Fuel Management

Fuel procurement optimization, hedging strategy, and real-time purchasing decisions.

Scope

Strategic Goal

Protect the bottom line from commodity volatility through data-driven fuel purchasing decisions.

Fuel Procurement

• Supplier negotiations
• Contract management
• Spot vs. contract purchasing
• Multi-airport fuel arrangements
• Into-plane agreements

Fuel Hedging

• Price risk mitigation
• Hedging instruments (swaps, options, collars)
• Hedge ratio optimization
• Counterparty management
• Mark-to-market monitoring

Operational Fuel Management

• Flight planning fuel optimization
• Tankering decisions
• Fuel efficiency monitoring
• Cost index optimization

Research Topics

• Fuel hedging strategies for small carriers
• Real-time fuel price data sources
• Tankering optimization algorithms
• Fuel supplier evaluation criteria
• Hedging instrument types
• Fuel efficiency KPIs
• Carbon offset integration
• Sustainable aviation fuel (SAF)

Architecture Considerations

Fuel Price Optimization

┌─────────────────────────────────────────────────────────┐
│               Fuel Price Dashboard                       │
├─────────────────────────────────────────────────────────┤
│                                                         │
│  Current Jet A1 Prices (USD/gallon):                   │
│  ┌─────────────────────────────────────────────────┐   │
│  │ CCS (Caracas)    │ $2.85  │ ▲ +0.05            │   │
│  │ PMV (Porlamar)   │ $2.92  │ ▼ -0.02            │   │
│  │ MAR (Maracaibo)  │ $2.88  │ ▬ 0.00             │   │
│  └─────────────────────────────────────────────────┘   │
│                                                         │
│  Market Price vs. Hedged Price:                        │
│  ┌─────────────────────────────────────────────────┐   │
│  │     $3.20 ─────────── Market Price              │   │
│  │     $2.90 ─────────── Hedged Price              │   │
│  │     Savings: $0.30/gal (9.4%)                   │   │
│  └─────────────────────────────────────────────────┘   │
│                                                         │
└─────────────────────────────────────────────────────────┘

Fuel Logic Decision Engine

Real-Time Data Inputs:
├── Current fuel prices by station
├── Forecast prices (1-7 days)
├── Aircraft fuel consumption rates
├── Flight schedule
├── Tank capacity by aircraft
└── Current fuel on board
        │
        ▼
┌───────────────────┐
│  Optimization     │
│  Engine           │
└─────────┬─────────┘
        │
        ▼
Decisions:
├── Where to fuel (cheapest viable station)
├── How much to fuel (tankering calculation)
├── When to buy (spot vs. contract)
└── Hedging recommendations

Data Model

FuelPrice
├── Station (ICAO code)
├── EffectiveDate
├── PricePerGallon
├── Currency
├── SupplierID
├── ContractType (Spot, Contract)
└── Taxes/Fees

FuelUplift
├── FlightID
├── Aircraft
├── Station
├── Quantity (gallons/liters)
├── Price
├── Supplier
├── Timestamp
└── InvoiceRef

HedgePosition
├── InstrumentType (Swap, Option, Collar)
├── Volume (gallons/month)
├── StrikePrice
├── StartDate
├── EndDate
├── Counterparty
├── MarkToMarket
└── Status

TankeringDecision
├── FlightID
├── DepartureStation
├── ArrivalStation
├── PriceDifferential
├── ExtraFuelCarried
├── CarryCost
├── NetSavings
└── Executed (Y/N)

Tankering Calculation

Tankering Analysis:
─────────────────────────────────────────
Route: CCS → PMV (return same day)
─────────────────────────────────────────
CCS fuel price:     $2.85/gal
PMV fuel price:     $2.92/gal
Price differential: $0.07/gal

Return flight fuel needed: 800 gal
Extra fuel to carry: 800 gal
Fuel burn for extra weight: 48 gal (6%)

Cost to tanker:
  Extra fuel purchased: 848 gal × $2.85 = $2,417

Cost to fuel at PMV:
  Fuel purchased: 800 gal × $2.92 = $2,336

Net savings: -$81 (DO NOT TANKER)
─────────────────────────────────────────
Decision: Fuel at destination

Integration Points

Hedging Strategy

Hedge Instruments

Hedge Coverage Targets

Recommended Coverage by Time Horizon:
├── 0-3 months:  70-80% hedged
├── 3-6 months:  50-60% hedged
├── 6-12 months: 30-40% hedged
└── 12+ months:  0-20% hedged

Hedge Ratio = Hedged Volume / Expected Consumption

Risk Management

• Counterparty credit limits
• Mark-to-market monitoring
• Hedge effectiveness testing
• Board-approved hedge policy
• Monthly hedge reporting

Fuel Efficiency Program

Key Metrics

Efficiency Initiatives

• Single-engine taxi
• Continuous descent approaches
• Weight reduction programs
• Engine wash frequency
• APU usage reduction

Sustainable Aviation Fuel (SAF)

Future Considerations

• SAF supplier identification
• Blending requirements
• Cost premium tracking
• Carbon credit integration
• Regulatory requirements

Vendor Landscape

Fuel Management Software

Data Providers