to give someone (working with a fuel truck) a bag full of money....
BAZL - Bundesamt gegen Zivilluftfahrt - royally screwing around with swiss aviation
 
KALB
Posts: 564
Joined: Sat Mar 11, 2000 12:33 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 11:40 pm

There is a scene in the movie "Airplane" where Captain Over (Peter Graves) hands his gas credit card to fueler, after the fueler has lifted the 707's nose to check the oil level. I still laugh VERY HARD every time I see that film.
 
CHRISBA777ER
Posts: 3715
Joined: Thu Mar 01, 2001 12:12 pm

RE: When Does An Airline Pay For Fuel?

Wed Aug 10, 2005 11:58 pm

Stoney - certainly the credit companies wouldnt give credit - i know of two majors that took our report and stopped credit, but they wouldnt have sued cash - more often it would be a credit card - the company has them for these reasons precisely.
What do you mean you dont have any bourbon? Do you know how far it is to Houston? What kind of airline is this???
 
komododx
Posts: 1734
Joined: Tue Jan 27, 2004 4:40 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 12:00 am

Does the 2/10/30 accounting principle hold?

Stefano  wave 
I'm homeless and unemployed
 
dairbus
Posts: 518
Joined: Mon Nov 17, 2003 10:45 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 12:19 am

Delta's aircraft have a BP Aviation credit card behind a plastic cover in the cockpits of their aircraft. I think this used only when there are unscheduled landings at offline airports, especially in other countries. I believe they started installing them about 6-7 years ago when they did their big Latin America expansion. For scheduled flights and charters, payment is usually arranged in advance. The pilots don't have to take the card out very often but it's there if they need it.
"I love mankind. It's people I can't stand." - Charles Shultz
 
FI642
Posts: 992
Joined: Sat Mar 12, 2005 9:48 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 2:00 am

Charter and some scheduled carriers work off of a fuel release. They contract with a company (like World Fuel), who will broker XXX gallons of Jet-A for them. The fueling company gets a faxed release allowing XXX gallons to be pumped for the carrier. Often through-put and into-plane fees are paid on a separate invoice. The airline will either have a credit facility with the fuel broker, or have prepaid the fuel estimate. They will estimate using XXX gallons per month, and prepay for that much.

Through-put and into-plane fees are based on the number of gallons pumped, and the more you pump, the cheaper the fee is.

Carriers that fly for the U.S. Airforce have a special militarty credit card embossed with the carrier, and the tail number of the specific aircraft.
737MAX, Cool Planes for the Worlds Coolest Airline.
 
CV747
Posts: 166
Joined: Wed Jan 26, 2000 11:23 pm

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 2:04 am

Quoting Stoney (Reply 8):
had a bag full of cash on board to pay for the fuel

That was certainly the case in the old days with small freight or charter airlines.
 
richardw
Posts: 3138
Joined: Tue May 08, 2001 3:17 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 2:23 am

I think in an early episode of Airline UK an easyJet aircraft had to make an unscheduled stop at LYS for fuel, but the airline didn't then have a facility with the fuel supplier and so the pilot handed over a credit card to pay for the fuel.
 
acidradio
Crew
Posts: 1595
Joined: Mon Mar 12, 2001 3:19 pm

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 2:54 am

Quoting LOT767-300ER (Reply 3):
How do you pay for fuel for an MD-80 going from Tirana to Helsinki with a credit card? No preset spending limits?

Carry an American Express card  Wink Actually, that would work since the American Express card has no spending limit on it. And for some strange reason, a lot of places outside of America seem to accept it.
Ich haben zwei Platzspielen und ein Microphone
 
FI642
Posts: 992
Joined: Sat Mar 12, 2005 9:48 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 9:06 am

Quoting Acidradio (Reply 16):
Carry an American Express card Wink Actually, that would work since the American Express card has no spending limit on it. And for some strange reason, a lot of places outside of America seem to accept it.

I did that on an Av Atlantic 727-200 in October of 1996. Let's just say it was retail, and over $10,000.00.
737MAX, Cool Planes for the Worlds Coolest Airline.
 
AsstChiefMark
Posts: 10465
Joined: Thu Feb 05, 2004 2:14 pm

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 9:14 am

Wasn't there an episode of "Airport" where a U2 flight had to divert to NCE? The fuelers wouldn't sell them Jet A unless they paid for it with a credit card? Like U2 is going to jump town and can't be tracked down for payment later?

Mark

[Edited 2005-08-11 02:24:22]
Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Damned MSP...Red tail...Red tail
 
User avatar
NWOrientDC10
Posts: 1283
Joined: Sun Mar 06, 2005 12:18 pm

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 9:22 am

I'm guessing that most airlines have a contract with a/c service companies, such as ASIG (I worked for them five years ago), to pay market price for fuel. The airline companies are probably sent a bill once a month for the fuel (and other services, such as baggage handling, pushback, interior cleaning, ...).

Russell
Things aren't always as they seem
 
aircanl1011
Posts: 259
Joined: Mon Aug 08, 2005 3:38 am

RE: When Does An Airline Pay For Fuel?

Thu Aug 11, 2005 10:41 am

Quoting AsstChiefMark (Reply 18):
Wasn't there an episode of "Airport" where a U2 flight had to divert to NCE? The fuelers wouldn't sell them Jet A unless they paid for it with a credit card? Like U2 is going to jump town and can't be tracked down for payment later?

They were diverted to LYS. After much negotiating, payment terms were reached using the Captains cell phone to talk to U2 's payables department. U2 was allowed to get the fuel and pay at a latter date.

But you are right, the captain was sweating buckets thinking he would have to put the cost of the fuel on his credit card.
CYMRU AM BYTH / WALES FOREVER
 
CO757bos2iah
Posts: 78
Joined: Fri Aug 12, 2005 1:37 am

RE: When Does An Airline Pay For Fuel?

Fri Aug 12, 2005 2:05 am

I can imagine it's fairly high. Which is why as long as airlines continue to "give away" $300 trans-cons flights they'll never make money.Plus bad management in some cases as well. From the DNU here at CO :



The price CO pays for jet fuel increased $1.68 Tuesday to a record $74.34 per barrel.

CO uses approximately 40 million barrels of jet fuel each year, so the airline's annual costs increase approximately $40 million for every dollar-per-barrel increase in jet fuel prices
Continental Airlines. We span the globe,because the world is your workplace.