EK Fuel Advantage Thread (or not)

Old May 10, 12, 7:10 am
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EK Fuel Advantage Thread (or not)

An interesting line from this article.....



Emirates hit by fuel costs, sticks with expansion

"Frankly we need more airplanes sooner to do all the things we want to do. For every route (we have), there's about five behind which we want to do and get going," Emirates' President Tim Clark said in an interview with Reuters Television.


http://www.reuters.com/article/2012/...84902V20120510
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Old May 12, 12, 11:10 am
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Originally Posted by Face81 View Post
An interesting line from this article.....



Emirates hit by fuel costs, sticks with expansion

"Frankly we need more airplanes sooner to do all the things we want to do. For every route (we have), there's about five behind which we want to do and get going," Emirates' President Tim Clark said in an interview with Reuters Television.


http://www.reuters.com/article/2012/...84902V20120510
The UAE must have fuel that we don't know about. Seriously, "rising fuel cost" in Dubai is probably like $1.5 a gallon or something. Once it hits $1.75 everyone probably starts complaining there.

"Two weeks ago, Emirates announced a new codeshare deal with New York-based JetBlue Airways. That arrangement will tack an Emirates code and flight number onto JetBlue flights from New York's JFK airport to a dozen U.S. destinations, including Chicago and Boston."

Wow, so a couple months ago I said that EK would be smart to just partner up with an airline like Jetblue or Virgin America instead of flying nonstop to all those "domestic" cities. Look what they did. Smart.

My advice to EK - Don't fly to MIA or MCO. Let Jetblue handle that for you.
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Old May 12, 12, 9:17 pm
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Originally Posted by blackmamba View Post
The UAE must have fuel that we don't know about. Seriously, "rising fuel cost" in Dubai is probably like $1.5 a gallon or something. Once it hits $1.75 everyone probably starts complaining there.
And what has that to do with the price of jet fuel?
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Old May 12, 12, 9:35 pm
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Originally Posted by ung1 View Post
And what has that to do with the price of jet fuel?
Jet A-1 is basically Kerosene, which is derived from Petroleum.

^
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Old May 12, 12, 9:43 pm
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EK Fuel Advantage Thread (or not)

Originally Posted by EK433B77W View Post
Jet A-1 is basically Kerosene, which is derived from Petroleum.

^
Yes, but EK's stance is that they purchase Jet A-1 at world prices, even though gasoline for cars in Dubai is cheaper than most of the world (but the most expensive in the region). So why is that?
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Old May 12, 12, 11:05 pm
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Originally Posted by ung1 View Post
Yes, but EK's stance is that they purchase Jet A-1 at world prices, even though gasoline for cars in Dubai is cheaper than most of the world (but the most expensive in the region). So why is that?
they're all from the same derivative of crude. its the refining that cost a lot of money. The UAE may have a lot of crude but looking at what you said before, maybe they don't have a refinery that can produce enough for EK's demand?

Didn't Delta just buy a refinery in PA? I'm surprised EK would even buy crude at "world prices." I'm sure they have little to no tax on it which make all the difference in the world.

Last edited by blackmamba; May 14, 12 at 10:18 am
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Old May 12, 12, 11:21 pm
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This is an excerpt from an EK "Myths and Facts" document, which is freely available online.
"Myths about Emirates access to free or discounted oil are often repeated, but in reality don’t stand up to scrutiny.

Airline Business recently carried an article that covered the issue of oil for Saudi Arabian Airlines. It said, “The problem for the government is that travellers in this oil-rich nation enjoy the benefits of cheap fuel, whether in the guise of subsidised air tickets or subsidised fuel for their cars. Saudi Arabian itself enjoys subsidised fuel prices too...

In May the local, privately owned low-cost players Sama and NAS Air were given the fuel subsidy...”

Given Saudi Arabia is a neighbour of the UAE, is it therefore reasonable to ask if we receive similar government support? The answer is no. Emirates procures its fuel at market rates from multiple suppliers at all airports to which it operates, including, of course, Dubai International Airport (DXB).

Fuel is sourced from all five suppliers that serve Dubai International Airport: BP, Shell, Chevron, ENOC and Emojet – a joint venture between Emarat and Exxonmobil. Outside of Dubai, Emirates’ main fuel suppliers are also Exxonmobil, BP, Shell and Chevron.

But don’t just take our word for it. Emirates recently wrote to Shell, BP and Chevron asking them to verify our credentials as fully commercial clients with contracts on par with their other airline clients around the world.

Chevron - “...happy to confirm that our present contract and all our previous contracts covering jet fuel supply to Emirates Airline at Dubai have all been negotiated and agreed with the same considerations as for those jet fuel contracts with our other airline customers...with no free fuel and with no economic subsidy.”

BP- “...have been a supplier of jet fuel to Emirates at Dubai since 1985 through a commercial fuel supply contract which is competitively tendered periodically”.

Shell - “Our contract with Emirates Airline is the result of a fair negotiation process in line with the negotiations that we have with other major customers...and the items invoiced are similar in type to those charged to our other customers...”

It is sometimes suggested Emirates receives very cheap or subsidised fuel at Dubai International Airport. This is wholly incorrect. The following chart shows fuel prices paid by Emirates at major airports around the world relative to the price we pay in Dubai, along with analysis of comparitive fuel costs.
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Old May 14, 12, 10:03 am
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Emirates says: We pay the same price for fuel as any other airline in Dubai and in Frankfurt.

Lufthansa says: Emirates pays a low price for fuel at their hub in Dubai while we have to pay a higher price at our hub in Frankfurt. (Logically, any airline has to buy approx. 50 % of the fuel at the hub(s) and 50 % at the out stations)

The fact that Lufthansa pays the same price as Emirates for fuel in Dubai doesn't help to bring LH's fuel bill significantly down.

The fact that Emirates pays the same price as Lufthansa for fuel in Frankfurt doesn't help to bring EK's fuel bill significantly up.

I'm with EK on this one, because LH could just stop in Dubai again on the way to Asia as they had to do 20 years ago, even with full traffic rights beyond Dubai. Lufthansa Cargo or German charter airlines like Condor still frequently stop in Sharjah to stock up on cheap fuel. If Lufthansa decides to fly nonstop to Asia as a commercial decision, they should just charge a higher price to the business customers who demand the nonstop flight, and if the market doesn't accept this, then they are simply out of business on that route.
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Old May 14, 12, 10:18 am
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Originally Posted by jarino View Post
Emirates says: We pay the same price for fuel as any other airline in Dubai and in Frankfurt.

Lufthansa says: Emirates pays a low price for fuel at their hub in Dubai while we have to pay a higher price at our hub in Frankfurt. (Logically, any airline has to buy approx. 50 % of the fuel at the hub(s) and 50 % at the out stations)

The fact that Lufthansa pays the same price as Emirates for fuel in Dubai doesn't help to bring LH's fuel bill significantly down.

The fact that Emirates pays the same price as Lufthansa for fuel in Frankfurt doesn't help to bring EK's fuel bill significantly up.

I'm with EK on this one, because LH could just stop in Dubai again on the way to Asia as they had to do 20 years ago, even with full traffic rights beyond Dubai. Lufthansa Cargo or German charter airlines like Condor still frequently stop in Sharjah to stock up on cheap fuel. If Lufthansa decides to fly nonstop to Asia as a commercial decision, they should just charge a higher price to the business customers who demand the nonstop flight, and if the market doesn't accept this, then they are simply out of business on that route.
Yeah it's all about the taxes. That's why they should just buy their own refinery like Delta!
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Old May 14, 12, 4:51 pm
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The refinery would only help them in dubai, everywhere else they would have to still buy fuel
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Old May 14, 12, 6:02 pm
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Originally Posted by Firemansam View Post
The refinery would only help them in dubai, everywhere else they would have to still buy fuel
You miss the point totally, even though EK did pay more for jet fuel (on paper) the UAE as a whole are making a killing with the price of oil exports these days. What really matters are the broader positives EK bring to Dubai, and the rest of the UAE economy. The seven Emirates function as one country, and people tend to forget that. The UAEs weakest link since the end of 2008 was the realestate sector, but it has out performed every other country since the beggining of 2012 so far which means the UAE are set to start they're next economic boom, and they're airlines will play a big part of that mowing down the competition.

The UAE also refine all of Irans oil, and with sanctions going into effect soon there will be plenty for EK. Why do you think they're building a jet fuel pipe line from Jebel Ali straight to DXB/DWC ?

Also most foreign companies in the UAE need local sponsors one way, or another so when you read between the lines when it comes to jet fuel you'll better realize why the legacy airlines are crying foul (slush funds), but they can't prove any thing. The oil companies are also more than happy being registered in the UAE because of the tax free policy, and not having to show any body they're books.

Just like all roads lead to Rome in the past, clean/liquid corporate money is making its way into UAE banks.

This thread should be a busy one with all the expasion planned in the future.
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Old May 15, 12, 3:19 am
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Originally Posted by blackmamba View Post
they're all from the same derivative of crude. its the refining that cost a lot of money. The UAE may have a lot of crude but looking at what you said before, maybe they don't have a refinery that can produce enough for EK's demand?

Didn't Delta just buy a refinery in PA? I'm surprised EK would even buy crude at "world prices." I'm sure they have little to no tax on it which make all the difference in the world.
Nothing to do with that. All airlines refueling in Dubai airport pay the same prices. Emirates does not recieve any subsidy on that.
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Old May 15, 12, 3:25 am
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Originally Posted by blackmamba View Post
Yeah it's all about the taxes. That's why they should just buy their own refinery like Delta!
Refineries does not necessarily mitigate the risk of price increases as refineries have both positive and negative margins. If Emirates enters into the refining business they still have the risk of incurring losses from the refinenry which can calculate into double losses.
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Old May 15, 12, 3:54 am
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Originally Posted by NOIR View Post
You miss the point totally, even though EK did pay more for jet fuel (on paper) the UAE as a whole are making a killing with the price of oil exports these days. What really matters are the broader positives EK bring to Dubai, and the rest of the UAE economy. The seven Emirates function as one country, and people tend to forget that. The UAEs weakest link since the end of 2008 was the realestate sector, but it has out performed every other country since the beggining of 2012 so far which means the UAE are set to start they're next economic boom, and they're airlines will play a big part of that mowing down the competition.

The UAE also refine all of Irans oil, and with sanctions going into effect soon there will be plenty for EK. Why do you think they're building a jet fuel pipe line from Jebel Ali straight to DXB/DWC ?

Also most foreign companies in the UAE need local sponsors one way, or another so when you read between the lines when it comes to jet fuel you'll better realize why the legacy airlines are crying foul (slush funds), but they can't prove any thing. The oil companies are also more than happy being registered in the UAE because of the tax free policy, and not having to show any body they're books.

Just like all roads lead to Rome in the past, clean/liquid corporate money is making its way into UAE banks.

This thread should be a busy one with all the expasion planned in the future.
The pipeline from Jebal Ali to the airports is a logistical solution to transport the jet fuel from the point of receipt which is Jebal Ali port where it is received and stored to the airport rather than using road tankers. You are the one missing the point totally.

People please understand the below facts from a fuel expert:
1- Dubai is tax free? Yes, for Emirates and all airlines. So other major airlines bad luck. Deal with your governments not with Emirates airlines, your nagging will not force Dubai government to impose taxes on other airlines.
2- Emirates gets fuel subsidy? No, the previous article from jet fuel marketers in dubai airport proves that. Any auditor who knows the oil prices can confirm that from checking the financial statement.
3- Owning a refinery does not make you get lower prices for fuel. It is a totally different industry which has its own risks. Good luck delta!

Emirates did not excel because of subsidies. The service, the convenience, the innovation, etc etc all made Emirates grab their passengers from other airlines, That's why it can be profitable why others struggle to survive.
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Old May 15, 12, 4:11 am
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Originally Posted by singbasi View Post
The pipeline from Jebal Ali to the airports is a logistical solution to transport the jet fuel from the point of receipt which is Jebal Ali port where it is received and stored to the airport rather than using road tankers. You are the one missing the point totally.

People please understand the below facts from a fuel expert:
1- Dubai is tax free? Yes, for Emirates and all airlines. So other major airlines bad luck. Deal with your governments not with Emirates airlines, your nagging will not force Dubai government to impose taxes on other airlines.
2- Emirates gets fuel subsidy? No, the previous article from jet fuel marketers in dubai airport proves that. Any auditor who knows the oil prices can confirm that from checking the financial statement.
3- Owning a refinery does not make you get lower prices for fuel. It is a totally different industry which has its own risks. Good luck delta!

Emirates did not excel because of subsidies. The service, the convenience, the innovation, etc etc all made Emirates grab their passengers from other airlines, That's why it can be profitable why others struggle to survive.
I know the pipeline will be for logistics purposes cause there's no refinery for jet fuel in the vicinity at the moment. Just by interest how much will EK save just by doing this ?

Any chance they will extend the jet fuel pipeline to the Indian Ocean aswel ?
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