Do airlines really have to pay the full "normal" price for oil (110$ per barrel) or do they have some.........

Question

....... agreements (like they buy so much that they just pay like the half or so)?!

Answer 1

If they paid $110 dollars a barrel, it would only be $2.61 a gallon.  But $110/bbl is for crude oil, of which jet fuel (kerosene) is only a small fraction, the rest being gasoline, diesel, naptha, lubricating oils, fuel oils, and asphalt.

The oil companies refine the crude and then sell the fractions to make a profit.  This is why jet fuel is more like $5/gal.

Some airlines can negotiate good prices if they buy in high volumes.

Answer 2

Last time I checked airlines were buying fuel, not oil...

Answer 3

They do have sponsors, which is like gambling. They will offer a company a set price for fuel, and if the sponsor thinks they will come out on top, that the cost will actually be lower, they will take the offer. Southwest had one of the sponsors during Katrina, when oil prices skyrocketed, and it saved them a load of money.

Some airlines store fuel for themselves and some have to buy at market price, and it is reflected in ticket prices.

Answer 4

Airlines will purchase fuel at HUGE quantities at reuced prices. The ability to store large quantities of fue at negotiated proices allows them to calculate exact profit margins for ticket sales.

Airlines have developed many different operational and planning techniques aimed at conserving fuel and optimizing fuel purchases.

On the operational front, many airlines:

employ single-engine taxi procedures during normal operations and selective engine shutdown during ground delays

reduce and measure more accurately onboard weight while redistributing belly cargo

tanker extra fuel on certain flights to avoid refueling at more expensive locations

cruise longer at higher altitudes and employ shorter, steeper approaches

In terms of planning for fuel usage, airlines may:

optimize flight planning for minimum fuel-burn routes and altitudes

work with FAA to change en-route fuel reserve requirements to reflect state-of-the-art navigation, communication, surveillance and wind forecast systems

employ self-imposed ground delays to reduce airborne holding

modernize their fleets with more fuel-efficient airplanes

invest in winglets to reduce aircraft drag and thereby increase fuel conservation

redesign hubs and schedules to alleviate congestion

advocate expanded and improved airfield capacity

use airport power rather than onboard auxiliary power units (APUs) when at the gates

change paint schemes to minimize heat absorption (which requires additional cooling)

alter the location in which fuel is purchased (i.e., to avoid higher-priced west coast)

pool resources to purchase fuel in bulk through alliances with other carriers

Does ATA do anything to help airlines optimize fuel consumption?

ATA works collaboratively with member airlines via the FAA Command Center to:

decrease re-route mileage

increase ATC/airline coordination during severe weather

analyze the jet stream and make recommendations for routing transcontinental flights

cite single-flight route issues and reduce mileage for flights unable to accept airborne reroutes

provide advance notice to airlines of future reroutes or “playbook” routes to prevent over-fueling

alert FAA to opportunities for avoiding fuel waste during departure delays and airborne holding

Answer 5

Airlines use "Jet A"m which is a highly refined kerosene, which is derived from crude oil, which is currently around $110/bbl.  A barrel of crude holds about 35 gallons.

Last I saw, Jet A was going for about $3/gal.  737-600 takes about 6300 gal to fill up completely.

Answer 6

They have oil sponsers like if they have a sponser then they get x free barrels.

Ex. The official airline of Crude Oil.

Answer 7

Turbine aircraft generally use Jet A fuel which varies anywhere from about $4.40/gal to about $6/gal. Jet A is refined from crude oil just like gasoline or diesel. They don't use pure crude oil at $110/barrel.

Some airlines/larger aircraft can actually negotiate the price they pay; they don't always pay the posted pump price. Since airlines buy in bulk, I doubt they pay regular prices. Some FBO's will negotiate price per gallon on Jet A for large purchasers with smaller aircraft such as business jets.