Nine African airlines have come together to purchase aircraft fuel jointly, a move the carriers believe will increase their leverage and raise the value and quality of fuel being procured.
According to the African Airlines Assn. (AFRAA), the nine airlines participating in the program include Kenya Airways, Ethiopian Airlines, Air Malawi, Air Namibia, Air Seychelles, LAM Mozambique Airlines, Precision Air, Rwandair and TAAG Angola Airlines.
AFRAA, which said more of its 32 members could join the program in the future, stated that the joint fuel buying project “is aimed at attaining better and stable unit price of fuel for the participating airlines, assuring quality of the product and supply reliability whilst the relevant fuel suppliers will benefit from higher fuel volumes purchased by airlines. Other areas of focus … include addressing the incidents of high taxes, charges and fees levied on fuel, especially in African airports, and lobbying stakeholders for the elimination of monopoly fuel suppliers at some airports.”
The carriers will purchase about 700 million liters of fuel in aggregate annually valued at about $1.5 billion. Fuel purchasing contracts for this year have already been jointly negotiated by the nine carriers, AFRAA said. While negotiations are being conducted by the carriers on a joint basis, fuel contracting will still be done by individual airlines.
“The contracts implementation dates will vary, with some airlines starting to purchase fuel under the [jointly] negotiated terms in February 2012,” AFRAA stated. “All contracts will, however, end in December 2012 and [be] replaced by new contracts for a full calendar year in 2013 and subsequent years following another bidding, evaluation, negotiation and awarding process to be carried out [jointly by the carriers] during the course of this year.”
By Aaron Karp