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Delta is taking an innovative approach to managing the flow of one of its biggest costs. Patrick Callan, Director of Jet Fuel Supply and Operations, explains.

With more than 5,000 flights per day on 1,250 aircraft, jet fuel is critical to Delta’s operation and performance. The airline uses about 3.9 billion gallons of fuel every year, and optimizing fuel use is a key focus of Delta’s innovative approach to the airline business model.

The airline has made some big changes in how it purchases and distributes jet fuel in recent years. Delta News Hub interviewed Patrick Callan, Delta's Director - Jet Fuel Supply and Operations, to discuss the mighty task of purchasing and supplying Delta’s aircraft fleet.

Delta News Hub: What was your background prior to joining Delta?

PC: I received my undergraduate degree from The University of Michigan and my MBA from Michigan State. I worked for a number of years in the energy field in Houston before I joined Northwest Airlines following graduate school. I made the move to Atlanta in 2008 and worked in various finance functions here at Delta for a number of years. I really view my role now as coming full circle given my energy, finance and supply chain experience.

DNH: Tell us about your role here at Delta. What are your main responsibilities?

PC: My main priority is ensuring that when a passenger boards a Delta aircraft, that among the reasons they may be delayed, they will not hear the pilot saying that their flight is delayed or cancelled due to their aircraft being out of fuel!  I lead a talented team that oversees every aspect of fuel supply, from the purchase contracts to the point of delivery to aircraft being refueled on the tarmac.

In short, I make sure we have the quantity of jet fuel we need, at the best price and quality possible, where we need it and when we need it. 

DNH: How is jet fuel purchased?

PC:  Because of the vast quantities of jet fuel Delta uses, we can’t just buy it as needed at the pump, the way you do for your car. The process begins with submitting requests for proposals – essentially offers to submit bids to supply fuel at particular airports – to jet fuel suppliers. Once those bids are awarded, the fuels group monitors contractor performance, troubleshoots supply issues and remains on call around the clock should urgent supply or operational issues arise.

And while purchasing and operations have been centralized, we individually negotiate jet fuel contracts for each of the 350 plus airports (including diversion and charter stations) where we serve, depending on the logistics and economics of each individual situation.

DNH: How is the fuel transported to our jets?

PC: Jet fuel is distributed through a complicated system that includes pipelines, ships, rail and trucks. Pipelines are the most cost-effective way to get fuel to an airport, while trucking jet fuel tends to be the most expensive. The fuels team works to achieve the most efficient transportation method while also working to ensure supply issues don’t emerge.

Delta’s integrated approach to fuel purchasing also allows us to practice “tankering” on a dynamic basis, basically loading more fuel at inexpensive airports so we don’t have to consume as much at high-cost stations.

DNH: Why do some airports have fuel supply issues?

PC:  Different airports tend to have different issues that can affect supply. New York City, for example, is highly congested with a lot of airlines demanding fuel and only one pipeline available for jet fuel deliveries, so supplies can sometimes run short despite a pipeline that runs constantly.

DNH: What has been the most challenging project you have worked on at Delta?

PC: I would have to say the most rewarding so far has been being part of the small team leading the effort (for Delta) to acquire the Trainer refinery (Monroe Energy in Trainer, Pa.). Everyone thought we were crazy, but it was a brave move for an airline, and is beginning to really pay off. I loved the challenge of everything about bringing the refinery on board. It gives Delta many advantages over our airline competition and what continues to motivate me is ensuring the Fuel team delivers better results than our competitors.

DNN: How does the Trainer refinery help us with fuel supply?

PC: The refinery in Trainer, Pa., was closed for a short period before Delta purchased it and restarted the operation. There are many advantages the refinery gives Delta which have been pretty well documented, not the least of which is its current projection to make a 2015 profit of $300 million. A key advantage for us is that the facility sends the jet fuel it refines via pipeline to New York, which helps maintain a steady flow of fuel to one of our most important cities.

DNN: Does the refinery help in other areas outside of the Northeast?

PC: Yes. Delta has contracts with other refining companies to swap the non-jet fuel products coming from Trainer, such as gasoline and diesel, for even more jet fuel. That fuel is distributed to airports across the domestic system, including key locations such as LAX (Los Angeles), ATL, LAS (Las Vegas), DFW (Dallas-Fort Worth) and ORD (Chicago-O'Hare).

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