Rajan Wilcox
Jet fuel, or aviation turbine fuel, is a type of fuel designed for aircraft powered by gas-turbine engines. It is typically colorless or straw-colored and is composed of a variety of hydrocarbons. The price of jet fuel varies based on numerous factors, including the region, demand, and the price of oil, which it is closely aligned with. As of January 2022, the price of Jet A1 was approximately $816 per metric tonne, though this price can fluctuate over time. The cost of jet fuel also depends on the quantity purchased and the specific aircraft being fueled. For example, it would cost approximately £205,000 to fill an A380 aircraft with its capacity of approximately 315,000 liters of fuel.
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What You'll Learn
Jet fuel price fluctuations
Jet fuel, also known as Jet A1, is a kerosene-based fuel used in turbine engine airplanes. As a product derived from crude oil, jet fuel prices are volatile and constantly fluctuating. This poses a challenge for airlines, which must be prepared to handle periods of rising fuel prices. The price of jet fuel has a significant influence on various industry decisions and their respective operations.
The price of jet fuel is an essential element of expenditure in the airline industry. Depending on the year, it typically accounts for somewhere between 20% and 30% of airlines' total operational expenses. As individual carriers are such a small part of the global energy demand picture, they have little ability to influence market prices. As a result, airlines employ various tactics to hedge their exposure to high fuel prices and prevent themselves from being ambushed by rising prices.
The classical form of fuel hedging involves the use of options to balance risk exposure to rising fuel prices. Airlines may wait for fuel prices to fall to low levels before purchasing large amounts of fuel in bulk. However, this requires the airline to maintain infrastructure to store large amounts of fuel or pay someone else to store it. Therefore, airlines often turn to futures contracts, which are agreements between buyers and sellers for prices in the future. For example, if an airline anticipates rising fuel prices in the coming year, they may buy a futures contract that allows them to purchase fuel at a lower price.
Hedging jet fuel is crucial for airlines due to the unpredictable nature of oil prices. Southwest Airlines, for instance, owes its low-cost strategy to its excellent hedging strategy, which includes call options, collar structures, call spreads, and put spreads. Similarly, Delta Air Lines purchased its own refinery in Pennsylvania, allowing the company to save around 20 cents per gallon on fuel expenses when the conflict in Ukraine drove jet fuel prices upwards.
While hedging tactics can provide a level of protection against rising fuel prices, they are not a perfect solution. As global fuel prices continue to rise, airlines will eventually need to pass these increased costs on to consumers in the form of higher ticket prices. Airfare is highly sensitive to price changes, and economists have found that consumers are very responsive to price increases. Therefore, airlines must carefully consider the potential impact on passenger demand before raising ticket prices to compensate for higher fuel costs.
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Jet fuel types
Jet fuel, or aviation turbine fuel (ATF), is a type of aviation fuel designed for aircraft powered by gas-turbine engines. It is usually colourless or straw-coloured and is a mixture of various hydrocarbons. The most common types of jet fuel are Jet A, Jet A-1, and Jet B.
Jet A is primarily used in the United States and a few Canadian airports, including Toronto, Montreal, and Vancouver. It is heavier than standard kerosene and has a higher flash and freezing point. Jet A must meet the ASTM specification D1655.
Jet A-1 is the standard specification fuel used in most of the world, except Russia and CIS members, where TS-1 is the most common. Jet A-1 has a lower freezing point than Jet A, making it suitable for long-haul international flights, especially those overflying polar routes. It also contains static dissipater additives, which decrease static charges that can form during fuel movement.
Jet B is a naphtha-kerosene fuel with enhanced cold-weather performance, primarily used in extremely cold places like northern Canada and Alaska. It has a very low freezing point of -60 °C (-76 °F) but a low flash point, making it more dangerous to handle. It is a blend of approximately 30% kerosene and 70% gasoline.
Other types of jet fuel include JP-5, JP-8, TS-1, T-1, T-1S, T2, RT, T-1pp, T-8V (aka T-8B), and T-6. The first axial compressor jet engine in widespread production, the Junkers Jumo 004, used on the Messerschmitt Me 262A fighter, ran on kerosene-type jet fuel.
The price of jet fuel, known as Jet A1, varies daily and is closely aligned with the price of oil. As of January 2022, the price of Jet A1 was approximately $816 per metric tonne or $0.82 / £0.61 per KG. This price is about double what it was a year prior.
A Jumbo Jet (Boeing 747-400) flying from London to New York burns approximately 70,000 kilograms of fuel, costing approximately £53,500 (€64,300) or £118 (€141 / $158) per person, based on 450 passengers. The Airbus A380 can hold approximately 315,000 litres of fuel, costing about £205,000 to fill.
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Jet fuel consumption
The price of jet fuel, also known as Jet A1, is closely aligned with the price of oil, which varies daily. In January 2022, the price of Jet A1 was approximately $816 per metric tonne, or $0.82 per kilogram. This was about double the price in January 2021, when Jet A1 was priced at around $430 per metric tonne, or $0.43 per kilogram. During the COVID-19 pandemic, the price of jet fuel dropped even further, with Jet A1 costing around $200 per metric tonne in May 2020, or $0.20 per kilogram.
While the amount of jet fuel consumed by aircraft may seem high, it becomes more manageable when considering the number of passengers on board. For example, a Boeing 747 Jumbo Jet flying from London to New York burns approximately 70,000 kilograms of fuel, costing around £53,500. With a capacity of 450 passengers, this works out to approximately £118 per person.
The Airbus A380, the world's largest jet airliner, burns an average of 4,600 gallons (11,400 litres) of fuel per hour. However, with a maximum capacity of over 800 passengers, it achieves about a 20% increase in per-passenger fuel efficiency compared to the older 747.
In 2023, U.S. jet fuel consumption averaged 1.65 million barrels per day, 5% below the pre-pandemic peak in 2019. Commercial aviation typically accounts for around 85% of jet fuel consumption in the United States, with general aviation making up about 8% and military and government consumers contributing around 7%. The increasing fuel efficiency of newer airplanes has helped limit jet fuel consumption, with the average fuel economy of U.S. commercial carriers improving to 65.5 seat-miles per gallon in 2023, up from 64.9 seat-miles per gallon in 2019.
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Jet fuel production
Jet fuel, also known as Jet A1, is a kerosene-based fuel used in turbine engine airplanes. As of January 2022, Jet A1 was priced at approximately $816 per metric tonne, or $0.82 per kilogram, though the price varies daily alongside the price of oil. The cost of filling up a jumbo jet such as the Boeing 747-400 or the Airbus A380 can easily exceed £100,000.
The production of jet fuel is a complex process that begins with the discovery and extraction of oil, a hydrocarbon-rich substance found deep within the Earth's crust. Modern techniques involve drilling wells to extract the oil, which is then transported to refineries for transformation into jet fuel.
At the refinery, the crude oil undergoes an intricate refining process to become jet fuel. The first step in this process is distillation, where the crude oil is heated in a furnace, and the resulting vapour is condensed in distillation columns. This separates different hydrocarbons, yielding various petroleum products such as gasoline, diesel, and jet fuel. The crude oil is also treated to remove sulphur compounds through a process called desulfurization, improving its environmental impact and engine performance.
After distillation, the refined oil is blended with other hydrocarbons like naphtha and kerosene in precise ratios to create jet fuel. This blending process ensures the final product meets the required specifications and international standards for jet fuel, including density and freezing point.
To enhance the performance and stability of jet fuel, additives such as antioxidants, anti-icing agents, and corrosion inhibitors are incorporated. Stringent quality control measures are implemented to ensure the fuel meets safety and performance standards, including tests for characteristics such as flash point, volatility, and lubricity.
In recent years, with the airline industry's focus on decarbonizing air travel, there has been a shift towards Sustainable Aviation Fuel (SAF). SAF is a blend of conventional, petroleum-sourced jet fuel with renewable materials such as corn ethanol, fermentation iso-butanol, or seed oils. This blend reduces non-renewable CO2 emissions when combusted in jet engines. Additionally, alternative methods for producing jet biofuel from natural oils, fats, and greases are being explored, such as the Fischer-Tropsch method and the use of biomass sources.
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Jet fuel additives
The price of jet fuel, also known as Jet A1, varies daily and is closely aligned with the price of oil. As of January 2022, Jet A1 was priced at approximately $816 per metric tonne, or $0.82 per kilogram. This price is about double what it was in January 2021, when it was $430 per metric tonne, or $0.43 per kilogram. During the Covid-19 pandemic, the price of jet fuel dropped dramatically, with Jet A1 falling to $200 per metric tonne in May 2020, or around $0.20 per kilogram.
The cost of fuelling an aircraft depends on several factors, including the type of aircraft, the distance travelled, and the number of passengers on board. For example, a Jumbo Jet (Boeing 747-400) flying from London to New York burns approximately 70,000 kilograms of fuel, costing around £53,500. This works out to approximately £118 per passenger, based on 450 passengers.
Now, let's discuss jet fuel additives, which are crucial for enhancing fuel performance and maintaining aircraft safety. Here are some key points about jet fuel additives:
- Additives for Fuel Performance and Protection: Companies like Afton Chemical develop additives to improve the characteristics of jet fuel. Their AvGuard™ range includes solutions such as the SDA Static Dissipating Additive, which enhances the conductivity of jet fuel, and the CI/LI Corrosion Inhibitor/Lubricity Improver, which prevents corrosion and enhances lubricity.
- Metal De-Activators: AvGuard™ MDA is a metal de-activator additive approved for jet fuel applications. It helps protect pipelines and fuel pumps by preventing the adverse effects of metal ions in the fuel.
- Antioxidants: Jet fuels can be treated with additives like AvGuard™ AO 609, a versatile phenolic antioxidant. This additive inhibits the formation of fuel decomposition products, such as gum, during storage, ensuring the fuel remains stable over time.
- Fuel System Icing Inhibitors: PRIST offers a range of aerospace products, including fuel system icing inhibitors, de-icing chemicals, and windscreen cleaners. These products are trusted by both the military and commercial aviation sectors to maintain aircraft safety and performance during flight.
- Customisability: Jet fuel additive manufacturers often work closely with customers to meet specific needs. This collaboration ensures that additives are tailored to satisfy local specification requirements and performance expectations.
- Safety and Reliability: The use of jet fuel additives is essential for ensuring the safety and reliability of aircraft operations. By utilising trusted brands, pilots and service personnel can have confidence in the performance and protection that these additives provide.
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Frequently asked questions
Jet fuel trades at a differential to the NYMEX futures market, so the price varies. For example, if NYMEX ULSD is pricing at $2.45/gal and a physical jet fuel trade is done at -20cts/gal, jet fuel would be valued at $2.25/gal.
As of January 2022, the price of Jet A1 was approximately $816 per metric tonne.
A Jumbo Jet (Boeing 747-400) flying from London to New York burns approximately 70,000 kilograms of fuel, which costs around £53,500.
The Airbus A380 can hold approximately 315,000 litres of fuel, costing around £205,000.
The typical car gets about 25 miles per gallon. Flying from New York City to Los Angeles would take 2,797 miles or 112 gallons of gas for two passengers. That works out at 56 gallons per person. Flying the same route would use 5,325 gallons of jet fuel, or 27 gallons per person with 200 passengers.
