12 – 13 May 2004, Bahrain Overlapping Tender Involved in Jet Fuel Purchasing “AACO’s Experience” Yasser Wehbe Head of Technical - AACO MEJET 2004 MIDDLE EAST JET FUEL CONFERENCE

(Source: AACO Database)

Fuel cost is very high: 12% Fuel Cost is very volatile

(Source: AACO Database) Fuel cost is very high: 12% Fuel Cost is very volatile We Need to Manage

AACO’s Mission “To promote cooperation amongst Arab Airlines and to serve their common interests, through service excellence”

AACO Joint Projects We Need to Manage CRS Distribution Ground Handling Regional Training Center MIDT Analysis JOINT FUEL PURCHASE

AACO Joint Fuel Purchase We started in 2000: –Arab Stations –Arab Fuel Suppliers –Bilateral Negotiations We wanted to grow: JOINT TENDERING

AACO Joint Fuel Tender For 2004: –300 million gallons –90 stations Adhoc –12 Airlines... Soon to become 13 How to manage?? –Work load –Maximizing Benefits –Study Market Change Two Tenders

AACO Joint Fuel Tenders Tender I: 1/1/200x – 31/12/200x Tender II: 1/7/200x – 30/6/200x We opted to overlap Tender I with Tender II

AACO Overlapping Tenders: WHY?? – Study market fluctuation in terms of services rates – Increase competition level – Smooth transition from Individual Tenders to Joint Tenders

AACO Tender I – Majority of Fuel requirements: Now 230 million gallons – Most of the Far East – Most of the Arab World – Some of Europe – Some of North America

AACO Tender II  70 million gallons in: –Most of Europe –Some of North America –Very few of Arab World –Very few of the Far East

Overlapping Tender: NOTES & RESULTS Tender II 1.Test bench for new ideas on pricing mechanism 2.Opportunity to gain market share by Fuel Suppliers 3.Streamlining of Airlines contracts terms

4.Improve supplier – buyer relationship 5.More opportunity for local Fuel Suppliers... Overlapping Tender: NOTES & RESULTS

6.Tenders volume will increase due to time and work load division.... Overlapping Tender: NOTES & RESULTS Tender I Savings: USD Four Million... We are looking for more