The last time Rani Awad, CEO of Atlantic FuelEx, featured on the front cover of EVA was back in November 2012. Since that time, his global fuel company has gone from strength to strength, building out from its Dubai base to the point where it now holds 100% of the refuelling contracts in Nigeria and Kenya for a number of Middle East commercial airlines, as well as having major military and commercial refuelling interests in Afghanistan. Next up, and currently in the planning stages, is a move into Europe with a representative office in the United Kingdom.
One of Awad’s more significant coups in the last few years has been to craft an arrangement with infrastructure developers IL&FS, who have a very substantial fuel and bunker oil storage facility at the port of Fujairah in the UAE. The port is located some 70 nautical miles from the Straits of Hormuz, through which some 40% of the world’s oil supplies pass each year.
“What Atlantic FuelEx is able to bring to IL&FS’s maritime fuel storage operations at Fujairah, is a network of suppliers and customers. For our part, what we gain is the ability to store large quantities of fuel which we can buy at advantageous prices and then make available to our customers at very competitive rates,” Awad explains.
The maximum volume that can be stored is very substantial, at 633,000 cubic metres. “The major clients at the facility are mostly oil traders doing bunkering deals to fuel shipping. When they do a trade they bring the product and store it in the IL&FS facility, then send it retail to their customers. There are two very extensive deep water berthing areas at the sea port of Fujairah, OPT1 and OPT2. OPT1 is dedicated to our facility which means that we have easy offload and easy onload, with 24/7 free slots for all vessels,” Awad explains.
The significance of this for his fuels business is hard to overestimate. “It is all too easy for a potential customer, be it a commercial airline or a business jet operator, to think that we are just a fuel reseller. When they think like that they naturally reason that they will have to bear a higher price in dealing with us because they are dealing with a middle man who has to add his bit to whatever price his supplier is quoting him. We now have a perfect counter to this because we can point out to the potential customer that we have the storage capacity to enable us to bulk buy when the price is very much in our favour, which enables us to provide them with very competitive pricing,” Awad says.
“This was always my target. If I am only in the downstream market it is hard to bring anything really new to the table. Now I can play in the upstream and downstream markets to bring an unbeatable price to the end user,” he adds.
However, Awad is very keen to point out that both commercial and general aviation customers need to be aware that price is only part of the story. In many ways a more important issue is the depth of the insurance cover on offer from whoever they contract with as their refuelling provider. Atlantic FuelEx is able to provide clients with $1 billion worth of insurance cover, double the depth of cover on offer from the best of the other refuelling companies, and many times more than the industry average as far as general aviation is concerned.
“It is an astonishing fact that in all my 14 years working in fuel I have never yet seen a general aviation fuel tender that prioritised insurance or paid sufficient attention to product quality. They focus virtually exclusively on price and the fuel supplier with the lowest price wins. This is crazy. If you compare it to commercial airlines, price comes third on their list of priorities. First is the depth of the insurance cover on offer.
Second is product quality and then we get to price. As a reseller we put an enormous amount of effort into ensuring that product quality meets the specifications laid down by IATA for commercial jet fuels. Even a tiny amount of water contamination in jet fuel will turn to ice when the aircraft is travelling at 30,000 feet and higher, and the ice will damage the engines.
“When the owner or operator is then faced with a stinging repair bill, they should be able to fall back on the fuel supplier, who in turn will fall back on their insurance. If the insurance cover is not adequate, what then?” he asks.
Quite apart from fuel contamination, every operator knows that ramp operations can go wrong. Awad cites an incident suffered by one commercial airline when the driver of a refuelling vehicle had a blank moment and went to move his vehicle with the hose still attached to the aircraft, damaging the aircraft’s fuel tank. Any contact between an aircraft and one of the many vehicles moving around it during ground handling operations can generate enormous repair bills. “My sincere advice to business jet charter operators and aircraft management companies, as well as to owners, is look at price by all means, but do not forget that insurance and product quality are at least as important,” he notes.
Another piece of advice Awad has for business jet operators and owners is to move away, wherever possible, from the practice of ‘quote by flight’, where the operator or a corporate flight department will routinely ping round several suppliers before each and every flight to find the cheapest quote to refuel the aircraft.
“This is a sixteenth-century business practice. It makes sense if you are going to a destination you have never been to before and may never go to again. But if you fly with any frequency to a particular destination it makes much more sense to select the best supplier and then stick with them. That way you can negotiate a sensible rate and enjoy the benefits that come from having a proper relationship with your fuel supplier,” he counsels.
Atlantic FuelEx has a dedicated Jet A1 storage tank at the IL&FS facility in Fujairah. “We can import fuel from various places, wherever the market price is in our favour, and we can resell it to smaller suppliers at various destination airports where they do not have ready access to plentiful supplies at the price we can offer,” he comments.
The arrangement with IL&FS also opens the door both to Atlantic FuelEx trading bunker fuels for vessels and to the company providing jet fuel to military customers. “I already have a contract from Qatar that lets me ship 120 cubic metres of fuel and we have buyers for this, so that gives us a very healthy arm to our upstream activities,” Awad notes.
For business aviation customers, Awad points out that where Atlantic FuelEx has contracts with commercial airlines, business aviation customers benefit directly from the uplift in scale provided by those commercial airline contracts. “Where we are selling a million US gallons to a commercial customer, we can meet the needs of a business aviation customer who only wants 1,000 US gallons at the same competitive price level as we offer to the commercial airline. That is a tremendous price advantage, and it comes together with the quality assurance that we are contracted to provide to commercial airlines and the $1 billion of insurance cover that we have on our operations,” he comments.
Two other recent milestones for Awad have been the opening of representative offices in Nigeria and Kenya to support its commercial and general aviation refuelling operations there, and the development of a major fuel storage facility in Afghanistan. “I have an agreement with a Nigerian oil company which enables me to be very competitive in my pricing for fuel at five airports in Nigeria and Kenya. This has enabled us to become the sole fuel supplier for Arab Air Carrier Organization (AACO) at those airports. Our customers include Egypt Airlines, Saudi Airlines, Gulf Air, Air Arabia and others. This is the first time that AACO have contracted for 100% of their fuel needs in Nigeria from a single supplier and is a tremendous coup for us,” Awad affirms.
The Afghanistan fuel terminal has a 120,000 metric ton capacity. Atlantic FuelEx built the terminal through 2013 and it became operational in 2014;e it serves Kabul and Kandahar airports as well as US military bases. This provides Awad’s operation with yet another solid revenue stream to power future growth.
With the precipitous drop in the oil price being a huge concern to both developed and developing economies, Awad is very interested in ensuring that Atlantic FuelEx helps to promote clear thinking and deep analysis around pricing futures and the supply/demand balance. “We took a lead role in sponsoring the AACO Fuel Forum in Dubai, which was held from the 19th to the 20th of October. The main topic of the forum was precisely the fact that the current low oil price is among the most significant forces in the global economy today. It has dramatically changed the equation of aviation business for airlines and fuel suppliers. The forum was very useful in that it brought together fuel suppliers and their customer airlines to really talk through the effects of this drop,” he comments.
The technical sessions in the forum considered the latest updates and ameliorations around the standards that have been put in place by the industry to regulate operations at fuel facilities and to ensure quality and safety during refueling operations.
“My whole philosophy is to focus on customer service and quality to ensure we build lasting customer relationships, while constantly looking for opportunities to build integrated upstream and downstream capabilities. This is so that we can combine the highest produce quality with very competitive pricing,” Awad concludes. So far, that approach looks to be working a treat!