In our last blog we talked about the problems airlines face when trying to analyze and learn from their fuel data, and how innovative analytics tools might offer a solution. In this blog, we wanted to focus more on why your fuel data is so important; how it can reveal a lot about the efficiency of your airline and help you improve performance.
So, we’ve put together a list of valuable key performance indicators (KPIs) that can be extracted from your fuel data, and some tips on how to use them to identify and address issues at different stages of your fuel management process. How many of these KPIs do you regularly monitor?
If all your fuel data is centralized and correctly linked, you should be able to compare the total volume of fuel contracted with the total volume that has actually been uplifted, for any time period you specify.
This is a useful overview KPI, helping you keep track of how much you are deviating from the fuel volume forecast. However, for more actionable insights, you could split this data by supplier and area/location. This would show potential problems with specific contracts — where suppliers are providing a volume of fuel that falls way above or below what was contracted.
It would also show problem areas, such as particular continents or even specific airports that were using up far more or far less fuel than was expected. You can then take measures to address these issues before the problems grow.
You could even split the data up in different ways, for example, by aircraft type or leg — whatever criteria is most useful to you. As long as the data exists in your fuel management system, it is technically possible to filter by it.
Comparing contracted fuel volume against uplifted volume can also be used for audit purposes and can help fuel buyers make more accurate forecasts in future.
It’s inevitable that there are differences between forecasted fuel prices and what fuel prices actually are at the time of uplift. However, large differences can have a significant impact on profitability and cause budgeting problems.
Regular analysis of your fuel data can help you understand exactly what the percentage difference is — for a certain time period, location, leg, or even a specific flight number — so you can then work to improve this KPI.
You could set an acceptable threshold for these differences, and then closely track anything that falls outside of that threshold, taking action if necessary.
Clearly, this kind of intelligence could help various teams operate more efficiently: Contracts, Finance and Fuel Planning for instance. It may help you forecast budgets more accurately in future and could even influence procurement decisions and the terms of future fuel contracts.
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When fuel tickets or fuel reports arrive very late, this can have several negative consequences:
1. The airline’s volume figures will not be up-to-date
2. The payment for this fuel will be made later than expected
3. Valuable staff time is used up chasing the ticket.
For these reasons, contract management and financial management become more difficult, and monthly reports on measures such as fuel expenditure, consumption and emissions are likely to be inaccurate.
However, if you use an analytics tool to interrogate your data, you should be able to keep track of the average delay (in days) for fuel tickets/reports. You could then filter this information by supplier/fueler or location, so you can easily see which suppliers and locations have the longest average delays. You may then wish to intervene to reduce that average — perhaps by changing procedures or contract terms. One solution might be to streamline the process of exchanging electronic fuel tickets, using IATA’s data standard.
Again, it should be possible to drilldown further into this data, so you can see exactly which flight numbers or fuel ticket numbers are causing these delays.
Time taken to verify invoices and number/value of invoice discrepancies
Checking and verifying invoices is a crucial step in the fuel management process and ensures the airline doesn’t overpay for fuel because of invoicing mistakes. Unfortunately, it can also be one of the most inefficient parts of the process.
Most airlines receive thousands of invoices each year and so checking the details of every one against contractual and operational data is extremely time-consuming — unless they have advanced technology that can automate these checks.
If there are discrepancies between the information on the invoice and the information recorded in fuel tickets and contracts, it will:
These problems can lead to delayed or inaccurate payments, lower productivity levels and possibly even poor supplier-airline relations.
Therefore, it benefits all parties to keep the invoice verification period as short as possible and the number of discrepancies as low as possible. If you regularly analyze your fuel data, you can measure stats like:
1. The average length of time (in days) taken to verify invoices
2. The proportion of invoices taking over X number of days to be verified (threshold set by you)
3. The number of invoice discrepancies for a certain period
4. The monetary value of invoice discrepancies for a certain period.
You could establish any of these as KPIs, whichever is most important to you. You should also be able to view which locations and which invoice issuers are responsible for the longest delays or most discrepancies, and you should be able to drilldown and find out exactly which parts of the invoice (fuel quantity, fuel cost or VAT) the discrepancies are about.
By conducting this analysis, you can determine the cause of any problems and take action if necessary. For example, you may decide to hold discussions with a supplier, or adapt contract prices, delivery terms or conditions.
Keeping track of important indicators such as these is easy when you have an advanced analytics application built into your fuel management system, as FuelPlus Cloud does. FuelPlus Analytics can blend and analyze terabytes of data and translate it into actionable business intelligence using easy-to-understand maps, charts, graphs and gauges — we’ve included examples throughout this blog.
The application has a variety of pre-built dashboards, reports and data relationships to get you up and running fast, but you can also build your own — it’s completely customizable. What’s more, dashboards, reports and KPIs are linked to user roles, so different teams can focus on what matters most to them.
If you want to be able to easily monitor your airline’s fuel performance and understand where improvements can be made, watch a recording of our webinar now.