Sharp rise in Jet fuel costs increases airlines demand for skilled procurement professionals

Sharp rise in Jet fuel costs increases airlines demand for skilled procurement professionals

21.03.2007: Sharp rise in Jet fuel costs increases airlines demand for skilled procurement professionals

International aviation officials sharpen purchasing skills at workshop on final day of Aviation Procurement and Finance Conference in Abu Dhabi

Richard Ludlow of the Chartered Institute of Purchasing and Supply helps airline procurement specialists develop their purchasing skills on the final day of the Aviation Procurement and Finance Conference in Abu Dhabi. 

 

Jet fuel costs have doubled over the past two years due to dramatic increases in oil prices making the role of airline procurement professionals more crucial than ever, delegates at the Aviation Procurement and Finance Conference in Abu Dhabi were told.

Robin Padgett, Vice President of Airline Procurement for Emirates, said that jet fuel currently makes up 30 per cent of long haul airlines’ operating costs, compared with 12 – 15 per cent two years ago, meaning that their profitability now depends even more heavily on controlling other costs such as in-flight catering, airport handling and air traffic control charges.

Today, the final day of the conference, procurement specialists from major airlines around the world equipped themselves for the challenge by attending workshops run by the UK-based Chartered Institute of Purchasing and Supply (CIPS) designed to sharpen up their purchasing skills.

The workshops, taking place in the Abu Dhabi National Exhibition Centre, focused on the expertise needed by modern purchasing professionals including how to negotiate effectively with suppliers, identifying and minimizing potential risks within the supply chain and aligning the procurement strategy with the overall business strategy. Delegates were also given an insight into how business negotiations tend to be run in the Middle East compared with other parts of the world.

"One of the major components of an airline’s cost base for long haul airlines is jet fuel, which now constitutes over 30 per cent of their operating costs due to recent dramatic rises in fuel costs," said Padgett. "This is a highly inflexible cost which is difficult to influence with traditional procurement techniques. This means that there is now even more pressure to carefully control areas such as in-flight catering, airport handling and air traffic control charges."

The three-day Aviation Procurement and Finance Conference is part of the Aviation Procurement Expo (APEX), which was launched to support the development of Abu Dhabi as one of the world’s most sophisticated aviation gateways and closes today. Sponsored by Boeing, the conference covered procurement issues facing modern airlines and was officially opened on Monday (March 19) by the event’s patron, H.H. Dr Sheikh Ahmed bin Saif Al Nahyan, Chairman of Etihad Airways and the Gulf Aircraft Maintenance Company (GAMCO).

The impressive programme of high profile speakers from airlines and related industry sectors around the world also included James Hogan, CEO of Etihad Airways, Silla Maizey, Head of Procurement and Finance Operations with British Airways and John Matthews, Managing Director of the Middle East and Africa Region, Aircraft Financial Services for Boeing Capital Corporation.

Richard Ludlow of CIPS, who was facilitating today’s workshop, said: "Around 80 per cent of an airline’s turnover goes to pay third-party suppliers, such as suppliers of aircraft, equipment, maintenance, support services and so on. It is therefore vital that airlines spend this money very wisely as it directly affects their profitability.

"As all businesses face new challenges of delivering enhanced cost and performance management across the whole supply chain, the need to demonstrate best value for money is a premium consideration for future survival. It is now even more important than ever that purchasing professionals are fully equipped to deliver these benefits."

CIPS is a professional body with a remit to promote high standards of skill and integrity among all practitioners in the field of purchasing and supply management. It runs a professional qualifications programme and associated membership scheme and undertakes training for organisations around the world along with assessment and accreditation of their purchasing and supply methods. For more information about CIPS go to www.cips.org  

 

- Lucy Wray, Total Communications Dubai - also photo

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21.03.2007 / MaP

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