Airlines should team up to buy fuel, IATA told

PARIS - Global airlines should consider collective fuel buying to save money, Malaysian Airline System Chief Executive Idris Jala said on Tuesday, and called on trade body IATA to study the idea.

By (Reuters)

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Published: Tue 6 Jun 2006, 9:04 PM

Last updated: Sat 4 Apr 2015, 3:22 PM

“I suggest IATA put together a little group, a fuel-buying house,” Jala, formerly an executive with oil giant Royal Dutch Shell, said during a panel discussion at IATA’s annual meeting in Paris. “My previous employer would probably not like this idea”.

“If you pool together, you get volume discounts,” he told Reuters on the sidelines of the event. “If three airlines get together, it could work, imagine 10 airlines getting together.”

German airline Lufthansa CEO Wolfgang Mayrhuber supported the suggestion: “I think it’s worthwhile to look into the idea.”

But Giovanni Bisignani, chief executive of the International Air Transport Association (IATA), which represents 261 airlines accounting for 94 percent of scheduled international air traffic, told Reuters the idea faced stiff anti-trust barriers.

“Certain kinds of services are competitive services. This is a competition issue,” he said. “Believe me, we have received many requests for this sort of thing.”

Jala, however, said it was time for carriers to roll up their sleeves and study whether it might work.

“My suggestion is that IATA do a study on it,” he told Reuters. “What are the mechanics, how do you get participants into it ... take a look at the various jurisdictions, (and the issues of) competition and anti-trust.”

Airline bosses struggling to contain operating costs blame part of their woes on jet fuel prices, which have risen even faster than crude oil because of high demand and bottlenecks in refining, a problem exacerbated by last year’s Hurricane Katrina, which damaged US refineries.

Jala, who is spearheading deep cost-cutting measures at Malaysian including slashing staff and domestic routes, noted the airline would have turned in record profits in 2005 if jet fuel had stayed at 2004 levels, but instead posted a record loss.

Mexicana President Emilio Romano told the IATA meeting his airline’s weight reduction efforts to save fuel had included lighter carpets, less water in the toilets and even fewer ice cubes on its planes.



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