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US Airlines consider more joint purchasing schemes for alternative fuels

The Air Transport Association of America (ATA) is considering at least two more alternative fuel purchasing agreements this year after developing two memorandums of understanding covering alternative fuels transactions in December 2009.

Two fuel suppliers have submitted formal proposals to the ATA to negotiate alternative fuel transactions in different parts of the USA, says ATA vice president and chief economist John Heimlich.

Heimlich made those comments to ATI and Flightglobal today in Washington at a signing ceremony marking an alliance between the ATA and the US Defense Energy Support Centre to advance the alternative fuels market for aviation.

One potential deal would cover a fuel purchase in California while the other would cover a sale in either the upper Midwest or the Gulf Coast, he says, adding it is too early to identify the prospective fuel suppliers.

The next step is to decide whether these agreements require a MOU or if that step can be bypassed for an actual fuel supply contract, he says.

Heimlich says he would like to close on the potential transactions before 2011.

In the meantime, some of the ATA member airlines that participated in the first two MOUs are now discussing terms for formal purchase agreements, Heimlich says.

Carriers involved with these negotiations include American Airlines, Delta Air Lines, FedEx, Lufthansa, United Airlines and US Airways.

Heimlich says he would like to see those MOUs firmed up in 2010.

In one deal announced on 15 December, fourteen airlines and alternative fuels producer AltAir Fuels entered a MOU to negotiate the purchase of roughly 189 million litres (50 million USgal) of bio-derived jet fuel per year to be produced by the Seattle-based company. Participating airlines include Air Canada, Alaska Airlines, American, Atlas Air, Delta, FedEx, Hawaiian Airlines, JetBlue Airways, Lufthansa, Mexicana, Polar Air Cargo, United, UPS and US Airways.

The second MOU unveiled on 15 December included AirTran Airways and all of the carriers involved with AltAir, except Hawaiian and Alaska. The parties inked a MOU with synthetic fuels producer Rentech to develop a framework for a future supply contract for roughly 946 million litres (250 million USgal) per year of synthetic paraffinic kerosene (SPK) derived from the Fischer-Tropsch process.

The memorandums were announced after voluntary standards development organisation ASTM International issued a specification for non-petroleum-based fuels, D7566, for up to 50% synthetic blends derived from the Fischer-Tropsch process, paving the way for commercial production and use of such fuels. In addition, ASTM approved the modification of the existing specification for aviation turbine fuel, D1655, to recognize fuels made with synthetic components.

This year ASTM considers up to 50% blends of bio-derived SPK called hydrotreated renewable jet (HRJ) for commercial production and aircraft use.

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