Russian jet refuelling company Gazpromneft-Aero (GPNA) has ambitious expansion plans and is looking to grow its coverage across the globe
Global passenger traffic is rising consistently every year and is expected to double in the next 20 years, according to the International Air Transport Association (IATA), creating extensive opportunities in the aviation fuel sector.
Boeing forecasts that the global jet fuel market itself will grow by 38% by 2025 to 374 million tonnes, in order to meet demand for the increasing number of aircraft being flown across the world.
GPNA is posting strong growth each year, which is being driven by the surging Russian commercial aviation market that has recovered from poor economic performance in 2015 and 2016 when air traffic numbers fell.
Growing global volumes
Last year GPNA’s ‘wing-tip’ sales increased 19% year on year, to 2.4 million tonnes, while the total volume of international sales via its global network reached 215,000 tonnes, an 89% increase year on year. In the first five months of 2018, refuel volumes of international airlines increased by 18% compared to the same period in 2017.
GPNA now provides refuelling services at more than 200 airports in 60 countries, for 82 international airlines and 84 Russian carriers. In 2018 it has already secured long-term agreements with Air France/KLM, Air China and Hong Kong Airlines for refuelling at Moscow airports and with Turkish Airlines at the airport of Voronezh (Russia) and Bishkek (Kyrgyzstan).
GPNA has grown significantly, but head of international sales directorate Dmitry Korpachev says much of the focus now is on improving efficiency.
“The company has established an efficient international network of refuelling stations in partnership with global jet fuel suppliers. We are in the top 20, but we will work hard to be in the top 10 by 2030,” he says.
The company intends to double its business and aims to be providing refuelling services at 259 airports by that date.
The biggest potential
The strategic focus of GPNA is to expand operations in the Asia-Pacific region, which it believes has great potential due to rising tourist flows from Russia; Europe and the Middle East are other priority markets.
“We are choosing to focus on the most attractive countries with the biggest potential. These include China, Egypt and Italy. But we also are planning to actively grow our presence in other countries,” Korpachev says.
In China, GPNA is working with China Aviation Oil Hong Kong Company Limited, a subsidiary of the Chinese national fuel operator CNAF. GPNA is looking to double sales in 2018 into China – the fastest-growing aviation market in the world.
Korpachev describes China as a huge market that is ripe with opportunities. “We need to constantly develop our sales and work there. We are aiming to double our business there. Many Chinese companies want to be provided by local suppliers,” he adds.
Egypt provides extensive possibilities as passenger traffic is growing strongly from Russia and other countries since commercial flights were given the go-ahead again (after being suspended due to security concerns). Korpachev said that GPNA is looking to increase volumes into Sharm el-Sheikh, Cairo and Hurghada, as it targets doubling sales in Egypt in 2018.
Thailand is another prime focus this year and GPNA is looking to increase sales by 50% to the Southeast Asian country.
In Europe, the main market focus for growth is Italy, where it is once again aiming to double its sales.
The Russian market grew 10% in 2017 after a 4% fall in 2016 and GPNA is targeting further increasing its share of the Russian jet refuelling sector, expecting it to grow to 30% by 2025.
In Russia, it is the largest jet fuel player and currently has a 25% share of the retail sales marketplace, compared to RN-Aero with 23.1%, Lukoil-Aero with 19.4%, Aerofuels with 5.1% and independents making up the remaining share.
“We rank after the independents in Russia which [together] make up about 27% of the market. These companies have most of their business at the small airports, and we see potential to increase our presence in this segment,” Korpachev says.
Central to GPNA’s plans for growth and development is digital transformation. In 2018 it plans on becoming the first company in Russia to implement the use of ‘smart contracts’ in aircraft refuelling and is aiming for implementation in all the airports that it and its partners use by 2021.
Through the use of blockchain technologies and smart contracts, airlines will be able to refuel their aircraft without prepaid charges or bank guarantees, leading to greater efficiency.
Korpachev says the change will simplify the payment process for one-time refuelling and ensure immediate transaction processing, thereby mitigating financial risk for parties involved.
The first refuelling of an S7 Airlines scheduled flight using this new technology took place at Tolmachevo airport (Novosibirsk) in August.
GPNA is also working in partnership with IATA to develop and implement technologies that will enable unified XML standards for the jet refuelling industry. XML standards simplify and accelerate work processes between airlines, fuel suppliers and airports.
To date, Korpachev says 21 companies have already adopted XML standards in partnership with GPNA including S7 Airlines, Pobeda, Ural Airlines, UTair, Lufthansa, Air France and Total.
There is no doubting that GPNA has lofty ambitions. It certainly has a clear strategy of how it will achieve future expansion – and with global passenger numbers set to continue to grow along with Russia over the next decade, it looks sure to achieve its goals. |