Gazprom, S7 Airlines use blockchain to buy aircraft fuel
Russia's S7 Airlines implemented its first blockchain-based smart contract for the refueling of one of its aircraft.
Gazpromneft-Aero, the aviation refueling arm of state-owned oil giant Gazprom Neft, and S7 Airlines conducted the first refueling of an S7 scheduled flight at Tolmachevo airport in Siberia, using a jointly developed blockchain-based aviation fuel smart contract (AFSC). The smart contract was completed along with Russian banking partner, Alfa Bank.
By implementing smart contracts, Gazprom reported that aviation companies now have the opportunity to make instant payments for fuel directly on refueling aircraft, without prepayment, bank guarantees or any financial risks to the parties involved.
“The technology makes it possible to increase the transparency of mutual settlements, to abandon a number of manual operations and speed up the processes," Pavel Voronin, deputy director general for information technology at S7 Group, stated in the press release
Initiating a smart contract through the AFSC system begins with S7 Airlines coordinating the fuel volume and price with Gazpromneft-Aero about an upcoming flight. This data is used to assign a refueling contract to the tanker driver of the local fuel operator at the airport. Once the pilot requests the exact amount of fuel listed in the smart contract, an online request is made to the bank to place a hold on the appropriate funds to cover the fuel. After the hold is issued, the bank gives instant confirmation to start refueling. At the end of the refueling, funds are withdrawn from the airline’s account and the reporting documents go to S7 Airlines and the local fuel operator at the airport.
The whole process takes 60 seconds.
“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,” said Vladimir Egorov, CEO of Gazpromneft-Aero, in the press release issued by Gazprom.
Blockchain technology is being touted a possible disruptor for aviation payments and supply chains because of its ability to enable and automate payments covering airports around the globe, including those in the most remote regions.