Gazpromneft-Aero, operator of the Gazprom Neft aviation refuelling business, and S7 Airlines have developed and implemented blockchain-based joint smart-contracts (aviation fuel smart contracts — AFSC), improving speed and efficiency in reciprocal settlements in aviation refuelling, as well as automating planning and accounting in fuel supplies.
This is the first usage of distributed ledger (blockchain) technologies on the Russian market. With its help, aviation companies now have the opportunity to make instant payments for fuel directly on refuelling aircraft, without pre-payment, bank guarantees or any financial risks to the parties involved — an approach resulting in manifold improvements in the speed and efficiency of financial transactions, as well as reductions in labour costs.
In initiating a smart contract through the AFSC system, S7 Airlines transfers information on the planned refueling of a future flight to Gazpromneft-Aero, fixing the initial fuel volume, and its price. Data is used to assign the technical task to a tanker driver, at the airport. On the day of refueling, the airline pilot asks the operator for a specific volume of fuel, through the system, following which an online application is sent to the airline’s bank to hold the required amount on account. Instant confirmation from the bank initiates the refueling process. The service completed, payment is settled, with the fuel supplier and airline’s commercial departments being sent information on the completion of refuelling, together with all accounting documents.
Thanks to blockchain technologies, data on refuelling operations is guaranteed to be securely stored in the AFSC system. All operations are undertaken exclusively on the basis of a digital contract approved by both parties, eliminating the possibility of any breach of contractual terms and improving transparency in accounting.
Anatoly Cherner, Deputy CEO for Logistics, Refining and Sales, Gazprom Neft, commented: “The development and implementation of digital services like this is an important element in creating a digital platform for managing the logistics, processing and sale of oil products at Gazprom Neft. Implementing digital transformation projects in cooperation with major partners will enable the company to reach a new level in technological and operational efficiency, right now.”
Gazpromneft-Aero CEO Vladimir Egorov added: “Gazpromneft-Aero operates to international standards, and is implementing international best practices, in innovating to improve efficiency in aviation refuelling in Russia. Using blockchain technologies in reciprocal accounting and settlements between aviation companies and fuel operators gives new impetus to the development of the entire aviation industry.”
Pavel Voronin, Chief Information Officer, S7 Group, added: “As a technological leader of the industry S7 Airlines analyses and, where appropriate, implements forward-looking technologies, including blockchain. We were the first to being using smart-contracts for letters of credit. After that, we developed a blockchain platform to automate trading operations with various counterparties, and launched a mutual-settlement service for air-ticket sales agents. Our next step is a service to automate accounting in refuelling. This means automating trading operations between three parties — the bank, the airline, and the refuelling company. Under established procedures, once refuelling is complete, reconciliation takes place and settlement is made. Technology means transparency in reciprocal settlements is improving, meaning we can abandon a range of manual operations, and speed-up processes.“
The first refuelling of a S7 scheduled flight using this new technology took place at Tolmachevo airport (Novosibirsk), where a Gazprom-Aero refuelling complex is located.
“Blockchain” refers to a continuously growing distributed database for storing and distributing information. No transactions recorded in a blockchain can be deleted or changed.
A “smart contract” is an algorithm which remotely initiates a blockchain on certain conditions being met. The result of smart-contract initiation is signed-off by all blockchain parties: on which basis, all data and history relating to logistics operations can be collated holistically. All parties involved in the procurement process have access to encrypted information, and all contracting parties — and enabled technologies — can engage in electronic data interchange.
The transition to advanced technologies in supplying petroleum products forms part of the digital transformation of the Gazprom Neft business, involving the creation of an integrated system of digital projects at each stage of the production chain, both in geological exploration and hydrocarbon production, as well as in processing, logistics, and sales to end-users. Thanks to this, a significant increase in business-process efficiency has been achieved, based on data management. Gazprom Neft has, in recent years, already implemented projects in implementing systems based around artificial intelligence (AI), Big-Data-based predictive analysis, the Internet of Things, and the development of cyberphysical systems based on digital twins of physical assets. Gazprom Neft is now developing an integrated long-term strategy on digital transformation to support the implementation of the company’s business strategy.
Gazpromneft-Aero is a subsidiary of Gazprom Neft, engaged in aviation refuelling and “wing-tip” sales of aviation fuel. The company leads the aviation refuelling market in Russia in terms of sales volumes, and is a strategic aviation refuelling partner to the International Air Transport Association (IATA).
The company’s operational activities are fully compliant with the highest safety standards in refuelling operations — Green Company specialists are also members of the IATA Fuel Data Standards Group (IATA FDSG), developing IATA’s digital standards in aviation refuelling. New electronic formats are making possible significant reductions in labour costs, as well as speeding up document flows as a result of aviation refuelling operations being conducted online.
S7 Airlines (the Siberia Airlines brand, www.s7.ru) is a member of the oneworld® global aviation alliance.
The company operates a wide network of internal flights from its hubs in Moscow (Domodedovo) and Novosibirsk (Tolmachevo). S7 Airlines also operates scheduled flights to countries in the CIS, Europe, the Middle East, South-East Asia and the countries of the Asia-Pacific region.
S7 Airlines is one of Russia’s most stable aviation companies, making use of the latest industry achievements in — and actively developing — passenger service.
S7 Airlines currently owns one of the most state-of-the-art aviation refuelling complexes on the Russian market. All flights are made using aircraft from leading global manufacturers.
S7 Airlines is one of the World’s Top 100 Airlines and is ranked third in Eastern Europe under the leading international Skytrax ratings.
In 2017 S7 Airlines was the recipient of two Skyway Service Awards, nominated for best airline in the “Economy Class, Domestic Regular Services” category and “Best Online Customer Service”. it is a member of the S7 Group of Companies. The Group carried more than 14.2 million passengers in 2017.
The International Air Transport Association (IATA) is a non-governmental professional organisation with its headquarters in Montreal (Canada) and its European centre in Geneva (Switzerland). The IATA has 117 offices worldwide. The IATA’s membership includes 265 airlines, together responsible for 83 percent of all international flights. The Association acts as industry coordinator, representing the industry’s interests in areas including aviation safety, flight operations, tariff policy, technical operations and maintenance, security, refuelling services, the development of international standards in conjunction with the International Civil Aviation Organisation (ICAO), and more.