Introduction to the Fuel Module

This article introduces the business processes supported by the FBO One Fuel Module. To keep this introduction to the point, this explanation is written around a concrete example, the so-called reference-FBO.

Above is a schema of the processes regarding fuel at the reference-FBO.

The reference FBO purchases its fuel at a depot. It is stored by the FBO in fuel tanker trucks, also known as bowsers.

When fuel is sold and pumped into an aircraft, it is called an uplift. Fuel can also be de-fueled from an aircraft into a fuel truck. And fuel can also be transferred from one fuel truck to another.

These processes will be explained in more detail further on in this document.

The FBO One Fuel Module is able to:

  • Enter the details of the fuel tickets
  • Track current stock (inventory management) for each type of fuel, such as Jet-A1 and AVGas
  • Account for stock differences, for example caused by missing tickets
  • Manage fuel contracts and credit terms
  • Automate price calculation to easily handle payments
  • Create and book invoices for fuel sales
  • Book fuel reward program points in the accounting system
  • Book revenue and stock value in the accounting system
  • Create management reports and charts
Differences between FBOs

The processes outlined above can be slightly different between FBOs. The FBO One Fuel Module can be adjusted to each FBO's specific processes and business model.

For example, the airport may have a hydrant system, an underground network of fuel pipes. The trucks used to refuel an aircraft from a hydrant pit are called dispenser trucks. If the a hydrant system is used, FBO One can account for the fact that the fuel is pumped directly from the depot into the aircraft. This scenario is called 'into plane' or 'throughput' fueling.

Another, similar scenario is that the FBO is not the owner of the fuel in their trucks, but the fuel remains in ownership of the supplier. In that case, the FBO is just an 'into plane service provider' that never owns the fuel. For such FBO's, FBO One will still be used to track and validate all inventory in each truck. The invoicing process will now be different, as there is no 'purchase' of the fuel at the moment that the truck is filled up at the depot. There is only a purchase in case the FBO sells fuel in its own name.

Purchase

Our reference FBO owns the fuel in the tanker trucks. In other words, they purchase fuel at a depot and store it in their own trucks.

Th ramp agent in the tanker truck receives a receipt for each purchase, a so called ticket. The fuel supplier sends a monthly invoice to the FBO.

FBO One helps when matching the fuel tickets to the supplier's invoices.

Uplift

The process of pumping fuel into an aircraft is called the uplift. When the uplift is complete, a receipt - the ticket - is printed in the fuel truck. The ticket contains the meter start and end values and the total volume of fuel sold. It is also used to capture the captain's signature for confirmation of delivery.

The payment for the uplift can be arranged in various ways.

  • An aircraft operator can have credit with the FBO. Credit can be in the form of a direct credit by the operator with the FBO, or because a fuel release is received for the handling. A fuel release is an authorization sent by a fuel broker (for example World Fuel or UVAir) to the FBO that authorizes the captain to fuel for a specified maximum quantity of fuel. These fuel releases are mostly sent by fax or email and received by the operation staff. In FBO One, the credit status of the Uplift service is set to 'paid' using the 'fuel release received' workflow step. 

When an aircraft operator has credit with the FBO, the ramp agent does not have to validate or process a form of payment. The FBO sends an invoice for the uplift to the client. 
FBO One assists the ramp agent in determining whether there is credit for the uplift or not, by clearly showing the credit status. This can be the ramp agents iPhone, iPad (see image below) or desktop PC. 

               

  • If the aircraft operator has no credit, the ramp agent has to arrange for payment. This can either be by using a fuel card, or by a direct payment in the form of cash or a credit card.
    1. Fuel brokers and suppliers issue fuel cards, also known as carnets. These cards are used like credit cards. Most of them are only valid for fuel, not for handling services. Examples are fuel cards from BP, Word Fuel, UVAir, Total, AVFuel and MultiService. If the captain presents a fuel card to pay for the fuel, the details of the card normally have to be validated by the Ramp agent with the broker. In Europe this validation is often skipped because there are no automated devices available to swipe and validate the card. In the USA, the fuel cards are always electronically validated. When an uplift is paid with a fuel card, the invoice is sent to the broker or fuel company that issued the card in a similar way as if they had sent a fuel release.
    2. The captain can also pay using a 'direct payment' - which is a credit card or cash - and pay the fuel with that. In that case, the fuel is paid together with the handling services.
Throughput

When the uplift is paid by one of the fuel suppliers, the uplift is called a throughput. In this case the purchased fuel is processed in FBO One as if the uplift was done using a hydrant; so the fuel is only pumped from the depot into the aircraft on behalf of the fuel supplier. The FBO will send an invoice to the fuel company for uplifting the fuel, but will not invoice the value of the fuel itself. The value of the fuel is invoiced by the fuel company to the fuel card holder.

De-fueling

When an aircraft needs maintenance, sometimes the aircraft must be de-fueled. In this case the fuel is transferred from the aircraft to the fuel truck. When the aircraft departs, the aircraft is refueled again.


 
The aircraft is de-fueled by placing a hose on the aircraft tank on one end, and by placing the other end of the hose in the top of the fuel tank. There is no meter attached to the hose. Therefore the fuel amount is estimated by taking the calculated remaining fuel based on the flight plan and flight time of the aircraft. In order to ensure that the actual amount of fuel in the truck is known, typically the truck is made empty directly after the de-fuel, by pumping the fuel through the meter into another truck or into a large tank owned by the maintenance facility. After this 'uplift', the stock position of truck can be reset to 0 because it is now known that the truck is empty. The difference that occurs between this final 'uplift' and the reset of the stock to 0, is automatically booked by FBO One as a loss or profit.

Transfer

If a fuel truck is filled from another fuel truck, it is called a transfer. This has no effect on the total stock owned by the FBO, only the individual stock of each fuel truck.

Stock location

All forms of storage for fuel are called stock locations in FBO One. A fuel truck is called a stock location. A depot or tank is also called a stock location. Each stock location has at least one meter that is used to measure the amount of fuel when fuel is taken from it. Some fuel trucks have two meters and can pump fuel into both wings of the aircraft at once. Uplifts and transfers always go over a meter, so the meter values printed on the fuel ticket are related to a one of the two meters.

Stock keeping unit (SKU)

A stock keeping unit is a type of fuel kept on stock by an FBO. This can be Jet-A1 for jet engines, AV Gas for piston engines or diesel and unleaded fuel for selling to vehicles used at the airport. For each of these fuel types, an SKU has to be defined.
Each stock location can only contain one SKU. So a particular fuel truck can only be for Jet-A1 or for AV Gas and not for both.
For each SKU, the price can be setup in FBO One by creating one or more products that are linked to the SKU. These products can be named like 'Jet A1 Uplift' and 'Jet A1 Transfer'. Each of these products is linked to the same 'Jet-A1' SKU, but has a different workflow and a different price structure. This is because uplifts and transfers have a different workflow and a different price. The sum of all the transactions (called tickets or stock mutations) for the Jet-A1 related products will always translate into the current stock position for the SKU. You can see this in the 'running stock' overview in FBO One.

Price components

The price for fuel can be defined in FBO One to be the sum of a set of price components. By allowing this breakdown, FBO One has the advantage of lower day to day price maintenance, because only those components that change need to be updated. Also, because the various taxes on fuel are configured as price components, FBO One is capable of generating tax declaration statements.
Below you will find several components of which the fuel price can consist.

FOB (Free On Board) Price

The 'Free On Board' price for Jet Fuel is an industry standard market price, published on a daily basis by, for example, 'Platts'. Because the fuel prices are very volatile, contract prices between the FBO, its clients and its suppliers are often based on the 'Platts FOB' as a reference value. On top of the 'Free On Board' price, a 'differential' is typically added.
For example, when an FBO purchases fuel from a fuel supplier, the price is based on the FOB price plus the 'purchase differential' charged by the fuel supplier to the FBO. So the value of the stock of the FBO is based on this price.

When the FBO sells fuel to a contract client, the price is based on the FBO's price plus a 'contract differential'. This contract differential is a relatively fixed value that is for example only renegotiated every 6 or 12 months.

Posted-Airfield Price

Each airport typically also publishes a 'Posted-Airfield Price'. This is the price that ad-hoc visitors must pay when they don't have a contract. This price is not directly related the 'Free On Board' price. When a visitor buys a lot of fuel, some FBOs give a percentage discount on the Posted Airfield Price.
A minority of the uplift contracts are based on this price component.

Purchase Differential

This is the differential on top of the 'Free On Board' price that is charged to the FBO when fuel is purchased. The purchase differential can be different per FBO.
Because the stock value is equal to the current purchase price, this differential is one of the stock value price components.

Airport Fees

Airport fees are a form of tax. They are different from duty tax and VAT in the sense that must always be charged. No client is ever exempt.
Together with the 'Free On Board' price and the Purchase Differential this forms the purchase price for the FBO.

Duty Tax

In most countries duty tax is charged on fuel. Duty tax is an excise tax imposed on the sale of fuel. In FBO One, duty tax can be set up differently according to the regulations of the country the FBO is located in.
In the Netherlands for example, a large amount of duty tax is charged by the government on each liter of fuel. This charge is similar for unleaded, diesel, AV Gas and Jet-A1. However, in practice, duty tax on Jet-A1 is mostly exempt because fuel used in commercial international air transport is exempt from duty tax.