Today we are going to look at Open Access fuel supply and the commercial benefits of it for your airport.
A fair amount of my work is to do with implementing Open Access principles and agreements and when talking to Airport CEOs and CFOs at conferences they give a knowing nod, saying they would love to do this ‘but’. The Open Access model offers a number of significant benefits to airlines and airports (see our Aviation Fuel Strategy page), so why is this model not as prevalent as it should be, what are the blockers to moving to this arrangement which is promoted by IATA and is so prevalent in the USA?
Let me start by recapping on what ‘Open Access’ is. It is a supply/operating model that allows Airline X to buy fuel from a fuel supplier on the open market and then have that fuel delivered and available for uplift at an airport by that Airline X.
Let’s be clear, Open Access is nothing to do with bowser or hydrant refuelling capability or how the fuel is physically delivered to the airport (pipeline, rail, road, ship…or extreme cases, aircraft!); it’s all to do with the commercial mechanisms leading to the key principle of Airlines achieving the best fuel price on the open market and not just at the airport.
At each point of the supply chain, the participant should be focused on delivering quality and quantity in their role. In almost all cases fuel is co-mingled and drawn-down as required from a central storage facility (Fuel Farm).
So why isn’t everyone doing it? Well, there are some straightforward blockers to moving to this arrangement and key chief one is the Fuel Facility ownership.
Fuel supply tied to one supplier /consortium through infrastructure ownership
In Europe, it is very often the case that supplying oil companies (all the major players) will own the fuel infrastructure. This is simply because they have grown up with the air travel industry hand-in-glove and aided it in becoming the giant it is today. These arrangements have always had the implicit feeling of supply security as the operating companies are the suppliers.
As this is the only fuel available at an airport it is fairly obvious that the lack of competition means it may not be the best price available on the market. Even in consortium arrangements where there may be more competition between suppliers, competition is still only within that group and not across the market.
In these situations (and this is the majority across Europe) the facilities are closed to other suppliers. If the airport wants Open Access to be available at their airport then this has to change. In some instances, facility owners will allow other suppliers outside of the consortium to supply a small amount of jet fuel which may seem like Open Access. However, this option is not open to all and the charge for using the facilities is not necessarily the same for all parties as it would be in the true Open Access model.
Most airports that have implemented Open Access have tended to opt to employ a specialist operator with experience in managing this type of model. Alternatively, the airport could also augment their existing fuel operations team to manage this arrangement.
How Can eJet Help?
- eJet can assist with a strategy for moving from the current [closed] to a preferred [open] model of supplier access.
- eJet can assist in finding the right Operations partner
- Help craft the necessary agreement structure as well as helping with existing operational capability.
The key driver to this model is simply to make your Airport more attractive to Airlines. If more Airlines want to fly to you then you can be more commercially successful.
For more information check out our case study on Dublin airport.
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