S7 Airlines and Gazpromneft-Aero are the first Russian companies to use blockchain-based smart contract for aircraft refuelling

27.08.2018

S7 Airlines, part of the oneworld® aviation alliance, together with the operator Gazpromneft-Aero and Alfa-Bank, have, for the first time in Russia, used digital smart contracts based on blockchain technology for the refuelling of aircraft. The new technology allows air companies to settle accounts more quickly and minimize the financial risks involved in transactions, as it does not require any prepayment or bank guarantees.

On the basis of digital smart contracts using the AFSC (Aviation fuel smart contracts) system, S7 Airlines agrees a preliminary volume of fuel, and a price for the fuel. This data is used to prepare technical instructions for the driver of the refuelling tanker in the airport. When the pilot of the aircraft requests the specific volume of fuel required for the flight from the operator, an online order blocking the relevant sum on the airline’s account is sent to the airline’s bank. The bank sends an instant confirmation, which enables the refuelling to start.

When the refuelling is finished the funds are debited from the account, and the commercial departments of S7 Airlines and the fuel supplier exchange accounting documents. The whole process takes 60 seconds. Today the first refuelling of an aircraft using a smart contract was carried out in Tolmachyovo international airport by the crew of flight number S7 3013 from Novosibirsk to Krasnoyarsk.

“As a technological leader in the sector, S7 Airlines analyses promising new technologies, including blockchains, and, where appropriate, incorporates them into its processes. We were the first to start using smart contracts for letter of credit transactions. After that we developed a blockchain platform to enable automated trade operations between several counterparties and used it to launch a service for exchange of payments with airline ticket agents. Our next step will be a service to automate settlements with fuel suppliers. This is an automated transaction between three parties: the bank, the airline and the fuel supplier. Once the aircraft has been refuelled in accordance with the pre-agreed procedure, the figures are reconciled and the funds debited from the account. This technology allows us to make exchanges of payments more transparent, eliminate a wide range of manual operations, and speed up our processes,” says Pavel Voronin, the S7 Group’s Deputy General Director for Information Technologies.

“This project has become an important milestone in the development of Alfa-Bank’s blockchain platform. We believe smart contract technology has an enormous potential, and they can enable us to resolve problems that would be too complex for traditional banks, and provide services to our clients as efficiently and quickly as possible,” said Maksim Pershin, member of Alfa-Bank’s Executive Board and joint head of the Corporate Investment Bank block.

“Gazpromneft-Aero, a leader in its sector, is not only a pioneer in the implementation of IATA international standards for fuel supplies in Russia, but it also plays an active role in introducing the best international practices and innovative approach to make business more effective. The use of this technology for the exchange of payments between airlines and fuel operators will boost the development of the whole aviation industry,” said Vladimir Yegorov, Gazpromneft-Aero CEO.

All the operations are carried out strictly according to the procedure agreed by the parties to the digital smart contract, making settlements more transparent.

S7 Airlines (“Siberia” airlines brand, s7.ru) is a member of the oneworld® global aviation alliance.

The airline has a wide internal route network, created on the basis of air transport hubs in Moscow (Domodedovo) and Novosibirsk (Tolmachevo). S7 Airlines also performs regular flights to countries of the Commonwealth of Independent States (CIS), Europe, the Near East, Southeast Asia and countries of the Asia-Pacific region.

S7 Airlines is one of the most reliable airlines of Russia, it implements latest achievements of the world’s industry in passenger services and develops its own services dynamically.

Today S7 Airlines has the newest and one of the most modern aircraft fleets on the Russian air transportation market. All flights of the airline are performed by the aircraft of the world’s leading manufacturers.

S7 Airlines is in top 100 of the best airlines of the world and ranks third in the Eastern Europe, as indicated by the authoritative international rating Skytrax.

The airline is a member of the S7 Group of companies. In 2017 Group member airlines carried more than 14.2 million passengers.

Gazpromneft-Aero is a subsidiary of Gazprom Neft. Since 1 January 2008, the company has engaged in its core activities of refuelling aircraft, including aerial refuelling. Gazpromneft-Aero has been a strategic partner of the International Air Transport Association (IATA), supplying aviation fuel, since December 2008.

Alfa-Bank was founded in 1990. Alfa-Bank is a universal bank, carrying out the whole range of banking operations available on the financial services market, including the servicing of private and corporate clients, investment banking services, financial leasing, factoring and trade financing.

Alfa-Bank is Russia’s largest private financial institution in terms of its total assets, total capital, and its credit and deposit portfolios.

According to its 2017 financial reports, compiled in accordance with the International Financial Reporting Standards, the total assets of the Alfa-Bank Banking Group, which includes ABH Financial, Alfa-Bank JSC and its subsidiary financial companies, amounted to 44.7 billion USD, its total credit portfolio was 28.6 billion USD and its total capital was 6.4 billion USD. The Group’s net profit in 2017 was 798 million USD.

As of 31 December 31 2017, Alfa-Bank provided services to more than 420 000 corporate clients and 14.3 million individuals. It has 762 branches and outlets in Moscow, the Russian regions and abroad, including a subsidiary bank in the Netherlands and subsidiary financial companies in Great Britain and Cyprus.


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