Save for later Print Download Share LinkedIn Twitter Airlines and their jet fuel suppliers met virtually this week to plan for the safe restart of global air travel after more than 15 months of Covid-19 devastation. High on the agenda at the Jun. 8-9 International Air Transport Association’s (IATA) Aviation Fuel Forum were possible problems with jet fuel quality caused by stagnant fuel tanks and unused pipeline and airport hydrant infrastructure. But labor shortages, an exodus of talent from the industry and problems accessing multi-fuel pipelines -- where nominations are based on historical use -- were also flagged as impediments likely to hamper restart efforts (JFI Nov.16'20). Aviation is emerging from the pandemic as a smaller industry following widespread downsizing of fuel teams at airlines and oil companies. Former Lufthansa Vice President for Fuel Management Thorsten Luft -- whose role has not been replaced -- sees further challenges ahead as environmental priorities reshape the business model. He cites the political debate in Europe about banning short-haul flights in favor of train transport, and more widespread use of sustainable aviation fuels (SAF) as the EU prepares to introduce an SAF mandate at regional airports (related). Costs are rising on many fronts. "We expect a renewed push from governments to increase taxes even though we are on a financial knife-edge for years to come," warned Hemant Mistry, IATA's director for global airport infrastructure, addressing a large group of 800 participants. EU finance ministers have expressed broad support for a Europe-wide tax on jet fuel used by airlines (JFI May28'21). Refueling costs are on the rise as into-plane companies and airport consortia offset lower throughput volume with higher fees. IATA formed its Fuel Restart Coordination Group soon after Covid-19 grounded the airline industry last March. But it has already had to throw away the initial restart plans it published last August. Developed by representatives from airlines, fueling companies and oil company suppliers in each region, those plans optimistically assumed a linear recovery in global air travel that has simply not played out as hoped. Domestic markets in the US and China have rebounded while international travel lags far behind. The phased recovery is showing wide variations between regions. US Domestic Market Takes Off Speakers from the US described an already booming domestic travel market but also acute problems getting fuel because of a shortage of truck drivers and "into-wing" airport fueling personnel. Michael AuBuchon, senior director of fuel supply chain management at US domestic carrier Southwest Airlines, said his company's jet fuel demand was already above pre-pandemic levels at some locations thanks to the rapid rollout of vaccines in the US and pent-up demand for leisure travel. Southwest has added 20% more leisure routes since it restarted operations, mainly to smaller US airports close to mountain and beach resorts that are dependent on deliveries of jet fuel by truck. Logistical constraints have resurfaced during the recovery. United Airlines' Vice President of Global Fuel Supply Janet Peters flagged similar problems around truck supplies to the smaller US airports it serves. But she also mentioned shortfalls in pipeline deliveries to its larger hubs after scheduling protocols curtailed jet fuel shipments. Allocations on multi-product pipelines are based on allotments over the previous 12 months, which had plunged during the pandemic. The resilience of US demand for road fuels over the last year has meant that gasoline and diesel nominations have already squeezed jet fuel out of pipeline delivery schedules at a time when airlines like United are adding routes to Europe this summer. Jet suppliers need plenty of advance notice to get certified fuel in the right place. And many larger airlines are struggling to provide that notice given the uncertainties surrounding international travel. Volatility of flight schedules has become the new normal, creating unprecedented challenges in maintaining adequate supplies at US airports. The IATA's Fuel Portal has issued frequent advisories about fuel shortages at airports across Florida and other leisure destinations, even before the cyberattack against the Colonial Pipeline in May caused further havoc (JFI May14'21). Europe Slow to Get Off the Ground Willie Walsh, IATA's new director general and the former CEO of European airline giant IAG, said the crisis facing aviation is no longer caused by Covid-19 but by government restrictions. IATA is pushing its own digital travel pass to help streamline vaccination and test data, and it is also lobbying for much cheaper Covid-19 testing. IATA is urging European governments to adopt a unified approach for reopening borders to enable the effective implementation of its travel pass by Jul. 1. This week, Spain and France lifted restrictions for vaccinated travelers, but most other EU countries have not. In sharp contrast to the US, Europe is still in the depths of Covid-19 travel restrictions. The UK's sudden dropping of Portugal from its "green list" of countries with no quarantine requirement was a hot topic at the Fuel Forum on Tuesday (JFI May28'21). Several speakers cited this as an example of how volatile the restart of international aviation is likely to be, but also as an example of how much pent-up demand for air travel there is. UK bookings to Portugal jumped from 80% below pandemic levels to 20% above after flights to Portugal restarted on May 17. But they collapsed again as soon as Portugal was downgraded to the UK's "amber list." IATA Chief Economist Brian Pearce said global air traffic is still barely a third of pre-pandemic levels, despite booming domestic markets in the US and China and global air cargo traffic that is already above 2019 levels. He sees the global recovery picking up in the second half of this year when the trans-Atlantic travel corridor between Europe and the US is expected to reopen, with a full recovery following within three years. The pandemic's demand-side shock has nevertheless wiped out two years of air traffic growth. Deloitte's global aviation leader Bryan Terry was confident that global jet fuel demand, and not just air traffic, would eventually recover to 2019 levels, despite the deployment of more fuel-efficient aircraft and a ramp-up in the use of low carbon fuels. But the slow resumption of high-value business travel would keep airline yields under pressure. Opinions are divided about the future of corporate travel. United has an optimistic view for a full recovery, while others say that virtual meetings and lower travel budgets will permanently dent the business segment. Digital Refueling The pandemic has proved to be a real catalyst for the digitalization of aircraft fueling. Low contact e-fueling is now “a must do, not a choice,” for into-plane fueling companies and airlines alike, according to Shell Aviation’s head of digital strategy Eva Wan. In a major step forward, the EU recently approved the use of digital signatures, which Lufthansa’s fuel purchasing manager Simon Berkemeier suggests will finally allow for completely contact-free paperless and real time e-fueling. IATA has already updated its fuel data standards to include digital signatures. Blockchain is seen as the next big step to make digital processes even more efficient but Berkemeier suggested widespread adoption was probably still 2-3 years away. Wan also flagged new opportunities to analyze the fueling data being harvested which could change the way companies operate. Kerry Preston, London
