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 refueling 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 counter parties 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 refueled 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.
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.
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