Jet-A Case Study

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Concord Regional Airport (CRA) is a small hub airport in the city of Concord. As of 2015, Allegiant Air is the only commercial airline has flights scheduled to and from CRA. Since the number of flights has been increased from twice a week to a total of six weekly departures, there is a significant impact arises from increasing flight frequency. One of the risk exposures was aircraft emits toxic gases into the atmosphere that creates climate changes and contributes to the pollution of the air and the destruction of the ozone layer. This type of risk is at moderate level. It is recommended that CRA implements loss control due to air pollution. For loss prevention, CRA should conduct routine inspection of aircraft along with Allegiant. Testing …show more content…
It is recommended that CRA should implement loss-financing technique to protect their cash flow and offset their losses. The positive correlation as oil price increase, jet fuel price also increase. Risk control personnel and risk manager should work closely together to decide whether or not retain the risk. With retention, CRA is considering self-insurance. They had to have enough fund to pay for the losses. It’s reflected negative change in cash flow as oil price increases and vice versa. Furthermore, they can manage price risk by using hedging or options. CRA buys the fuel from the major integrated oil companies that make Jet-A or Av gas such as Exxon, Shell, and Chevron. By using the convenience of a forward contract for jet fuel, CRA can conveniently protect itself against price hike by purchasing jet fuel several months in advance. The forward contract would eliminate price exposure for the airport. Furthermore, it doesn’t require any initial outlay of funds to purchase the fuel. Another benefit of using the forward contract is jet fuel storage; the Airport does not need to store the jet fuel until it is …show more content…
The risk exposures from regulatory compliance such as air pollution, noise, soil & land management, and aircraft rescue and fightfighter that has been identified. It is important to implement the risk management technique to comply with laws and regulation. Whether it can use loss control and loss finance to cover all the gaps between CRA and

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