SAA losses take off as fuel line gets squeezed

[Deskjocky]

Interesting article in yesterday's Sunday Times, does anyone know if CE has the same problem at Gatwick? Furthermore when there were fuel shortages in SA does BA/VS get treated the same way?

SAA is facing horrific long-term losses on its London services unless the fuel shortage at Heathrow Airport ends soon.
The airline has been losing R14-million a month since early December through having to stop at Milan to refuel on return flights to South Africa — and has been led to believe that the situation may not be resolved for up to 18 months.
This does not mean SAA will allow losses to run up to a staggering R2.5-billion, and it may, in an effort to staunch the haemorrhage, cancel or combine some flights to London during the coming high season, a lucrative peak, and beyond. But whatever option it chooses, money is going to be lost until normality is achieved.
As it is, SAA is losing passengers and cargo to its British competitors, British Airways and Virgin Atlantic, who are not subject to the same restrictions on fuel uptake at Heathrow.
SAA’s fuel uptake at Heathrow is restricted by as much as 30%.
The airline’s CEO, Khaya Ngqula, has had two urgent meetings with the British Airports Authority (BAA) but little relief has been granted, it said in a recent statement.
SAA said the BAA position, that allows London-based long-haul carriers to maintain a complete fuel supply, is discriminatory.
“We cannot stand by idly and watch our customers suffer the consequences of this fuel shortage,” said Ngqula.
He said the airline would continue to aggressively negotiate a solution to ensure normal services were restored as soon as possible.
In reply to questions this week, SAA said the BAA had predicted that the situation “will continue for up to 18 months”.
A BAA spokesman said on Friday that fuel rationing at Heathrow will be here for “some time” but would not be more specific.
“The International Air Transport Association is meeting in London right now and next week to discuss the rationing structure — allocations to the various airlines. We will await the outcome of the meeting,” he said.
Recent fire damage to the Hemel Hempstead fuel depot in the UK had cut a third of the supply of fuel to Heathrow, but BAA said it was actively seeking to increase the supply.
SAA said the estimated R14-million was made up of landing fees and overfly rights, loss of cargo revenue because of the additional fuel it had to carry out of South Africa, higher maintenance costs to aircraft and the loss of passengers to opposition British carriers not subject to the fuel penalties.

[Fluffy flyer]

Not that I am a big fan of SAA but what I see they need to do is impose the same fuel restrictions on BA and Virgin from the South African side.

Not that tit for tat is ever a good way of solving problems, but it may put pressure on the UK to be fair about its rationing policy.

It will level the playing fields……

Then again maybe SAA is getting what it deserves, it doesn’t like being unfairly treated, but SAA has never played a fair game with domestic carriers in South Africa, so maybe now SAA will find out what its like to try and still keep it together when the rules are not the same.

[surely not]

No sympathy for SAA at all when they skew the rules re stand occupancy at JNB so much in their favour.
Unlike normal airports where aircraft on immediate turn round get priority for pier served stands over those that arrive and are then towed off stand for the day, SAA and ACSA between them allocate stands on the basis of total passenger throughput for each airline, which gives SAA the advantage over smaller carriers.
Play fair in SA and people might be more supportive of your gripe in LHR

[Deskjocky]

I really dont think the two issues are in anyway linked- stand allocation, yes its important but at the end of the day airlines concerend can still operate if they have to bus pax etc- whats happening here is commercial sabotage. All carriers should have the same restrictions.

Yes, perhaps SAA is getting some of its own medicine for its errrant ways in the past and should to a certain extent have to do some sucking up but this doesnt only involve SAA- what about all the other carriers? can CE sustain this sort of thing?

If this situation is going to last for 18 months then one cannot see the BAA not getting sued by one or two carriers- thats going to get quite interesting.

There has also been talk of JIA going through some fuel shortages in the near future- if this were to happen and the proposed contingency plans were not sucessful- one wonders if BA and VS are going to be "short changed" in favour of SA's local carriers.

[surely not]

As the reason for the fuel shortage in LHR is outwith the control of BAA I doubt that they can be sued for the fuel shortage. If they are seen to be behind the 'unfair' allocation of the limited fuel resource then maybe there will be a case to answer.

[Deskjocky]

The insinuation at this point in time is that the BAA are the ones who are driving the allocation of fuel- if not then who is? The door is certainly open for any carrier disadvataged to take the matter to court as well as persue the matter with the relvent competitions tribunal.

[surely not]

I would have expected the fuel companies to have some input as to who they supplied, and how much they supplied??

[canthover]

Wasn't the big guy off to London the other day to resolve this matter - or was it just another extension of his opulent spend program on helicopters and nice hotels?

[Deskjocky]

Even for him, I think it was a bit of a stretch for the bell, he probabaly checked though:}

[Tailspin2001]

There is a thread running on the main rumors section but I will paste the relevant notam here where it states that even LHR based Airlines are being rationed.
They are looking at various options but this problem may be around for some time to come.
Here is the NOTAM.
Q)EGTT/QFULT/IV/NBO/A/000/999/5129N00028W005
FROM 06/01/30 12:24 TO 06/03/30 12:00 EST A0151/06
E)HEATHROW AIRPORT IS EXPERIENCING REDUCED DELIVERIES OF JET FUEL.
IN ORDER TO ENSURE CONTINUANCE OF OPS, THE ARRANGEMENTS AGREED IN THE
DRAFT HEATHROW FUEL CONTINGENCY PLAN (HFCP) WILL APPLY WIE.
THE SITUATION REMAINS UNDER CONSTANT REVIEW AND AS SUPPLIES AND
STOCKS CHANGE FURTHER CONSIDERATION WILL BE GIVEN TO THE OPERATIONAL
IMPACTS ON EACH AIRLINE.
ALL INBOUND ACFT WILL MAXIMISE TANKERING OPPORTUNITIES. IN ADDITION
TO TANKERING, FUEL RESTRICTIONS WILL ALSO APPLY.
USING THE HFCP, EACH CARRIER WILL, ON A DAILY BASIS, BE ALLOCATED A
PERCENTAGE OF THE PREVIOUS WEEKS TOTAL UPLIFT. THIS ALLOCATION CAN BE
USED AT AIRLINES DISCRETION.
ALL DEPARTING ACFT WILL RECEIVE FUEL, BUT ON A REDUCED BASIS -
(REFLECTING NORMAL CONTINGENCY PRACTICE WORLDWIDE). THE FOLLOWING
RESTRICTIONS APPLY:
NEW ALLOCATION FOR VISITING CARRIERS AT LHR WILL BE AS FOLLOWS:
FLTS UP TO 5 HR DURATION WILL RECEIVE 40 PER CENT OF NORMAL UPLIFT
FLTS OVER 5 HR DURATION WILL RECEIVE 70 PER CENT OF NORMAL UPLIFT
NEW ALLOCATION FOR BASE CARRIERS:
FLTS UP TO 5 HR DURATION WILL RECEIVE 55 PER CENT OF NORMAL UPLIFT
FLTS OVER 5 HR DURATION WILL RECEIVE 82 PER CENT OF NORMAL UPLIFT
CONSIDERATION WILL BE GIVEN TO AIRLINES THAT PREDOMINANTLY OPERATE
ACFT AT THE LIMIT OF THEIR RANGE. AIRLINES IN THIS CATEGORY SHOULD
CONTACT THE AIRSIDE BUSINESS RECOVERY TEAM ON 020 8745 7582 TO
ESTABLISH AN AGREEMENT.
THE SITUATION WILL BE MONITORED DAILY AND AIRLINES PERFORMANCE
MEASURED, AS THE FUEL SITUATION DEVELOPS THE ALLOWANCES MAY BE
ADJUSTED AND FURTHER NOTAM WILL BE ISSUED.

[south coast]

i would have said it is quite normal for each country to protect their own first...

cant imagine it would be any different if it were in sa, pretty sure saa would remain on normal fuel requests while foreign carriers had to acceot reduced fuel loads.

protectionism, quite normal, anyhow, saa is government funded, not allowed in europe-officially, so you guys paying your tax can keep topping up saa!

[Deskjocky]

Thanks Tailspin, seems like the gap is closing then- although a 12% gap is still quite a bit.
south coast, during the recent fuel crisis at CPT, all carriers were treated exactly the same way- SAA was given no preference at all. Its longhaul filghts out of CPT either had to route via JNB or elsewhere just like BA had to do.

[tired]

To answer the question at the top of the thread - yes, BA/VS got treated the same way when there was a fuel shortage at FAJS in July 2001. Don't know what BA did, but VS had to ferry the aeroplane to Durban 4 times a week to tanker fuel back to JNB in order to meet the reduced uplift requirments imposed at JNB.

Also, people seem to be missing the point here. LHR is BA/VS's home base and 50% of their daily flights leave from there, whereas other airlines, including SAA's, LHR-originating flights make up a much smaller percentage of their daily departures. So the LHR based airlines are hugely more affected by this than any non-LHR based airline. For info, most of VS's flights inbound to LHR tanker fuel up to MLW - 2T in order to meet the uplift penalty at LHR- I landed with 35T yesterday, (as against a normal landing fuel of about 10T). Rule of thumb is that it costs 3%/hour to tanker extra fuel, so this is costing VS a bomb. (Also - rule of unforeseen consequences! - landing with all this cold-soaked fuel in the tanks means that we are getting ice forming on the top of the wings before just about every departure, meaning we have to de-ice before most departures, which isn't cheap either.)

The bottom line is that this is costing everyone involved a bomb, but while it only affects a tiny percentage of SAA's flights it affects nearly 50% of LHR-based carriers' flights- the differential in uplift penalities imposed by LHR fuel consortium doesn't get anywhere near to addressing this imbalance.

[PAXboy]

If you read the thread in R&N, you will learn that the current restriction precentages were agreed between BAA and all their customers. This was done under general precautions and long before the Buncefield depot blew up.

Now that they have had to implement the plan that everyone agreed to, some of them don't like it.

[flyboy2]

http://www.mg.co.za/articlePage.aspx?articleId=263837&area=/breaking_news/breaking_news__business/

A new fuel scheme in place at London's Heathrow airport was good news for South African Airways as it ended diversions via Milan, the airline said on Thursday.

"It is good news on one hand but, on the other, something they can withdraw at a day's notice," SAA flight operations general manager Colin Jordaan said.

Fuel supplies to Heathrow were severely disrupted on December 11 after a fire at the Buncefield Fuel Depot that supplies the airport with fuel.

At the time it was estimated the depot would take 18 months to repair.

Jordaan said the fuel situation at Heathrow was now under control and SAA was assured of an adequate supply of fuel until February 20 -- depending on stocks being maintained.

The new agreement, brokered by the International Air Transport Association (Iata), comes into effect on the same day.

Jordaan cautioned that despite the Iata agreement, the crisis would only be over when the reconstruction of the depot was complete.

Iata Southern Africa spokesperson Linden Birns said the new arrangement levelled the playing field for all airlines operating long haul flights from Heathrow, including SAA.

No longer would British airlines such as British Airways, Virgin Atlantic and British Midland receive a proportionally larger allocation of fuel than the foreign airlines operating into Heathrow.

Under the revised regime, all operators of long haul flights would receive 92% of their normal fuel allocation.

In a statement released in London, Iata said the agreement resulted from intense negotiations among airlines.

"The first priority of all concerned was maintaining operations at Heathrow with 35% less fuel supply. Airline co-operation was critical and we have achieved a great and historical result," said Iata director general Giovanni Bisignani.

The British Airports Authority was pleased the airlines had reached the agreement.

"With 186 000 passengers using Heathrow every day, this workable
solution is beneficial for all. BAA is convinced that this solution is a positive step forward and will continue working on options toward a long term return to a fully robust supply," said airport managing director Mick Temple. - Sapa

[Boeing Rules]

CE has no problems from gatwick with fuel, see all pax trvling now on CE to get less worries about fuel shortage.:{ SA:{ BA:{ VS:D CE $
BR