Collaborative fuel purchasing takes off at African airlines

20 January 2012

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20 January 2012 | Angeline Albert

A group of nine African airlines, including operators in Angola, Mozambique and Namibia, will buy fuel worth $1.5 billion together to get a cheaper, better quality and more reliable supply.

TAAG Angola Airlines, LAM Mozambique Airlines and Air Namibia are among the nine members of the industry body the African Airlines Association (AFRAA) collaborating in a joint fuel procurement deal, which was initiated by the trade organisation.      

A total of 700 million litres of fuel is to be bought for 2012 under the agreement by the participating AFRAA members. Others involved in the deal include Air Malawi, Kenya Airlines, Ethiopian Airlines, Rwandair, Precision Air and Air Seychelles.

Different suppliers have been awarded contracts to provide fuel for airports at specific geographical locations. The start dates for the fuel contracts with the airlines vary, with some starting in February but all will end by 31 December 2012.

The launch of the agreement follows the creation of AFRAA’s Joint Fuel Steering Committee last year, made up of representatives from the airlines, which sent out tenders to fuel suppliers serving airports around the world and led to bids being evaluated by the airlines.

AFRAA hopes collaborative purchasing will result in cheaper, stable prices, quality fuel and a reliable supply for the participating flight operators, but none of the airlines would disclose how much money they hoped to save as a result of the agreement. AFRAA said fuel makes up 40 to 50 per cent of an airline’s direct operating costs.

Another joint fuel tendering process will take place this year for the 2013 calendar year. The trade body, which has 32 members, expects more of its members will participate in this upcoming procurement process. The committee is also considering how they can prevent high taxes and levies placed on fuel at certain African airports.

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