Latest / Best of Business / Cath O'Brien: Board of Airline Representatives NZ executive director on the warnings that airlines will have to cut NZ flights in fuel shortage

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Cath O'Brien: Board of Airline Representatives NZ executive director on the warnings that airlines will have to cut NZ flights in fuel shortage · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks be follow
• 0:12
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• 0:16
  Speaker 2: There are warnings that overseas airlines may have to cut
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  Speaker 2: New Zealand as a root of our jet fuel crisis worsens.
• 0:21
  Speaker 2: The companies are worried about their planes potentially being stranded
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  Speaker 2: in New Zealand with not enough fuel to get home.
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  Speaker 2: Cath O'Brien is the executive director of the Board of
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  Speaker 2: Airline Representatives. Hi Kath, Hi, Heather. Is this an US
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  Speaker 2: problem or is this an all over the world problem? Well?
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  Speaker 3: I think this isn't all over the world problem. But
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  Speaker 3: we can only worry about ourselves, so so a bit
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  Speaker 3: of both.
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  Speaker 2: Okay, So what's the trigger that makes these airlines decide
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  Speaker 2: to cut certain routes?
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  Speaker 3: Well, I think what we're looking for is to understand
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  Speaker 3: that should jet fuel become scarce in New Zealand, which
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  Speaker 3: my eyes have glued to the oil watch just as
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  Speaker 3: much as yours, you know, should that happen, then we
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  Speaker 3: need to have a mechanism by which that fuel might
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  Speaker 3: be allocated or shared. And we've seen this in New
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  Speaker 3: Zealand before, when we had the pipeline when we had
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  Speaker 3: the jet fuel limitations in twenty twenty two and twenty
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  Speaker 3: twenty three. Airlines know that jet fuel can be limited,
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  Speaker 3: and we need to know what will happen in this situation.
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  Speaker 2: So last time, tell me if I'm wrong. But last time,
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  Speaker 2: wasn't it that they were allowed to use up to
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  Speaker 2: eighty percent of their allocation?
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  Speaker 3: Yeah, So what usually happens is fuel suppliers will impose
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  Speaker 3: a fuel allocation event on customers when fuel becomes scarce
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  Speaker 3: and they can't quite make it to the next shipment.
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  Speaker 3: And so we've seen that a lot before. And so
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  Speaker 3: when that happens, the fuel supplier picks a number that
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  Speaker 3: stretches the available fuel out to the new ship if
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  Speaker 3: you like. But so and so you know that might happen.
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  Speaker 2: Right, So that sounds like there will not be there's
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  Speaker 2: no real risk of being stranded, because as long as
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  Speaker 2: you've got a percentage of your allocation, you still have
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  Speaker 2: something available to you, don't you know, that's right?
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  Speaker 3: And even if you had your allocation, would you would
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  Speaker 3: fly your aircraft back home and you might cancel a
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  Speaker 3: later flight. It's not a question of whether airlines we'll
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  Speaker 3: just sort of be stuck here. Yeah, but I think
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  Speaker 3: you know that there is a need to plan it
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  Speaker 3: as to what will happen to that air connectivity.
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  Speaker 2: So it is are you going public with us because
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  Speaker 2: you're not getting the sense that this is being actively
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  Speaker 2: considered and discussed in Wellington.
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  Speaker 3: Certainly I have actively been discussing it in Wellington, and
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  Speaker 3: it's not yet clear that we have a well understood
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  Speaker 3: plan as to what might happen if we run a
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  Speaker 3: bit shorter jet fuel. And I think the chances of
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  Speaker 3: running shorter jet fuel are non zero. You know, if
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  Speaker 3: I look at those boats and you know, there could
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  Speaker 3: be a delay in a shipment, and it's reasonable to
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  Speaker 3: think that that might happen, and so we should plan
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  Speaker 3: appropriately now if.
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  Speaker 2: We do run, like, what is the most likely scenario?
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  Speaker 2: If we do miss a shipment, what happens?
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  Speaker 3: So the likely scenario, and what has happened before, is
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  Speaker 3: that we might miss a shipment or not have quite
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  Speaker 3: enough on the water on the way to us. And
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  Speaker 3: the fuel supplies will realize this first because they know
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  Speaker 3: how much we have and they know how much they've ordered,
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  Speaker 3: and they will realize that there is a need to
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  Speaker 3: make an allocation. And usually that happens with about twelve
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  Speaker 3: hours notice, so the fuel supplies will advise the airlines
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  Speaker 3: and from midnight that night the allocation is in effect.
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  Speaker 1: Now.
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  Speaker 3: Usually airlines can pick up some fuel from other countries
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  Speaker 3: on the way out of New Zealand to get home
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  Speaker 3: again if they are limited here. But in this particular
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  Speaker 3: strange situation, if New Zealand is limiting jet fuel, so
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  Speaker 3: might other nations be, and so we cannot necessarily tech
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  Speaker 3: stop and pick up some extra gas, such as we've
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  Speaker 3: done in the past to manage these situations. Airlines will
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  Speaker 3: be left in the unfortunate circumstance of just having to
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  Speaker 3: cancel services instead. That is the only choice we will have,
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  Speaker 3: and so because of that we need to make a
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  Speaker 3: plan now to get through this.
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  Speaker 2: Are you seeing any indication that there is a slowdown
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  Speaker 2: of supply or is it still completely normal at the minute.
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  Speaker 3: At the moment, it looks like we've got sufficient supply
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  Speaker 3: in the current time. And I have a close eye
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  Speaker 3: on the information published by MB which gives us the
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  Speaker 3: fuel days both on shore and on ship, and the
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  Speaker 3: line I'm interested in most is the orders at the
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  Speaker 3: very bottom, which is the orders on ship, and that
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  Speaker 3: only goes out to one April that data which is
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  Speaker 3: not very far away, and beyond that we have no
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  Speaker 3: visibility as to watch it. Fuel there may or may
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  Speaker 3: not be on their way to New Zealand, and I
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  Speaker 3: think that's the point at which we need to be
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  Speaker 3: paying attention.
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  Speaker 2: Kath. It's good to talk to you. Appreciate your time
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  Speaker 2: very much. Kath O'Brien Bord of Airline Representatives.
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