African airline organisation selects fuel supply partners

plane  Dave HeutsThe joint fuel purchase was started in 2012 to increase the bargaining power of airlines and reduce their fuel costs. (Image source: Dave Heuts/Flickr)The African Airlines Association (AfrAA) has selected 25 fuel suppliers for its joint fuel purchase deal in 2013

AfrAA deputy head of corporate finance and administration, Juliet Indetie, said the 25 suppliers have stations at 104 locations in which most AfrAA members operate. AfrAA did not, however, disclose the details of the firms that won the tender.

“We have partly completed the second tender and are in the process of issuing award letters,” Indetie remarked.

AfrAA, which is headquartered in Nairobi, started the joint fuel purchase programme last year to increase the bargaining power of airlines and reduce their fuel costs.

In the first tender, only nine airlines that were part of the AfrAA had launched the programme to cut down fuel costs in the airline market.

For the 2013 order, 14 airlines had signed the deal but Jetlink has pulled out temporarily due to stoppage of its operations because of financial problems.

Kenya Airways said in June last year, after release of its full year results for the period ending March 2012, that it had saved an estimated US$2mn as a result of discounts advanced as part of the deal.

Indetie informed that airlines will benefit from even bigger discounts in the second tender since the volume of fuel to be ordered will increase from the 660mn litres purchased for 2011/2012 to one billion litres for next year.

“We have got very good deals this time round and we expect that airlines will save a lot more,” she explained.

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