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e-JetInternational Limited

Impact of New Generation Aircraft and Low Cost Carriers

on Airports, Fuelling Supplies and Services

John Pitts

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Key Issues

• Low Cost Carrier fuel characteristics (ME region)

• Next Generation Aircraft – A380, B7E7 recently launched

• Overall – cost effective fuel provision

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Cost Effectiveness vs.Gold Plating

CriteriaOver-EngineeringFitness for PurposeCost Effectiveness

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FANTASIA FANTASIA INTERNATIONAL AIRPORTINTERNATIONAL AIRPORT

G.N.P. from sugar cane, G.N.P. from sugar cane, cultured pearls and cultured pearls and tourismtourism

Fantasia is a small island near Fantasia is a small island near Sunset IsleSunset Isle

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1998 government built a new 1998 government built a new international airportinternational airport

HOPE FOR THE FUTUREHOPE FOR THE FUTURE

2 wide-body aircraft leased 2 wide-body aircraft leased inclusive holiday charter flightsinclusive holiday charter flights

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Foreign investment, new hotel resorts, Foreign investment, new hotel resorts, infrastructure improvements, health care and infrastructure improvements, health care and living standardsliving standards

Regional stability cementedRegional stability cemented

Good outlook Good outlook

THE HONEYMOON EFFECTTHE HONEYMOON EFFECTInitially, passenger numbers Initially, passenger numbers increased increased

Aviation Fuel volumes Aviation Fuel volumes

encouragingencouraging

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Aviation Fuel facility was Aviation Fuel facility was expensive to build, extravagant expensive to build, extravagant and over budget and over budget

Construction planning and co-Construction planning and co-ordination were poor, many ordination were poor, many claims on the construction claims on the construction contractcontract

THE TRAP SPRINGSTHE TRAP SPRINGS

Inefficient and costly to operateInefficient and costly to operate

System fees were high, making fuel prices higher System fees were high, making fuel prices higher than Sunset Islethan Sunset Isle

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Airlines started to Airlines started to tankertanker

Fuel volumes Fuel volumes became depressedbecame depressed

THE VICIOUS CIRCLETHE VICIOUS CIRCLE

Fixed costs had Fixed costs had to be apportioned to be apportioned against lower against lower volumes, system volumes, system fees became even higherfees became even higher

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• Air fares increased Air fares increased

• Fantasia no longer anFantasia no longer an inexpensive holiday location inexpensive holiday location

• Passenger numbers decreasedPassenger numbers decreased

• Fantasia Airlines was forced to Fantasia Airlines was forced to reduce flight frequencies - one reduce flight frequencies - one aircraft became redundant, but aircraft became redundant, but was still on lease was still on lease

• Other airlines reduced frequencies Other airlines reduced frequencies

• Foreign currency spending decreasedForeign currency spending decreased

• Jobs in the tourist industry were lostJobs in the tourist industry were lost

• The economy sufferedThe economy suffered

FANTASIA LOST OUT TO SUNSET ISLE FANTASIA LOST OUT TO SUNSET ISLE

THE KNOCK-ON EFFECTTHE KNOCK-ON EFFECT

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More Than One Solution

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Case A

8 tanks of total storage capacity 800,000 bbl

Tank farm main supply by a single pipeline

Back up supply by road tanker receipt facility

Case B

4 tanks of total storage capacity 300,000 bbl

Tank farm main supply by a single pipeline only

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% Construction CostsTankfarm Cost Breakdown Case A Case BDesign and engineering 6.0 3.5Procurement 2.0 1.9Materials 28.0 16.0Civil works 5.0 2.5Tank construction 8.0 4.0Piping/mech/struct works 12.0 7.5Electrical works 10.0 5.0Instrumentation 10.0 5.5Buildings 4.0 3.5Contractor's Site management 10.0 7.0Site mobilisation and demobilisation 3.0 2.5Site support 2.0 1.3Total 100.0 60.15

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Operational Cost Considerations over Lifecycle

Case A 8 x 100,000 bbl tanks

Case B 4 x 75,000 bbl tanks

Operating Staff > <Maintenance Staff > <Spare Part Stock > <Tank Inspections > <Maintenance : > < - Mechanical, Electrical, Instrument, GeneralExternal Painting: > <Tanks, PipeworkReliability Risk : > < - Mechanical Failure

- Electrical Failure - Instrument Failure

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Comparison of Lifecycle Costs to Users

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Case A 8 x 100,000 bbl tanks

Case B 4 x 75,000 bbl tanks

Occupied area (ha) 5.5 3.5Capital Costs (US$ million) 80 49.8Client’s Costs (US$ million) 10 8.45Total Project Cost (US$ million) 90 58.25Base Year Operating Costs(US$ million) 5 3UAC (USc/USG) 2.0241 1.253

Total Costs Payable by Users over 25 years 788,375,655 488,055,436Potential Saving over 25 years (US$) 300,320,219Percentage Saving 38

Cost per million USD excess 9,944,378Ratio 9.9

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Low Cost Carriers - Characteristics

• 2 hour sector maximum typical• B737 predominant• Fuel at one end of sector pair only• 20 minute turn around• Quick ITP service required – redundancy• Price driven• Secondary airports 9e.g. Frankfurt Hahn/

dedicated terminals (e.g. Singapore Changi)

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Middle East Impact

MenaJet

• Middle East's first no-frills airline

• Sharjah International Airport base

• two 162-seat Airbus A320s

• Southwest Airlines model

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Next Generation Aircraft

• A380

• B7E7

• A340, B777 derivatives

• B737 replacement c 2013 – Y1 (120 – 190 PAX)

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Airbus A380

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Specifications A380-800 B747-400

Length (m) 73 70.7

Wingspan (m) 79.8 64.4

MTOW (kg) 548,000 396,000

Range (km) 15,100 13,500

Seats 555 416

Fuel capacity (litre)

330,000 213,000

Service Entry 2006 1989

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Boeing 7E7

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Specifications 7E7-3 7E7-8 7E7-9

Length (m) 56 56 62

Wingspan (m) 50.3 – 51.8 59 59

MTOW (kg) 163,500 205,250 222,400

Range (km) 6,500 15,700 15,400

Seats 300 200 250

Service Entry 2008 2008 2010

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Impact - Other Airports’ Experience General

LHR • GBP 100 million• T3: 4 stands (incl. 2 x 2 MARS) double deck boarding

bridges, taxiway re-alignment• T5: 5 x A380 stands for 2008 opening, 14 by 2011• Singapore Airlines, Emirates, Virgin Atlantic Airways,

Qantas, Qatar Airways, Malaysia Airlines

Paris - CDG and Orly• EUR 100 million – taxiways, terminal, maintenance areas

Major Middle East impact – Dubai, Doha

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Impact - Other Airports’ Experience Fuel Facilities at LHR

• Limited impact – new fuel farm part of T5 developments – 6 x 10,000 m³ tanks

• 440,000 annual movement limit, currently 420,000

• New large aircraft still small % of population (c 5 %)

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Conclusions

Low Cost Carriers • Middle East Region next candidate – operational

impacts not facilities• Cost effectiveness/fitness for purpose even more

important than everNew Generation Aircraft• Middle East airports major players• Cost effectiveness/fitness for purpose even more

important than ever

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