Austin Airport Faces a Jet Fuel Shortage, Issues Appear to Be Localized

Mohit Oberoi, CFA - Author
By

Mar. 29 2022, Published 9:29 a.m. ET

Over the last few years, consumers and businesses have gotten used to shortages. ABIA (Austin-Bergstrom International Airport) in Austin, Tex. has issued an alert about a jet fuel shortage. Is there a nationwide shortage of jet fuel in 2022 or is the issue localized at the Austin airport?

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U.S. companies have been grappling with shortages of things ranging from packaging material, rubber, and chips. Shortages combined with the labor shortage situation compounded the supply chain woes in the U.S. and added to the already high inflation.

Why is there a jet fuel shortage at the Austin airport?

The Austin airport has asked landing flights to carry more fuel than they normally carry and warned that the airport might not be able to refuel them due to a jet fuel shortage. The jet fuel shortage is due to a higher influx of travelers at the airport.

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ABIA has also instructed travelers to arrive at least two hours before the flight departure time. Higher-than-normal traffic at the airport is leading to delays in the boarding process.

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Speaking with Fox News Sam Haynes, a spokesperson for ABIA, said, "This has become a more regular occurrence as the airport is seeing increased flight activity.” Haynes added, "There are no immediate impacts to operations, but it’s possible flights could have to divert to refuel before landing at AUS."

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Airports usually carry jet fuel for around seven days. However, the jet fuel at the Austin airport wouldn't last more than three days, which is half of the industry average. The airport expected a bump in traffic in 2022 and talked about the need for a fuel shortage facility.

ABIA is still in the process of finalizing a new net storage facility. Currently, it has two fuel tanks since the airport was built in 1999 to carry 11 million passengers annually. In 2022, ABIA expects near-record volumes of 17 million.

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There was a jet fuel shortage in 2021.

There was a widespread jet fuel shortage during the 2021 summer travel season. While larger airports didn't face any issues because they get their fuel supply through dedicated pipelines, some smaller airports faced a jet fuel shortage.

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The issues were partially due to the crippling shortage of drivers. There weren't enough truck drivers to deliver fuel to terminals located away from the airports.

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Also, some of the pipelines carrying jet fuel were diverted to other works. We saw pretty much the same playbook across multiple products in 2021. While the demand bounced back from the COVID-19 pandemic lows, the supply couldn't keep pace because no one expected the demand to bounce back so sharply.

Fuel prices might be rising but there doesn't appear to be a jet fuel shortage in 2022.

The Austin airport jet fuel shortage looks like a localized event led by the huge influx of passengers and low fuel storage capacity. There doesn't appear to be a nationwide jet fuel shortage in the U.S.

However, given the steep rise in crude oil prices, jet fuel prices are going up. This would invariably lead to higher fares for passengers, especially at a time when the overall costs for airlines have been going up. Strong travel demand allows them to pass on the higher costs to passengers.

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