Picking Best Method for Purchasing Jet Fuel – Part 1

> | November 14, 2012 | 3 Comments
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Picking Best Method for Purchasing Jet Fuel – Part 1

While there’s an assortment of ways to pay for jet fuel uplifts, some methods are better than others in terms of price, service reliability, and backup support options in the event of billing errors. In almost all cases, the preferred method for jet fuel payment is via aviation fuel cards or contract fuel releases. It’s best to work with your 3rd-party provider and local ground handler to confirm fuel payment at each destination.

Here are some tips regarding jet fuel payment options.

1. Cash payments for jet fuel are not recommended

It’s not recommended to pay cash for jet fuel uplifts, as you’ll receive posted price for fuel and not a contract price. Only some currencies may be accepted – usually U.S. dollars and Euros – at international locations. Cash payments often cause delays, as the fueler needs to process the payment and, in some cases, convert payment into local currency. Additionally, carrying large quantities of cash onboard is a security risk, particularly at remote or volatile locations. There are additional fees to consider for conversion into local currency. If you’re audited by your governing authority, it may be difficult to prove that the cash payment was actually made for jet fuel. The only real benefit of cash payments would be at remote locations where credit cannot be arranged.

2. Avoid use of consumer credit cards

Consumer credit cards are not the most efficient or secure means of paying for jet fuel. You’ll receive posted price and not contract price, and the fueler has access to your credit card information. Fixed base operators (FBOs), or ground handlers, may not accept certain cards due to processing fees involved, and there may be issues with card credit limits – especially on longer trips. If you have an uplift charge dispute after the trip, there may be issues with disputing charges. The “pros” with regard to using credit cards are that operators may get “points” on their account, and payment processing turnaround time is usually fast. If you prefer using a consumer credit card, coordinate with your contract fuel company to make a credit-card-on-file arrangement.

3. Oil company cards do not give you the best price

When using oil cards, there are typically no jet fuel releases involved. The operator needs to contact the fueler or oil company rep in advance of travel, and the process can be more complicated compared to using aviation fuel cards. Jet fuel discounts, typically, are not comparable to aviation fuel cards or contract fuel. For any billing errors, operators will need to contact the oil company directly and, in most cases, oil card providers may have limited ability to assist with discrepancies. You’ll pay a higher price compared to contract fuel, and your invoice is often the “final sale.” Advantages of using oil company cards include fast invoice processing time and, in some cases, additional discounts when buying jet fuel from your home-base supplier at other locations with the same oil company provider.

4. There are significant advantages to using contract fuel, aviation fuel cards, and fuel releases

Aviation fuel cards and contract fuel are the most efficient way to pay for fuel. With these options, you provide the fueler with an aviation fuel card – the fueler will denote the card number on the fuel invoice – or you’ll be extended credit via a fuel release, in which case your tail number or other reference number will be noted as a reference. Jet fuel will be billed to the contract fuel supplier, although processing time may be somewhat longer compared to a credit card. Contract fuel processing time may vary between 5 and 30 days depending on the supplier. In some cases, including Russia and Venezuela, fuel invoices are processed only once a month, which may extend the invoicing period. Contract fuel prices are lower than what you will pay with a consumer credit card or cash. Another advantage with contract fuel and aviation fuel cards is that you’ll have better back-up support should there be an invoice inaccuracy. International fuel providers offer 24/7 assistance and have the negotiating power to act effectively on your behalf.

5. Pros and Cons of FBO direct billing

In some cases, operators make arrangements with their home-based FBO to extend credit and payment for services, including jet fuel. In such cases, operators are extended credit based on their contract terms and may receive a certain price per gallon/liter discount and/or reduced into-plane fee. Benefits include jet fuel uplift discounts, although not usually as favorable as contract fuel prices, when operating to FBOs in the same chain. Cons include higher pricing than contact fuel (in most cases) and you may be locked into a term agreement. If something changes and you find a supplier with a better price, you may not be able to use them.

Conclusion

While there are pros and cons to consider with all methods of fuel payment, best practice is to choose a payment method that provides best price, best service, and best support with billing issues or errors after the trip. In most cases, the preferred method of payment is an aviation fuel card or contract fuel release.

Questions?

If you have any questions about this article, contact me at alexandratruesdell@univ-wea.com.

Stay tuned for part 2, where we’ll cover tips in determining which payment option is best for the given situation and what documentation you’ll need.

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About

UVair Fuel Sales Rep Allie Truesdell has more than eight years’ combined experience working in the jet fuel industry in both sales and FBO operations, giving her vast knowledge on client needs and pricing trends. Some of Allie’s specialties include advising her clients on fuel taxes, including European Union tax regulations. Prior to joining Universal Weather and Aviation, Inc. in 2010, Allie served as a Customer Service Manager and Operations Manager at several FBOs throughout the United States. Her experience also includes serving as a National Air Transportation Administration operations safety trainer, managing fuel farms and operations at an FBO-level. Allie, who holds a bachelor’s of science in accounting & business management and a master’s degree in accounting, has attended several industry trade shows including the National Business Aviation Association conference and the Citation Jet Pilots association conference where she was a featured presenter.

You can reach Allie at alexandratruesdell@univ-wea.com.

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