An article published on December
1, 2008 in Wall Street Journal reported that Air Canada faces an unusual
challenge in the airline industry of finding enough jet fuel. Part of the
problem is that Canada's small pipeline infrastructure is overtaxed and the
nation's major refiners are cutting back on production. Looking south doesn't
help much because most U.S. refiners don't produce the extreme-cold-tolerant
blend of jet fuel that Canada requires.
So Air Canada decided to boost
its fuel supply itself. The ACE Aviation Holdings Inc. unit is building
fuel-storage depots, pipelines and docks and leasing rail cars, trucks and
barges. It is also scouring the globe for vessel shipments of refined jet fuel
and buying the precious liquid with its own credit from as far away as Saudi
Arabia, Nigeria and Venezuela. In March, Air Canada and the rest of the
airlines that serve Toronto Pearson International Airport will open a satellite
tank farm, pipeline and rail siding to bolster supplies at the nation's busiest
airport.
"We want to own it, control
it," says Paul Whitty, the carrier's director of fuel purchasing and
supply, who recalls a time a few years ago when the shortage was so dire that
the Toronto airport storage-depot operator used manual pumps to get every last
drop of fuel from the tanks. "The only thing we're not doing is buying the
crude and processing it" into jet fuel, he says.
Air Canada's efforts are keeping
the carrier aloft and shaving up to 100 million Canadian dollars (US$80
million) a year from its overall fuel tab, which could reach C$3.5 billion this
year. The carrier, which controls 60% of the Canadian market, consumed 25
million barrels of jet fuel world-wide last year, 65% of it in its home market.
The U.S. has plenty of refining
capacity, many ports and an extensive interstate pipeline system. While only
10% of Canada's aviation fuel was imported eight years ago, imports accounted
for 33% last year, according to the Canadian Petroleum Products Institute, a
trade association of refiners and marketers.
John Armbrust, an aviation-fuel consultant
in Palm Beach Gardens, Fla., says Air Canada's fuel problems also reflect a
retreat by oil companies from many of the distribution options they offered 15
or 20 years ago. The airline's "supply chain has gotten longer," he
says. "Instead of around the block, it's halfway around the world."
Source: Carey, Susan, “Air Canada, Out in Cold, Learns Fuel
Self-Reliance” Wall Street Journal,
December 1, 2008.