I thought I'd try a get a few facts (I know I know - this is a rumour network) about how much QF pays for it's fuel. That's not easy to do since that's a closely guarded commercial secret. But with a bit a digging around you can make some educated guesses. Here we go ....
First some conversion figures:
1 barrel = 42 US gallons
1 US gallon = 3.785 litres
1 litre JetA-1 ~ 0.79 kg
1 USD = 1.30 AUD
Talking to refuellers around Australia over the years about the cost of aviation fuel has left the lasting memory that the cost of Jet A-1 fuel was always around half the cost of petrol. If still valid that means that Jet A-1 should retail at about $0.70 per litre. Giving that QF has hedging in place they probably pay a bit less. How much less? Dunno - but lets say %10 - which means around $0.63 per litre. This is a rough guess. Lets see if we can refine it - so to speak !
The website:
www.icispricing.com gives world prices for various chemicals including crude oil and Jet fuel. It's a subscription service but as an example of what subscribers get it gives some historical examples. The examples for oil and fuel are dated 8 Nov 05 and gives the SIN crude oil price as USD 62 per barrel (= USD 1.4762 per US gallon) and the SYD Jet A-1 fuel price as USD 1.9688 per US gallon. Whilst the data is some months old, it does reveal the cost of refining, shipping etc. 1.9688/1.4762 = 1.3337. ie There is a 33% mark up from the price of crude oil to the price of Jet A-1 in SYD. This percentage markup is probably constant.
Now QF have publicly stated that they have hedged their fuel prices for 05/06 at USD 56 per barrel (of crude oil). Applying the 33% markup gives 56/42*1.3337 = USD 1.7783 per gallon Jet A-1. This is 1.7783*1.30/3.785 = AUD 0.6108 per litre. Which is pretty darn close to my rough guess (0.63) so I am confident that QF pays about AUD 0.61 per litre.
Now how does this relate to the fuel surcharge? Lets look at in terms of how much fuel each passenger buys. The domestic levy is $31 per pax = 31/0.61 litre per pax = 31/0.61*0.79 = 40.1475 kg per pax. ie $31 buys 40kg of Jet A-1 fuel.
How far does 40kg get you? Lets say a 738 with 125 pax. They've bought 125*40 = 5000kg of fuel. The cruise fuel flow is about 2500kg/hr so about two hours worth of flying. That'll get you between east coast cities, but it won't get you across the country. So if the sector is less than two hours the surcharge is more than the total cost of fuel, but on sectors more than two hours it is less than the total cost of fuel. So it probably averages out.
But here is the rub. Is the surcharge meant to cover the total cost of fuel or only the increased cost when crude prices increased? When crude oil was around USD 30 per barrel there was no surcharge. QF introduced the surcharge to cover the increased cost of fuel - ie the difference between $30 and $56 per barrel. So the surcharge should only cover about half the fuel cost - but domestically it appears to cover the total cost.
What about internationally? The Tasman surcharge is $56 which buys you 73kg of fuel. A 763 with 200 pax has bought 14.6 tonnes of fuel. At 5 tonnes per hr this gives a flight time of about 2.9 hours. This is about the average flight time. So like their domestic friends, the Tasman pax have bought all the fuel.
The International surcharge is $98 which buys you 127kg of fuel. A 744 with 320 pax has bought 40.6 tonnes of fuel. At 10 tonnes per hour this gives a flight time of four hours. This is less than most international flights - lets say an average of 10 hours - so these pax are buying about 40% of the fuel required.
In summary:
- QF pays about $0.61 per litre for its fuel.
- The Domestic surcharge of $31 buys 40kg of fuel, this appears to cover the total cost of fuel.
- The Tasman surcharge of $56 buys 73kg of fuel, this appears to cover the total cost of fuel.
- The International surcharge of $98 buys 127kg of fuel, this covers about 40% of the cost of fuel.