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Business Air News Bulletin
Business Air News Bulletin
The monthly news publication for aviation professionals.
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Fuel review: To surcharge or not, that is the question

With fuel prices fluctuating daily and varying from location to location, providing an accurate charter quote may seem a challenge. But how much does the actual cost of fuel on the day actually impact charter profitability? For many of our respondents, quotes tend to be sought fairly close to the trip and, as fuel prices are unlikely to vary wildly, the operator will absorb any increase. For quotations made further in advance, however, some operators protect themselves against fuel price increases with a surcharge written into their terms.

At Fly Comlux, Christophe Lapierre says: "Fuel prices are updated on a monthly basis, and most bookings are made less than one month prior to performing the flight. We do not factor the fuel price for each quotation, the process is too complex to be integrated with our current quotation software."

Gama Aviation and ABS Jets both report that they guarantee the charter price quoted, while Bernhard Fragner of GlobeAir says: "We would absorb the gap caused by the fuel price increase, however, on a weekly update cycle we expect not to run very often into this issue."

Amira Air GmbH also finds it rarely needs to add a surcharge for increased fuel prices as price developments are taken into account when providing a quote and trips are not booked that far in advance.

At AirGO Flugservice Daniela Flierl says that hourly rates reflect the actual fuel price which is adjusted according to changes. "For short-term contracts we give a fixed price while for long-term contracts we adjust the hourly rate according to fuel price changes of more than five per cent," she says.

"During 2012 we managed to avoid raising the price due to negotiations of fuel contracts. Occasionally for flights to airports with extremely high fuel prices and the need to take a lot of fuel we make an adjustment."

Once Twinjet has agreed a price with the customer, it does not add a surcharge. Ops director Philip Moore says: "We tailor our quotes to each specific customer and, although the fuel price does get updated in air ops' generic price, we tender for fuel quotes per trip and choose the most favourable one on the day."

DragonFly generally assumes a certain fuel cost per hour in quoting charter prices but will consider adding a supplement where the destination airport is notorious for expensive fuel. "On occasions when charters are booked to take place several months ahead, the company contractually reserves the right to review quotes prior to flight in case fuel or FBO prices have materially increased," says Howard Palser.

Rizon Group Holdings Qatar agrees on a rate prior to departure, so avoiding late fuel rate fluctuations. Chris Eden says: "Charter rates will be adjusted for large fuel price differentials but this generally only ever occurs in remote destinations and is therefore easily captured."

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