The authors analyze the practice of tankering fuel, which seeks to lower total fuel costs by having aircraft carry excess fuel when traveling from locations where fuel is cheaper than it is at the destination. To determine whether savings might be achieved, historical flying patterns, fuel prices, and other factors are examined for the C-5, C-17, and C-130 aircraft.
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Research Question
- Would tankering fuel generate cost savings and what procedures would have to exist to realize these savings?
The authors analyze the practice of tankering fuel, which seeks to lower total fuel costs by having aircraft carry excess fuel when traveling from locations where fuel is cheaper than it is at the destination. To determine whether savings might be achieved, historical flying patterns, fuel prices, and other factors are examined for the C-5, C-17, and C-130 aircraft. The authors examine the changing potential for future cost savings as Air Mobility Command transitions from wartime to peacetime operations. They also discuss the four different price regimes in place at the Defense Logistics Agency — the agency that purchases fuel on behalf of the Department of Defense — and fluctuating market rates. Their research compares the fuel costs of more than 94,700 flights completed without tankering during FY 2012 with estimated costs of those same flights if they had tankered fuel to the maximum extent possible.
Key Findings
Tankering Fuel Would Generate Cost Savings Under Some Circumstances
- Air Mobility Command can enjoy savings from tankering even without access to market fuel price data.
- Most savings generated by tankering would come from in-theater wartime operations.
- The sharing of fuel market rate prices between the Defense Logistics Agency and Air Mobility Command would benefit the Department of Defense.
- Even without price-information sharing, both Air Mobility Command and the Department of Defense would benefit from savings in the wartime scenario.
- Offloading fuel from the aircraft fuel tank or other onboard containers could increase Department of Defense tankering savings by 460%.
Recommendations
- The U.S. Air Force should work with the Defense Logistics Agency to provide market price information to Air Mobility Command.
- An internal compensation mechanism within the Department of Defense should be created to shift some of the savings reaped by the Defense Logistics Agency to Air Mobility Command to incentivize the command's participation.
Table of Contents
Chapter One
Introduction
Chapter Two
Flight and Fuel Price Datasets
Chapter Three
Four Decision Factors to Consider When Tankering Fuel
Chapter Four
Is Tankering Fuel on AMC Aircraft a Cost-Saving Strategy?
Chapter Five
Fuel Offloading: Economic Effect and Feasibility
Chapter Six
Conclusions and Recommendations
Appendix A
DLA Standard Prices, April 2009-October 2012
Appendix B
Spot Price for Jet Fuel at 22 International Airports
Appendix C
Environmental Effect of Fuel Tankering
Appendix D
Future Research Directions
Research conducted by
This analysis was part of the "Fuel Reduction for the Mobility Air Forces" project, commissioned by the Air Mobility Command (AMC) Director of Operations and conducted within the Resource Management Program of RAND Project AIR FORCE.
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