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Gulf Air’s high fuel price claims denied

Manama, May 1, 2012

Bahrain Petroleum Company (Bapco) has dismissed reports Gulf Air may be paying up to seven times more to buy its jet fuel than some of its regional rivals.

Sources earlier said it was cheaper for the national carrier to re-fuel its planes in Asia or Germany because of the premium charged by local suppliers.

It is understood the airlines pay nearly $3.40 per gallon in Bahrain, $3.10 in Kuwait, $3.35 in Frankfurt and $3.25 in Bangkok.

But Bapco yesterday said allegations that Gulf Air had to pay extra for aviation fuel at the Bahrain International Airport (BIA) were inaccurate.

It said comparisons between airports were also misleading because each had its own method of price calculation.

"It is interesting to note that since Bapco started supplying jet fuel at Bahrain International Airport some 28 years ago none of its customers have ever raised any complaints claiming that prices were too high," said a Bapco statement.

"In fact, all customers prefer to deal with Bapco due to its competitive pricing. With regards to the pricing formulas applied in European and south east Asian countries they differ from the one used in the Gulf region so fuel prices vary from one airport to another.

"Based on our information Gulf Air actually pays the lowest jet fuel price at Bahrain International Airport."

Bapco said given the fact Bahrain was not a large oil producing country it had to import 85 per cent of its crude requirements from Saudi Aramco and was treated like any other company and has to pay the market price.

"Additionally, Bapco has to bear all operational expenses related to refining including storage charges by the Bahrain Fuelling Company, transportation costs and the actual fuelling of aircraft," it said.

Sources previously said it was believed Gulf Air's global fuel bill reached $500 million last year and jet fuel prices were severely hampering the airline's profit potential and strangling its growth.

But according to Bapco, even if the carrier had paid a cheaper rate for its jet fuel it would only made a difference of around $27 million or 6 per cent of its total fuel bill.

"Even if Bapco waved this margin it would not have a significant or pivotal impact on the current financial woes of Gulf Air," it said.

"It is also worth mentioning that every passenger using Gulf Air or any other airline has to pay tax known as fuel surcharge", which is calculated as part of the ticket price.

"This means that the passenger bears the actual cost of any fuel surcharge.

"While Bapco understands the difficulties caused by recent events and their negative impact on Gulf Air operations, apportioning blame for supposedly high jet fuel prices are not just misleading they are also without foundation.

"Jet fuel prices at Bahrain International Airport are in fact lower than at other airports in the region." – TradeArabia News Service




Tags: Gulf Air | Bapco | Jet fuel | fuel price |

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