Shell Aviation is a leading player in the Middle East and a keen watcher of developments as the local aviation industry has really taken off.
Mike Lumely, the general manager for the Middle East operations of the company, says the new airline companies launched in the Gulf region open up a range of opportunities.
He told Gulf News that the company is now exploring the possibility of offering new airlines a risk management service to ease them through the investment process.
Gulf News: The aviation companies are competing for a slice of the low-cost carrier market and at the same time the price of fuel keeps fluctuating. How do you see this developing?Mike Lumely: We welcome the entrance of new carriers in the region as we believe that the low cost carriers have the potential to stimulate further market growth. This is if they can properly control costs and deliver genuine value to their customers.
We have seen this phenomenon already in the US and Europe where carriers such as Ryanair, Easyjet and Southwest have significantly grown the overall demand for air travel on identified routes.
With regard to the cost of fuel, the underlying fuel price does certainly fluctuate but jet fuel marketers are actively looking to assist start up airlines with ironing out these fluctuations by offering risk management services.
We have the benefit in this area of being able to embed risk management contracts into our physical supply contracts, making it easier for the airlines than dealing with the banks for their paper deals and the oil companies for their physical requirements.
With two new airlines from Abu Dhabi and Sharjah, do you feel that the market for the aviation fuel companies has improved?Obviously, new airlines are a positive factor in stimulating demand for jet fuel - the key is to ensure that these airlines deliver value propositions which stimulate the growth of new demand for travel rather than simply cannabalising market share from existing players such as Gulf Air and Emirates.
How is the market for premium grades like Shell Aerojet and the performance additives in the region?The demand for Aerojet in the region is somewhat determined by the flying conditions, and particularly the prevailing temperature differentials. In this respect, we see the colder regions of North America and Northern Europe as the key target markets for this product although we are evaluating business potential in a number of other regions throughout the globe.
With regard to performance additives, we are currently running commercial trials of APA 101 with KLM and initial results in terms of the potential for lowering total cost of engine ownership are encouraging due to indications that the additive has positive impacts in reducing fuel nozzle caking.
The exact benefits depend on engine type and usage patterns, however, we do feel that APA 101 has potential applications with both new and old engine technologies.
We will be showcasing our energy products and solutions at this years Dubai 2003 air show.
Shell Aviation is launching its Shell Aviation card in the US markets soon. Is there any possibility of Shell going for the same product in the Middle East region?The Shell Aviation Avfuel card has been available for over 18 months - it is a card with global reach giving customers access to fuel in over 1,300 locations worldwide - in this sense it is already available in the Middle East.
Gulf News
