How do airlines pay for their oil?

Question

*And how much too..

Answer 1

most large corporations have contracts with fuel companies, and there are trucks at each airport they fly to. this fuel can cost upwars of billions per year, with the average plane containg 70,000 dollars of fuel when full.

Answer 2

Like the others said with an accounts payable dept. The fuel company sends a bill every month or so.

Also there is something called 'fuel hedging'. Basically it is insurance the airline buys to be protected against high fuel prices. The greater the hedge (the difference between what the airline pays and the fuel actually costs), the greater the cost of the insurance, but it is worth it if fuel prices go high. On the other hand it can be wasted money if fuel prices stay the same or drop.

In the case of fuel hedging, the insurance company pays for the portion of the fuel above the set amount.

Malibu Canyon: If it wasn't in the legal sense, who would be obligated to pay the difference and how would you make them? Someone is underwriting the cost/risk for a fee, sounds like and insurance company to me.

Answer 3

Well, Ive never flown on an airline that doesn't charge for tickets and headphones don't cost that much.

Fuel costs alot, thats why fuel efficient aircraft and engines are going to sell alot, example the 787.

Answer 4

airlines have an accounts receivable department, i look at the screen press a button and do an electronic funds transfer

Answer 5

They sell tickets to passengers. Part of the cost of that ticket pays for the fuel. Just like a taxi. Jet fuel is actually just kerosene.

Answer 6

Like any other large corporation would. With an accounts department.

Jonathan S
ATP-LRJET
Flight/Ground Instructor

Answer 7

calnickel: Fuel hedging does not involve insurance companies. It is not a policy of insurance in the legal sense.

Answer 8

With money.
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