Aeroflot strikes fuel price deal with Russian oil companies

I received a press release from Aeroflot today, telling me that the carrier has entered an agreement with several Russian oil companies on a fixed pricing formula for jet fuel.

It says this is “part of the Russian government’s plan to stabilise fuel prices”. This is the first time I’ve seen such an agreement between an airline and an oil company – is anyone else aware of any similar agreements that have taken place in the past?

If fuel prices shoot up again to the levels seen earlier this year, this could give Aeroflot and other Russian airlines a significant competitive advantage.

Here’s the full text of the press release:

AEROFLOT AGREES ON FIXED JET FUEL PRICING WITH RUSSIAN OIL COMPANIES

Moscow, 11th November 2008 – Aeroflot has agreed on a new jet fuel pricing formula with several leading Russian oil companies as part of the Russian government’s programme to stabilise fuel prices.

The Gazprom-led group of oil companies will sign long-term contracts with Russian airlines incorporating a fixed pricing formula for the entire contract period. Price quotations by Platts, a leading global provider of energy information, will be used as the basic benchmark indicator for determining the price formula.

“The newly agreed jet fuel pricing formula will be an effective instrument enabling Russian airlines, like Aeroflot, to become more flexible when planning fuel expenses and hedging risks connected with price fluctuations,” said Aeroflot’s Chief Executive Officer Valery Okulov.

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One Response to Aeroflot strikes fuel price deal with Russian oil companies

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