Focus on Fuel: Saving on fuel (and other) costs

 - September 28, 2006, 4:54 AM

A few months ago, an Internet forum popular with corporate pilots erupted with a lively discussion about ways to save money while flying business jets, from catering and meal costs to hotel and rental-car expenses and FBO and fuel prices.

No one jumped into the discussion to say they didn’t care about helping their companies keep costs to a minimum, but there was plenty of criticism of pilots who had a cavalier approach to on-the-road spending. In one of the answers to requests for cost-saving ideas, chief pilot Mike Kreller, who works for Louisiana-based
D & S Industries, added his advice in the form of a top-ten list. Judging from all the responses to the requests for cost-saving ideas, there is no shortage of expertise in this area. And despite the fact that business aviation is relatively healthy, it never hurts to learn more about keeping costs down.

“We can laugh and make jokes concerning cost control,” explained Bart Gault, a chief pilot who flies a Challenger 600, “but our employers will not be our employers for very long if we cannot justify our road expenses. Please remember that the aviation department is often considered an expense area, not an income producer.”

Gault, whose small flight department is composed of him and one other pilot, plans ahead as much as possible and tries to handle as many simple items as he can, instead of paying markups to third parties for booking a hotel room or arranging for local catering.

“The basic thing is being proactive instead of reactive,” he told AIN. Before each trip, Gault makes notes about what is needed then takes care of any items that he can do himself. A simple example is bottled water, which he can buy from an FBO, at a high markup, or at the local supermarket. “It’s fine for [the FBO] to make the money,” he said, “but I can buy water myself.”

The subject of catering generated much commentary in the forum. For catering, Gault prefers to use local restaurants at the destinations that he frequents. “As long as I have time, I’ll do it myself,” he said. In Atlanta, for example, Gault buys sandwiches for eight people at a bakery in Buckhead for less than $100. “Had I gone through the FBO, it would have been $400,” he added.

Managing Fuel Costs
The greatest savings opportunity, many pilots agreed, is on fuel costs, and many chimed in with a variety of strategies to help manage fuel expenses. Gault checks fuel prices in advance, negotiates with FBOs where possible and offers alternative airports to his employer to save money on fuel.

On a trip to Miami, Gault can save more than $5,000 on fuel by using Fort Lauderdale International Airport instead of Miami International Airport, if his boss is willing to put up with a 20-minute-longer drive to Miami. For a Dallas destination, Gault flies to Dallas Executive Airport instead of Love Field to save money on fuel.

Nathan Crane, CEO for consulting firm Volaeris Aviation, in Mesa, Ariz., used to work for a company with 12 jets and was assigned to manage fuel costs. After some analysis, he found that the company had signed up with nine contract fuel companies but pilots were actually using only two of the contractors to buy fuel. Crane put three months of trips in one airplane, a Gulfstream III, into a spreadsheet and calculated how much money the company could have saved if pilots took full advantage of all the contract fuel opportunities that were available.

The spreadsheet showed that with just one airplane, the savings added up to $20,000 over three months. Crane reported that information to management and then created a new process and trained schedulers and flight crews in how to use the system. Unfortunately, flight crews didn’t follow the instructions and the program didn’t deliver the promised savings.

“One pilot loved Colt,” Crane said. “There’s nothing wrong with Colt, but they can’t do the best deal for you at every location. He just liked Colt. I asked him, ‘What did you use Colt for?’ He said, ‘I don’t know how to use the [recommended] fuel card so I just used the Colt card.’ I tried to explain to folks how much money they could save. You add up trips, you start saving in the tens of thousands of dollars.”

Handling Services
Flight-planning and handling companies can make it easier to arrange for fuel, airport services, weather information, accommodations and so on, especially for trips outside the U.S. These companies also specialize in pre-arranged fuel discounts, but each firm’s deals differ, so it can be worth checking around before deciding which one to use.

Pilots should watch how handling companies charge for services, suggested Warren Boin, vice president of sales, marketing and business development for Hunt Valley, Md.-based Avcard.

Most handling companies add administrative fees to the charges for the services that they arrange, Boin said. Avcard is a credit card, and like most credit cards, vendors pay a fee to Avcard, but card users do not pay additional fees.

Avcard offers flight-planning services, too, having purchased planning company International Jet Services in 2004. But, Boin said, “We are a credit card. From day one in 1984 we spent our entire existence getting our card accepted at FBOs and ground handlers worldwide.”

Fuel isn’t the only cost factor for business jet trips, Boin added. Pilots should also look at communications charges that handling companies levy. “Charges can add up to hundreds of dollars. Some are charging a little bit every time you call up, or a copy is made or a fax sent.”

Many operators do not consider flight-planning and handling services as big a cost as fuel, Boin said, “but it is a significant cost when you add all the additional charges.” A good strategy for managing these costs, he suggested, is to provide an invoice from a recent trip to competing handling companies and have them calculate what their charges would have been.

Jerry Scott, president of BaseOps International, which is owned by fuel provider World Fuel Services, said that it’s important to consider the total trip, not just each expense item related to the trip. “If you save a little here,” he said, “it might cost more somewhere else. Fuel cost is the biggest [expense], but there are other areas as well.”

Where a handler can really help is in preventing costly problems, Scott explained. A simple example is hours of operation of non-U.S. airports. If you don’t arrive before the curfew, the airport might allow you to land, but be prepared for a hefty fee. BaseOps maintains a constantly updated database of these factors. “We’re an extension of [dispatchers],” he said. “We’ll be involved in places where they may not be familiar or things have changed politically.”

BaseOps offers its services on an a la carte basis, so customers can see up front how much it will cost and choose which menu items they need. Fuel discounts are arranged via BaseOps parent company World Fuel Services. And BaseOps’s Air Data Limited flight-planning program can adjust flight-planning parameters to match the performance characteristics of the customer’s airplane or the pilot’s performance preferences. “[Pilots] might not need us everywhere they go,” Scott said, “but we are a resource and can help them operate their aircraft more efficiently.’

Universal Weather & Aviation offers full-service handling, weather and flight planning as well as a do-it-yourself online service that allows pilots to save time and money by taking care of many trip needs without consulting a Universal specialist.

“They still leave the tough stuff to us,” said Jon Sorensen, technology products and services manager. Trips full of details and with many legs in different countries should still be managed by trip specialists, but for more ordinary travel the Web services system enables pilots to build default trips that are flown regularly, including crew and passenger lists, fuel quotes and flight plans. The cost is lower, too, because there is less involvement by Universal specialists although they do help double-check the customers’ information.

Universal launched Web services six years ago because customers asked for tools to help them make their trips more efficient and less costly. Pilots like to be able to go online at their hotel room and check their trip status or input changes. While most Universal customers still consult with trip specialists, 30 percent are using Web services, Sorensen said. “There’s a steady movement toward online [activity].” Online services are available to anyone, and they don’t have to be Universal clients or pay a monthly fee.

In addition to using online services to save money, Universal recommends careful shopping for fuel, using the company’s UVair division. Pilots must be flexible on fuel stops, said senior trip support specialist Laura Everington. “We get those types of calls daily,” she said. For example, “[some] airports in Italy are all so close that changing an airport may add 30 minutes to [ground] transport but save thousands of dollars in airport fees.”

“Fuel is one of the largest expenses,” said Kelly Hughes, UVair general manager of sales and marketing. To help customers fly more efficiently, UVair can deliver reports on fuel consumption and how much was saved via UVair discounts.

Like Gault, another Challenger pilot, Rick Shoemaker, agreed that cost-management is an important flight department function. When it comes to handling services, Shoemaker prefers to do it himself, as much as possible, contacting local airport ground handling providers directly and bypassing the major handling companies.

“I call them, make the deal, and have them disclose the fees,” Shoemaker wrote in his forum post, which he agreed to share with AIN readers. “I will use a handling service only for overflight setup where I cannot find the address to notify them myself, or like Cuba where there are few options. It burns me up to have the handling service notify the country for an overflight and then add a service fee to the overflight bill as well as the fee to perform the notification. There are so many people in our business who do not care what the cost is, [and] when one of us questions an item, we are looked upon as being cheap, which is BS. It is our duty to be responsible stewards of our company’s resources.”

In-flight Cost Savings
Printpack flight department manager Ron Current has a novel method to help keep costs down. By tracking flight efficiency and costs, he tallies all the money his flight department saves, which helps justify pay increases for his team members.

All flights in Printpack’s Astra are logged in Seagil Software’s Business Aircraft Records and Tracking program. Over the past six years, 628 trips between airport pairs have been logged, giving the department’s pilots a baseline for how long a particular trip should take and the average fuel burn for that city pair. Each completed flight is compared with the baseline, for both flight time and fuel burn. If a pilot shaves off a few minutes and a few pounds of fuel, then the saving is tallied. “We track that flight by flight, month by month and for the full year for each pilot,” Current said.

Maintenance costs for the Astra average $840 per hour, according to Current. So if a pilot can save one-tenth of an hour on a city-pair flight, that is another $84 in the savings kitty. If the average fuel burn for this city pair is, say, 3,500 pounds and the actual fuel used is 3,400 pounds, then chalk up 15 gallons saved, which is $60 to $75 or more at today’s prices.

After implementing the program, in 500 hours of operation Current was able to document $300,000 in savings. He noted that pilots are not given bonuses based on shaving time off a flight. “Pilots aren’t competing against each other,” he explained. “Everyone understands they have to fly by the rules as far as airspeeds are concerned. And sometimes it doesn’t work because of ATC delays, weather or some circumstance. We might save on trip times but burn more fuel because we’re stuck at a lower altitude.”

Current doesn’t rely only on the flight efficiency program to save money, but it does have a big effect. As flight department manager, he has financial objectives that he must meet every year. And he looks carefully at all purchases, including fuel, catering and other trip expenses. His maintenance technician is part of the team, too, and each month records how much the company has saved by doing maintenance in-house.

“Typically we save money,” Current said, “and the difference can be shown as cost savings. This is an incremental program; it helps us keep our eye on the ball a little better. Everybody is focused on savings, but at the same time we don’t spare any expense on maintenance. It makes management feel better, and hopefully they’ll reward those who help them save.”

How pilots fly, not just in terms of how fast they push the airplane, but how they treat the equipment, is an important factor in cost savings, agreed Challenger chief pilot Gault. “Are they always sitting on the redline, always pushing it, landing hard and going through $200,000 worth of brakes?” A little restraint goes a long way toward managing costs, he said.

Destination Expenses
Lloyd Geist, chief pilot for Jet Management, could not believe his ears while he was standing at the FBO customer service desk during a recent trip. “I was standing behind a pilot who was returning a rental car,” Geist related. “When he told the CSR [customer service rep] that the tank was on empty, she advised him that he would be charged $4.75 per gallon. His reply? ‘That’s OK, it’s not my money.’ I could only shake my head in disbelief.”

Rental-car charges may seem like small potatoes, but everything adds up.

In addition to securing reasonable fuel prices before departing by calling the FBO or arranging for contract fuel, Gault always asks for a discount at the FBO. “It amazes me how often I see pilots just paying the posted price,” he said. “You’re not going to get a fuel discount until you ask for it.”

When eating on the company expense account, Gault and his first officer try to keep costs reasonable. “We don’t have to have the biggest and fanciest dinners,” he said. “And I don’t drink on the boss’s dime,” he added, not only because he would not spend his own money on alcohol, but also because he doesn’t want to have to tell the boss that he can’t fly a pop-up trip because he had a couple of drinks with dinner.

Part of Gault’s pre-departure planning includes arranging hotel rooms himself. While he checks with the FBO, it’s usually cheaper to book the room online, he has found. During one trip, the rack rate at a destination Marriott hotel was $200. The FBO’s rate was $150, yet Gault was able to get the room online for $99.

Companies that ask employees to share hotel rooms are not looked on with affection, according to pilots interviewed for this article.“Crew rest is most important,” wrote Paul Richardson, a Falcon contract pilot, in a forum post during a trip. “Sharing a room is not the way to safely operate an aircraft. Just as I am up now (0500 local time), out of synch with the time zones, I am not disturbing another crewmember’s sleep in my single room.”

One company that Geist knows suggested the pilots forego sit-down meals. “Meals are the source of the energy one needs to perform duties,” he explained. “How is your blood sugar after a sleepless night, fast food and an 18-hour day with five international cities in the last 24 hours?”

Kreller summed up with his philosophy on cost savings: “It doesn’t matter if you fly a $1 million or a $40 million airplane, spend it wisely and use common sense. You don’t have to come off as a cheapskate, but on the other hand you do not want it to look like you don’t care because it is not your money.”