For the past five years, airlines around the globe have struggled to contain their rapidly rising fuel bills. Solutions have included everything from ditching magazines and wine bottles to taxiing with one engine shut off. Air Canada even tried stripping the paint off one of its planes to reduce weight.
But Delta Air Lines Inc. may have come up with the best idea yet: make your own jet fuel. The airline’s executives are rumoured to be considering a US$100-million purchase of an idled ConocoPhillips refining facility in Trainer, Penn. It’s estimated that Delta could shave as much as 10 per cent off its US$12 billion in annual fuel purchases by making jet fuel at the refinery and shipping it to hub airports in New York, saving on the so-called “crack spread,” the price difference between refined fuel products and raw oil, in the process.
While some have cautioned that the refinery business is a difficult one, at least one analyst described the bold plan as the “ultimate hedge.”
Monday, April 23, 2012