US Airways considers legal action against BAA in fuel supplies row

Danny Fortson,Business Correspondent
Monday 11 February 2008 01:00 GMT

US Airways may launch legal action against BAA, the owner of Heathrow airport, over its inability to secure fuel supplies for a new service it plans to launch next month from the world's busiest airport.

Under the new Open Skies regime that throws transatlantic routes open to full competition for the first time from the end of March, a raft of airlines have unveiled plans for new Heathrow services. According to aviation industry sources, all but US Airways have signed deals with companies to refuel their planes at the world's busiest airport.

A US Airways spokesman said: "We are working every possible angle to acquire fuel at Heathrow and have been ever since we announced our start-up last November. This situation continues despite the fact that the BAA and [airlines trade body] IATA have brokered a deal among all of the airlines to allocate fuel among themselves to ensure everyone, including the new entrants to the market, have adequate fuel." The US carrier has just over seven weeks to find a solution before its first scheduled Heathrow-Philadelphia service begins on 29 March.

BAA has appealed to several other airlines to make some of their supplies available to US Airways. None has agreed to do so. A source at one rival airline said: "They spoke to us about it but of course we said no. They are competitors. No one has been willing to take them on."

A BAA spokeswoman said: "We are confident there will be sufficient fuel, and we have contingency plans in place."

Fuel supply has been an issue at Heathrow since late 2005 when the Buncefield fuel storage depot in Hemel Hempstead closed down after an explosion and fire destroyed much of the site. Buncefield had provided about a third of the jet fuel to airlines flying out of Heathrow. BP, which owns a jet fuel storage depot at Buncefield that is operational but has remained shut due to safety concerns, said that it hopes to begin service again in "late spring" but could not give a more specific timeframe. Last week, Dacorum Borough Council approved another series of safety measures to allow for the resumption of operations there. Total, the French oil giant, also submitted an application to the Dacorum planning authorities last week to rebuild three aviation storage tanks on the site. The reopening of the site is a hot-button issue for local residents after the massive explosion in 2005 caused damage to homes in the area.

In the immediate aftermath of the Buncefield explosion, BAA and the IATA brokered an agreement under which the airlines agreed to ration their fuel. Some carriers were forced to carry excess fuel or to land at other airports to fill up. The supply situation is now much improved, although fuel remains tight, with many new entrants relying on code-sharing partners to facilitate supplies for new services.

Carriers fear that further delays to the reopening of the BP storage depots could make rat-ioning necessary again during the peak travel months in the summer. With the beginning of Open Skies just weeks away, the airlines have been hustling to sign catering, ground crew and the fuel contracts needed before new routes come in.

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