Avgas price spikes have pilots griping

Posted: Thursday, July 08, 2004

ANCHORAGE Grumbling about gasoline prices as you fill up your car? Better watch your language around pilots.

The price of avgas gasoline formulated for use in piston-driven airplanes such as Alaska's much-loved Cessnas and Super Cubs has increased about 80 cents a gallon in most Alaska markets, even more in others. The spike in prices has caused many in the business of flying to raise their rates to keep up with the added costs.

Aero Tech Flight Services currently charges about $2.99 a gallon for avgas, said company employee Matt Smith. That's up from $2.53 in early May.

Aero Tech is a flight school and also offers flightseeing tours and charters. Its 10 aircraft run through about 2,000 gallons of avgas a week during the summer, Smith said.

In mid-June, Smith said Aero Tech managers were working to figure out new, higher rates for plane rentals and charter flights to make up for the increased gas prices.

''We had to raise our rates last year for the first time in seven years,'' he said. ''That was an increase to keep up with the standards of the industry mostly. Gas prices went up a bit, but it was mostly because of insurance, operations and maintenance.

''With the gas prices, oh man, it's a sore subject,'' he added. ''Nobody's happy about it, even myself. I fly. But there's not much you can do.''

A Cessna 207, for example, carries 80 gallons of fuel and burns about 14 gallons an hour. To fill a tank completely, a flyer would pay nearly $240 for a little more than five hours of flight time.

Among the hardest hit are those who fly in Bush Alaska. The first barges carrying fuel to rural Alaska should arrive in early July.

Currently, Hageland Aviation in Kotzebue is paying about $3.10 a gallon. But when the barge comes, avgas will go up anywhere from 80 cents to a buck a gallon.

Avgas prices generally reflect gasoline prices, said Bruce Barto, vice president and general manager of Crowley Marine, which supplies Alaska with roughly 3 million gallons of avgas a year.

Much like gasoline, the avgas supply is limited.

Unlike gasoline, there is only one refinery on the West Coast, run by ChevronTexaco, Barto said.

Crowley's wholesale purchase price for avgas in mid-June was about $2.25 a gallon, up from about $2 a gallon in early May.

Gasoline, by comparison, was running at about $1.40 a gallon wholesale, down from about $1.60 in mid-May and $1.50 in early May.

Fuel companies in the Bush have little choice but to place their orders right in the peak of the high prices. Fuel is barged to rural communities during a short period of time during the summer months, when the ice along the rivers has thawed, allowing watercraft access to the remote regions.

Crowley's barges were just getting underway from the West Coast in mid-June to deliver avgas and other fuels to the state's regional hub areas such as Bethel, Kotzebue and Nome. From there, avgas and other fuels will be barged to smaller communities, such as Aniak, Kiana and Shungnak.

''My sense is that consumers are continuing to buy out there, but they are buying only what they absolutely need,'' Barto said.

A gallon of avgas generally runs 50 cents to 60 cents more than a gallon of gasoline, he said.

Barto isn't sure why avgas prices aren't dropping right now to reflect the drop in gas prices. But, he added, he doesn't expect them to drop until the fall.

In late August, Bush Alaska businesses generally receive another supply of fuel to top off their storage tanks, the last they can get until the next spring.

Those on the road system are hurting, too. Leif Wilson, one of the owners of 40-Mile Air, said he's had to raise his rates, ground some aircraft and forego hiring seasonal staff to stay ahead.

Bulk avgas is $2.90 a gallon in Tok, he said, an increase of 90 cents over the same time last year. 40-Mile recently raised its charter rates by $15 an hour of flight time, to around $335, depending on the aircraft.

''We're doing a little less flying because it's so expensive,'' Wilson said. ''The more it costs, the less people can afford to do. People who could marginally afford it before aren't flying now.''

Joy flying is also on the decline, said Bob Hawkins, vice president and general manager of Alaska Aerofuel in Fairbanks. The company is selling avgas retail at $3.69 a gallon, up from about $3 a gallon this time last year.

''We've seen a huge decrease in people flying for fun, now everybody only flies when they have reasons to do it,'' he said. ''You used to see people at flight schools, families going out on outings, cross-country flying. That's all stopped. Now it's mostly just people going on fishing trips or air taxis.''

The decline in pleasure flying is resulting in a marked decline in the Alaska Aero Fuel's avgas sales.

''It puts you in a clutch,'' Hawkins said. ''When sales go away, you've got to look at your margins. When you sell less, you've got to charge more. Right now, avgas is not a profitable thing because there aren't many sales.''



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