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### Author Topic: FUEL CONTRACTS - How do they work?  (Read 2569 times)

#### darrenashford

• Former member
##### FUEL CONTRACTS - How do they work?
« on: September 07, 2011, 09:40:54 PM »

For the benefit of the players that dont understand the fuel contracts, you pay a monthly fee and then receive the stated discount on the fuel price.

But how do you know if its worth it?  Well, you need to do a little maths....

(1) Work out your average weekly fuel bill, your "actual spend". Add the last three weeks fuel bill from your income statement, and then divide by three. This is your "average actual spend". Write this number down, lets say for the purposes of this example is \$345,678

(2) Next, calculate how much that would cost if you had the contract discount, lets say its 6.5%. To find the discount, you multiply your average "actual spend" by the percentage divided by 100.   So thats \$345,678 x 6.5 / 100 = \$22,469    This is the discount amount

(3) So if you had the contract your fuel would cost you 323,209 but you have to pay a fixed monthly cost for the contract, and lets say this is 199,000. Remember this is every month, so take the contract cost and multiply by 12, to make it a whole year, then divide it by 52 (52 weeks in a year). So \$199,000 x 12 / 52 = \$45,923    This is the contract cost, per week

(4) If the contract cost, per week, is LESS than the discount amount then TAKE THE CONTRACT. If as in this case it's more, then to get the saving of \$22,469 you have to pay \$45,923 you can see its NOT worth having a contract.,

Simples. Tschhhh.

#### Suavis

• Former member
##### Re: FUEL CONTRACTS - How do they work?
« Reply #1 on: September 09, 2011, 05:05:16 PM »
The only difficulty comes in when you operate more than one base.  You have to enter into a fuel contract at each individual base, but you are not able to view the total fuel costs per base.

Sami, would it be possible to look into splitting the fuel cost on the income statement per base?

I still think the fuel contracts are worth it.  You sometimes just need to wait for the right one.

#### Sami

• Members
• Posts: 14726
##### Re: FUEL CONTRACTS - How do they work?
« Reply #2 on: September 09, 2011, 05:57:12 PM »
Sami, would it be possible to look into splitting the fuel cost on the income statement per base?

Not at the moment, they are stored on company level only. And it's also quite hard to differentiate most of the expenses anyway to different bases.

#### Gleipner

• Members
• Posts: 495
##### Re: FUEL CONTRACTS - How do they work?
« Reply #3 on: September 09, 2011, 10:07:56 PM »
http://www.airwaysim.com/forum/index.php/topic,33557.0.html

Just remember to look at monthly fuel cost

Not at the moment, they are stored on company level only. And it's also quite hard to differentiate most of the expenses anyway to different bases.

Time for educated guesses. Love to see this feature in the future though!

#### forsberc

• Former member
##### Re: FUEL CONTRACTS - How do they work?
« Reply #4 on: December 13, 2011, 06:22:56 AM »
Is there anyway to do it with weekly fuel prices and "average fuel burn" according to the airline statistics page?

#### Sanabas

• Members
• Posts: 2161
##### Re: FUEL CONTRACTS - How do they work?
« Reply #5 on: December 13, 2011, 10:11:26 AM »
Is there anyway to do it with weekly fuel prices and "average fuel burn" according to the airline statistics page?

Should be doable. But it probably won't be as accurate as just looking at the fuel section of your income statement, because I think different countries/airports have slightly different fuel prices.

Let's see...

In DOTM, where I don't have a fuel contract, my airline stats say my weekly fuel burn is 3020 tonnes. Fuel price is \$217 per tonne, up from 205 the week before. So my weekly fuel bill should be about 620-650k. Go to my income statement, and it is... 640, 649, 642 k the last 3 weeks.

So looks like I could get an accurate enough value check from using those. Fuel price x Average weekly fuel burn x 2.15 (because there are 4.3 weeks in a month, and the discount applies to half your fuel) x percentage discount/100 will give you your monthly saving. If that's more than the contract price, you'll save. If it's less, you won't.

#### forsberc

• Former member
##### Re: FUEL CONTRACTS - How do they work?
« Reply #6 on: December 13, 2011, 03:53:07 PM »
thanks!

#### sergio

• Members
• Posts: 131
##### Re: FUEL CONTRACTS - How do they work?
« Reply #7 on: December 20, 2011, 09:10:05 AM »
Hello! i never made good business to have several bases. picked up wrong places.))

If i have aircraft based in london, and aircraft based in paris (EU open sky), on the same line. Fligts London - Paris, and vice versa respectively.
And I have a fuel contract in both bases.
Do I get discount for all flights, or only for flights from airport of registration?

(as far as i understand - flight hong kong - beijing - i get discount for hkg-beijin, and beijing-hkg - i pay chinese the full market price. correct me if i am wrong).

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