Aviation is a constantly-growing industry: the latest figures from the International Air Transport Association show that global passenger traffic in July rose again, compared with the same month last year. And air freight markets showed double-digit growth at the same time. So, what does this mean for businesses in the sector, such as Air BP?
More than nine million passengers a day fly between global destinations on more than 26,000 commercial aircraft, supported by an aviation sector that provides 63 million jobs worldwide. With air traffic doubling every 15 years since 1984, aviation is a huge growth area. For a business alert to the opportunities, you could say the sky’s the limit. That potential has not escaped Air BP, the global aviation fuel and services business. It is one of the world’s leading suppliers of jet fuel, used in turbine engine-powered aircraft, as well as aviation gasoline, which is used in piston engine-powered aircraft. It also supplies a variety of other associated aviation fuel-related services, such as the design, commissioning and operation of airport fuel infrastructure.
Air BP is present at more than 800 airport locations in some 50 countries (including its joint ventures), and will continue to grow this network coverage year on year. The business has built a reputation for safety, reliability, and excellent customer service. It has a customer base of around 400 airlines, in what is called the commercial airlines segment, along with another 16,000 customers, such as business jet and helicopter operators, airfields, private pilots and fixed base operators, in what is known as the general aviation segment.
A large part of Air BP’s recent growth has come from the commercial aviation market and the business has had a raft of successes lately, with new or enhanced relationships with global names, such as British Airways, Cathay Pacific, Qantas and Emirates. Air BP is now increasing its focus on the general aviation segment as well
Plans for growth
The business has plans to grow in all customer segments by investing in what it does best - innovative products, technology and service. “For Air BP, growth is a strategic imperative,” says Jon Platt, who was appointed as chief executive officer in September 2016. “We need to grow in a safe, reliable and compliant manner, without losing focus on our core business. We intend to do that by continuing to differentiate and innovate in the products and services that we offer and by accessing new geographies with growth prospects.”
The potential to grow within Air BP’s more mature areas is significant as well, according to Jonathan Wood, chief strategy and business development officer: “We are operating in what is probably the fastest-growing market sector in the Downstream. There is rapid growth in demand in the Asia-Pacific region, but there is still potential in Europe and the US. We are already delivering above-average returns and our role is to grow further.”
In numbers: ready for take-off
Air BP employs around 1,100 people in 34 countries
The business has some 400 commercial airline customers
Air BP has interests in more than 150 joint ventures
He continues: “We are looking at larger countries, such as India and Mexico - where deregulation and economic development present an opportunity to invest and grow. We are also looking at medium-sized geographies in Southeast Asia, where we hope to build our presence on the back of success in Indonesia, the Middle East and Africa. Also, in South America, we have built on our Brazilian position by starting up a business in Peru and are now evaluating our next country entry. We continue to look to grow in China, beyond our two existing joint ventures in the south of the nation.”
Successful joint ventures
Joint ventures (JVs) are a common business model in Air BP and a good way to enter new locations, says Wood: “Air BP brings global sales and marketing skills, account managers in every continent and innovative offers.
"We also have more than 90 years of experience in the technical and operating aspects of aviation fuel, designing, building, commissioning and operating supply infrastructure; things that local partners often don’t have.”
Technical know-how is enshrined in the way that Air BP operates and the business currently has some 90 technical service agreement customers, providing consulting and support services to a range of partners, from national oil companies to single-site JVs and projects, as well as military customers.
A lower carbon future
Air BP is also playing a role in the transition towards a lower-carbon future. In October 2016, it became the first aviation fuel supplier to achieve carbon neutrality for its into-plane fuelling services across more than 250 Air BP-operated locations.
Longer term, Air BP is also taking a lead in the supply of jet biofuel - known as biojet - which could reduce net carbon emissions compared with regular jet fuel.
The International Air Transport Association (IATA), which represents major airlines in 117 countries around the world, has set out ambitious climate goals, including carbon-neutral growth by 2020 and a 50% reduction in carbon emissions by 2050. While the aircraft and engine manufacturers look to develop more energy-efficient aircraft, and airlines look to improve operational efficiency, it is up to suppliers like Air BP to bring their expertise in fuel manufacturing, blending and product quality to support new types of fuel.
In January 2016, Air BP became the first operator to deliver biojet to commercial airports through the existing fuel infrastructure, including the airport hydrant system, at Oslo Airport in Norway. Before Oslo, this fuel would be segregated and delivered separately into an aircraft via a tanker truck. Having overcome the technical complexities, the big challenge now is ensuring sufficient biojet volumes in a market where demand outstrips supply. Which is why Air BP announced towards the end of 2016 that it is investing $30 million in pioneering biojet producer Fulcrum BioEnergy.
Working in partnership with BP Ventures, BP’s venturing team, the deal secures 50 million US gallons per year of biojet for Air BP over a 10-year period. Fulcrum produces the biojet from municipal waste and is now planning to build waste-to-fuel plants in North America, with the first facility under development. Fulcrum also has backing from two major airlines - United Airlines and Cathay Pacific - and the potential to build production plants outside North America, with the help of Air BP’s global presence. Initially, Air BP will distribute and supply biojet at key hubs across North America in its role as a preferred supply chain partner. “This marks our clear intent to help the industry confront the carbon challenge,” says Wood.