Will training costs go down with fuel?

[Darkhorse]

The price of gas has fallen considerably lately. Fuel is a big part of training but I noticed even though auto fuel is down to $1.43 here, avgas is still $5 to $6 bucks. Is this the price you guys are seeing around the rest of the country or am I just "lucky"?

If aviation fuel does come down a dollar or "gasp" 2 dollars, how likely are schools to pass the savings on to their students instead of trying to make up a bit of lost profit from lack of students?

[MN Heli Flyer]

There are some variables to consider. Does your flight school have a fuel surcharge added onto their rates? If so then is is possible that when AVGAS does go down they will reduce the surcharge. I am not sure how wide spread the use of surcharges are but at the business where I trained, they have a fuel surcharge. I did not pencil it out but it seemed to me that the surcharge went up faster than the fuel price.

 

If your company does not use a fuel surcharge then I doubt that the price will come down much if any. Mainly because fuel is a smaller portion of the overall picture when the business is adjusting costs. Insurance costs, and maintenance or future maintenance replacement costs needs to be considered and is driving the larger part of the operational cost.

 

If you are using a helicopter that burns 10 gph and the fuel price goes down a $1.00 per gallon this would only reduce the operating cost by $10.00 per hour.

[edspilot]

The answer is no, you will not see anything like a 1 or 2 dollar drop in aviation fuel price.

 

Reason: Aviation fuel is NOT traded on the comodities market like auto gas is. That trading is what causes the big swings in daily or weekly prices. Aviation fuel is more stable and thankfully so or you would see FBOs going out of business faster than they are in this down turn. The aviation fuel is a very small part of the overall oil refining output and therefore is the reason it is not traded the way auto gas is.

 

Sorry, for the long answer.

 

edspilot

[edspilot]

MN Heli Flyer,

 

Good job explaining the sur-charge side or the "up-charge" to fuel. Sur-charging is the fast and hidden way to charge more for the fuel already in the ground tank to anticipate the price to refill the ground tank when empty. The dealer or FBO can say he has not "raised" his price of his fuel and be at lease somewhat truthful when saying it. However, the added sur-charge they say is not the fuel price. Yea, right!

 

edspilot

[Darkhorse]

I admit I don't know the workings of aviation fuel but it seems to me that being processed from oil, it would still be effected to some extent by the price of a barrel. I get my fuel from the Aero club on base. $10 or $15 dollars an hour would make a big difference for someone going thru commercial, CFI or general time building. But point taken and thanks for the replies thus far.

[helonorth]

Where is gasoline traded as a commodity? When I instructed we had a $15 per hour surcharge.

Over the course of training, you're looking at around $2500.

Edited December 31, 2008 by helonorth

[apiaguy]

Avgas does correspond to oil and fuel markets. Currently the cost for wholesale avgas is in the neighborhood of $1.99!!!!! Now you do have to add your state and local taxes and for me in Idaho that works out to about $2.23/gallon wholesale today. Yes, you SHOULD be seeing a reduction in costs but there probabally won't be because a couple factors.

1. who ever the fuel supplier on the field is may have a surplus of $4/gallon fuel left from 3 months ago depending on how fast they go thru the fuel

2. the operator has increased prices and hasn't really seen any decrease in business because of it and will try to milk that increase as long as possible... maybe in the future they'll reduced prices if they remain stable on the fuel end... but as everyone is predicting, they will go up and why not just leave it where it is.

 

So mostly, it is the helicopter business or fuel supplier that is ripping you off.... that's business!!

[Goldy]

I can get AVgas in LA for under $3 bucks a gallon now. However dont plan to see flight schools lower their prices, its hard enough for them to just stay open let alone make a buck..

 

Goldy

[jehh]

We had a fuel surcharge this summer, however as AvGas prices came down, we got rid of it.

 

It just doesn't drop as fast as it goes up, blame our fuel supplier...