Airlines Face Growing Fuel Shortage Risk

With passenger traffic rising above pre-9/11 levels, the nation's aviation business is slowly outgrowing the infrastructure that fuels it.

Airlines have used all sorts of strategies to improve their fuel efficiency, from flying at slower speeds to taxiing on one engine. These efforts have worked, but they have also been offset by their maneuvering around supply bottlenecks.

America West's assistant treasurer Timothy Walker said the industry deserves credit for its ability to manage these problems without affecting service. But he conceded that making up for low supplies with truck and airplane deliveries is not a long-term strategy.

''The lack of fuel could slow growth in certain markets,'' Walker said. He cited Phoenix and Las Vegas as two America West markets likely to face fuel-supply challenges if traffic continues to grow.

Indeed, one of the latest supply snags to catch the industry's attention began around July 20 in Phoenix. While accounts of what happened vary slightly, it is agreed the trouble began after Kinder Morgan did not make a scheduled delivery of jet fuel, at which point carriers began ''ferrying'' extra fuel to Phoenix from California and Nevada.

At first, it seemed a crisis was averted. Then it cascaded.

The near-shortage in Phoenix gradually spread to airports in Reno, Nev., San Diego and Ontario, Calif. Jet fuel had to be trucked in just to keep the ferrying program to Phoenix alive, executives said.

Delivering jet fuel by truck is like ''putting a handful of sand on a beach,'' Hipp said. ''It doesn't really keep up with demand.''

San Diego and Ontario came so close to drawing down their fuel inventories, Sturtz said, that airlines were a few hours away from scheduling additional layovers so planes could refuel.

The crisis was resolved gradually as pipeline deliveries returned to normal and airlines focused on using as little fuel as necessary.

Kinder Morgan blamed its canceled fuel shipment on an unnamed refiner that couldn't keep up with higher-than-anticipated demand. Nevertheless, it announced plans to spend $130 million to replace a 140-mile pipeline with a larger one to move more fuel to Arizona from Texas and New Mexico refineries.

Airports across the Southwest weren't the only ones struggling with fuel supplies last month.

A handful of airports in Florida, most notably Orlando and Tampa, saw their regular shipments cut off as a result of refinery and shipping snags caused by hurricanes and tropical storms moving through the Gulf of Mexico. Again, the airlines began bringing in fuel by plane.

''We've been ferrying to Orlando for two weeks,'' Sturtz said. ''It just goes on and on.''

Copyright 2005 Associated Press

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