Thursday September 25, 8:12 PM AEST
Fuel Shortage Disrupts Sydney Airport Flights
By Lilly Vitorovich and Edgar Ang
Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)--Local and international airlines Thursday started diverting flights due to a surprise jet fuel shortage at Australia's busiest airport, adding hours to the length of some long haul flights from Sydney.
With the shortage traced to production problems by Caltex Australia Ltd. fuel rationing at Sydney Airport began late in the morning and was expected to remain in place for at least 48 hours.
Analysts said the shortage will be a short-term headache for international carriers, adding to costs and inconveniencing passengers who are now only just returning to airline travel following the SARS outbreak and Iraq war. Domestic flights should be able to withstand the rationing as they can carry enough fuel from their starting point.
"It is certainly is a bit embarrassing," said Peter Harbison, the head of industry consultant Centre for Asia Pacific Aviation. "You don't really expect to have this happening in a a sophisticated commercial environment," Harbison said.
Qantas late Thursday confirmed it had sent four international flights from Sydney to refueling stopovers in either Melbourne, Darwin or Cairns before proceeding to their final Asian destinations.
Singapore Airlines Ltd. said it is assessing the impact of the jet fuel shortage with flight disruptions expected on Friday morning for the next two days.
"We are concerned about the impact these restrictions may have on aircraft operations. We are now working with our fuel planners to identify the impact that the new directive will have on our passenger aircraft and freighter operations to and from Sydney," it said.
Initially, Singapore Airlines had been advised that its fuel uptake had to be reduced by 10%, which could be accommodated by loading extra fuel from Singapore. But than it was told that uptake from Sydney must be slashed by 65%.
Virgin Blue Seeks Local Flight Preference
A Sydney-based transport analyst at a major investment bank said he expects the fuel shortage to hurt international flights more than local carriers Virgin Blue and Regional Express.
"It could be a problem for the long haul flights until this next shipment comes in. I guess they will be getting every bucket they can over to the airport," he said.
"You have a bigger problem for some of the international flights, particularly to LA where there is nothing much you can do. The worst thing that can happen is flights will have to be extended one and a half to two hours by going to Brisbane or somewhere else to fill up."
Australia's second biggest airline, Virgin Blue, plans to operate normal services from Sydney Airport on Friday despite the fuel shortage.
Virgin Blue said it will ask that oil companies give priority to domestic airlines as a result of the school holidays and several sporting events.
In a statement, fuel companies Caltex, ,Exxon Mobil Corp. ,BP PLC and Royal Dutch/Shell Group (RD) said they are working to restore full production as well as organizing additional tanker shipments from interstate and overseas.
The first ship will arrive in Sydney's Botany Bay Thursday evening, the fuel companies said.
A Caltex Australia official told Dow Jones Newswires that the planned shutdown at Kurnell refinery's 60,000 barrel a day crude distillation unit is helping squeeze the already tight jet fuel market.
The unit has been shut since September 3 but the resumption date has been pushed back by four days to October 7 due to some technical problems at the Sydney refinery.
"It is now a major issue regarding the jet fuel shortage, the shortage problem was underestimated," the official said.
Australian Industry Minister Ian Macfarlane said every effort is being made to ensure the inconvenience to airline passengers is kept to a minimum.
"It'll have some impact in terms of international flights but it is hoped that overall on the basis of the information given to us by the airlines that those impacts will be minimized," he told Australian Broadcasting Corp. radio.
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