Strategic Fuel Purchasing: Time Your Fuel Purchase to Maximize Your Margin
Thursday, May 24, 2018 at 12:37PM
John L. Enticknap and Ron R. Jackson, ABSG in FBO, FBO Success Seminar Series, Fuel, IATA Jet Fuel Price Monitor, Jet A, Platts, fuel prices, strategic fuel purchase, strategic fuel purchasing

As a follow-up to our last blog post, Managing Your Fuel Prices in a Volatile Market, we would like to share a tip on how FBOs can make a strategic Jet A Fuel purchase.

Time your fuel purchase to maximize your margin. We teach strategic fuel purchasing at our NATA FBO Success Seminar. The technique is a process of knowing how aviation fuel is priced in your region and when to make the fuel purchase.

During your last fuel supplier contract negotiation, you might have established an indexed pricing formula, which is based on what is known as Platts pricing indices. The indices are named after Warren Cumming Platt who, in 1909, started a monthly news magazine titled National Petroleum News. His goal was to level the information playing field between independent oilmen and Big Oil by promoting transparency within the oil industry.

By publishing reliable, market-based price information, Platt not only shed light on a once opaque marketplace, he also inspired greater market efficiency and competition. Today the fuel price indices are published worldwide with nine regional segments in the U.S. alone. There are also indices for Europe, Middle East, Far East and all around the world.

For general aviation, the daily U.S. Jet A index prices are averaged, and the change is generally posted on a Tuesday, so it is easy to track whether the average price is up or down for the week. Jet A fuel price adjustments are calculated by the average change for the week.

For the independent FBO owner/operator, obtaining the Platts data can be somewhat difficult and expensive, especially if you want to subscribe to the Platts daily news information. Therefore, you may want to ask your fuel supplier for the data.

Alternately, you may keep track of the price of a barrel of oil through USA Today’s business section, or go to IATA-Jet Fuel Price Monitor, a free website. 

The important thing is to take a little time to keep track of weekly changes in the pricing indices.

With this information, you can buy fuel when the pricing changes to your advantage. For example, if you determine that the price will be increasing for the coming Tuesday, you may want to purchase a load of Jet A before the price increase. Conversely, if prices will be going down, wait until Tuesday before purchasing.

Of course, there are several factors you must review, such as having sufficient fuel storage space, anticipated fuel sales and cash flow/credit status.

Through strategic fuel purchasing each week over the course of a year, you might be able to save a considerable amount of money.

Please leave a comment on this subject below. If you have any questions, please give us a call or send us an email: jenticknap@bellsouth.net, 404-867-5518; ronjacksongroup@gmail.com, 972-979-6566.

ABOUT THE BLOGGERS:

John Enticknap has more than 35 years of aviation fueling and FBO services industry experience and is an IS-BAH Accredited auditor. Ron Jackson is co-founder of Aviation Business Strategies Group and president of The Jackson Group, a PR agency specializing in FBO marketing and customer service training. Visit the biography page or absggroup.com for more background.

SUBSCRIBE:

Subscribe to the AC-U-KWIK FBO Connection Newsletter

© 2018 ABSG

Article originally appeared on Flight Planning, Airport Information, General Aviation (http://www.acukwikalert.com/).
See website for complete article licensing information.