IMPACT OF RISING AIR TURBINE FUEL COST ON AVIATION INDUSTRY Submitted in partial fulfillment of the requirements for the award of degree of
BACHELOR OF BUSINESS ADMINISTRATION
UNIVERSITY OF PETROLEUM & ENERGY STUDIES
ENROLLMENT NO- R460211026
UNIVERSITY OF PETROLEUM & ENERGY STUDIES
I hereby declare that the dissertation entitled “IMPACT OF RISING AIR TURBINE FUEL COST ON AVIATION INDUSTRY” to be submitted for the degree of BBA-AVO ; my original work and has not formed the basis for any degree, diploma of similar title. It has not been submitted to any other organization , university or institution for award of any degree or diploma.
Signature of Candidate
I am highly grateful to The University of Petroleum and Energy Studies , Mr.Manish Yadav(assistant professor, aviation department), for providing this opportunity to carry out the Major Project .
I would like to expresses my gratitude to other faculty members of management department of UPES. The help rendered by Mr. Ankur Mittal is greatly acknowledged.
Finally, I express my indebtedness to all who have directly or indirectly contributed to the successful completion of my major poroject.
What is ATF?
Air turbine fuel or Aviation fuel is a specialized type of petroleum-based fuel use to power the aircraft. It is generally of higher quality than fuels used in less critical application, such as heating or road transports, and often contains additive to reduce the risk of explosion or icing due to the higher temperature, among other properties. Most of the aviation fuels available for aircraft are kinds of petroleum spirit use in engines with spark plugs (i.e. piston and Wankel rotary engines), or fuel for the jet turbine engines, which is also used in diesel aircraft engines. Air turbine fuel (ATF) or the jet fuel is the specialized type of petroleum-based fuel that used to power the aircrafts. It is generally of higher quality than fuels used in the less critical applications such as heating or the road transport.air turbine fuel is clear to straw coloured and is a blend of hydrocarbons, a product of petroleum refining which belongs to the middle distillate group, In some regions, lower quality specification kerosene or a dual-purpose grade is produced and used as a domestic heating fuel especially in Asia and notably in Korea and Japan. In Airline companies, being the single largest user of jet fuel, are exposed to price risk owing to extreme volatility in prices worldwide. Typically, airlines have to either absorb the price volatility or pass the same to consumers. However, Globalisation and the competitive scenario existent today demands competitive pricing in the absence of which airlines stand to lose the business. To decrease the cost per passenger and increase revenues, airlines need to hedge their price risk inherent in jet fuel by taking position in the futures market. Crude oil refineries, on the other hand are faced with the risk of decreasing product prices which includes Air turbine fuel. Decreasing product prices put a strain on refining margins leading to lower profitability. Again, Air turbine fuel futures are required to mitigate the price risk faced by these refineries.
As the primary function of ATF (jet fuel) is to power an aircraft, combustion quality and energy content are key fuel performance properties. Other significant performance properties are stability, fluidity, volatility, lubricity, cleanliness and non-corrosivity. Besides providing the source of energy to power the aircraft, fuel is also used as a hydraulic fluid in engine control systems and a coolant agent for certain fuel system...
Bibliography: CAPA 2007 – “Aviation Consolidation Looming in India”, Outlook 2007
Trivedi V, “Airlines: Opportunities and Challenges”, Aero India, Bangalore
Indian Oil Corporation Limited (IOCL), www.iocl.com (last visited on 19th November 2013)
Air India plans fare system that sync with fuel price; April 4, 2012; Rediff Stock; www.rediff.com/business (last visited on April 11, 2013)
“Annual Energy Outlook 2006 With Projections to 2030 (Early Release)⎯Overview,” Energy Information Administration
[online], Dec. 2005, http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html [retrieved Jan. 17, 2006].
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