Does anyone know about Air China Fuel Group?

Among the many companies in China that are currently impacting the Fortune 500, China Aviation Oil may be the youngest.

Chinese people’s understanding of this young and growing company mainly comes from some sporadic information, some of which once became sensational news.

The Chen Jiulin case that broke out at the end of 2004 made the name of China Aviation Oil, which was originally unknown, spread around the world.

In 2007, because Eagle United Airlines defaulted on aviation fuel payments, China Aviation Oil North China Company categorically refused to continue supplying fuel to the airline, resulting in stranded passengers and various media reports.

In 2008, China Aviation Oil won great reputation for its excellent performance in fighting rain, snow and ice disasters, earthquake relief, and ensuring air transportation during the Olympic Games.

In 2009, East Star Airlines announced that it had entered bankruptcy proceedings, which brought the risk of bad debts to China Aviation Oil...

Among the many pieces of information above, what the public still sees is that China Aviation Oil Appearance of oil. As for the essence of China's aviation oil, most people do not understand it and even have a lot of misunderstandings...

1. Starting point: The original sin of monopoly?

In recent years, the rapid development of state-owned enterprises has been amazing but also aroused doubts. Accusations that China's large state-owned enterprises "rely on monopoly and make huge profits" continue to appear. Whether state-owned enterprises have the original sin of monopoly has become a key topic of research and debate in the economic circle and a basic premise for evaluating state-owned enterprises.

Without exception, the young China Aviation Oil has also been involved in the vortex of monopoly original sin.

What are the facts?

Zhou Rucheng, member of the Standing Committee of the Party Committee of China National Aviation Oil Corporation and President of China National Aviation Oil Co., Ltd., has been involved in the aviation oil system for a long time. He understands the historical changes of China Aviation Oil and is familiar with aviation oil management. Business expert. China National Aviation Oil Co., Ltd., which he leads, is the core segment of China National Aviation Oil Group and the main supplier of China's aviation fuel market. When it comes to public doubts about China's aviation fuel monopoly, Zhou Rucheng is very calm. He thinks it's normal. Because it is impossible for the general public to have an in-depth understanding of a very professional and special market like aviation fuel.

“It is really a misunderstanding to say that China’s aviation fuel is a monopoly.” Zhou Rucheng said, “Whether it is analyzed from the perspective of economics or objective facts, this is not true. We can neither control the upstream supply of goods, nor can we control the supply of upstream commodities. It cannot determine the sales price of downstream goods, let alone block market access. How can we start talking about monopoly? ”

China Aviation Oil must start from its upstream supplier PetroChina (9.66, -0.02, - 0.21), Sinopec (7.40, -0.02, -0.27) and other domestic petroleum and petrochemical companies and international markets purchase aviation fuel, and provide aviation fuel supply services to their downstream airlines through transportation, storage, distribution, refueling and other links. . As an important strategic material for the country, the ex-factory price of aviation fuel is determined by the National Development and Reform Commission, and the sales price is determined by the Civil Aviation Administration of China. Faced with such a mechanism, even if China Aviation Oil wants to monopolize it, it may be powerless.

In addition, China’s aviation oil market is not exclusively operated by China Aviation Oil. Nearly 50% of the aviation fuel market share in South China is held by overseas companies; nearly 50% of the aviation fuel supply in developed areas such as Shanghai, Nanjing, Shenzhen, and Yantai no longer belongs to Chinese aviation fuel. In Hainan Province, China Aviation Oil only holds a negligible stake in Sanya.

The public is not aware of the above situation.

The public's suspicion of China's aviation fuel monopoly seems to be mainly due to the common red letters printed on the last few tickets of airline tickets - "fuel surcharge", as well as the domestic aviation fuel price. Higher than abroad.

In recent years, with the sharp rise in international crude oil prices, aviation fuel prices have also been rising. The proportion of aviation fuel in airline operating costs is also increasing. In order to cope with the rising costs, domestic airlines have introduced "fuel surcharges" with the approval of relevant national departments. Domestic routes of more than 800 kilometers are levied at 100 yuan per person, and domestic routes of less than 800 kilometers are levied at 60 yuan per person. Based on the 160 million civil aviation passengers, domestic passengers spent nearly 10 billion yuan in fuel surcharges in 2007.

Since this fee is in the name of "fuel", many people mistakenly believe that the fee must have been taken by China Aviation Oil.

"Actually, the fuel surcharge has nothing to do with China Aviation Oil. We don't know whether the fuel surcharge is 10 billion yuan a year, and none of this money belongs to China Aviation Oil." Zhou Rucheng explained explain.

On the topic of monopoly, there is one last question: Does policy monopoly exist?

The reporter asked Zhou Rucheng: The reform of the civil aviation system has put forward the requirement of "gradually liberalizing the aviation fuel market and introducing a competition mechanism" for aviation fuel. What step has it taken now?

Zhou Rucheng replied: "The agreement to join the WTO in 2001 and the "Regulations on Domestic Investment in the Civil Aviation Industry (Trial)" implemented in 2005 have determined that the aviation fuel market is completely open. Like the whole world, the aviation industry There is an entry threshold for the oil market. This threshold is the minimum standard for airworthiness and is determined by national administrative regulations. The Chinese aviation oil market will welcome all domestic and foreign companies that meet the entry requirements. This is the case in many industries. So. ”

Regarding the issue that domestic jet fuel prices were once higher than international oil prices, Zhou Rucheng said that our country’s jet fuel prices, together with gasoline and diesel prices, have been in line with international standards, and the National Development and Reform Commission will unify them based on changes in international oil prices. Determined by the actual development of the national economy. Due to the timing of the adjustment, there are times when the price of jet fuel is higher than the international price of jet fuel, but there are also times when it is lower than the international oil price. For example, when international oil prices reached a record high of US$147 last year, domestic jet fuel prices were lower than international oil prices for a long time, but overall domestic jet fuel prices are consistent with international jet fuel prices.

At this point, the suspicion of China Aviation Oil’s monopoly should be basically clarified.

2. Risk interpretation

Zhou Rucheng believes that China Aviation Oil not only cannot enjoy the peace of mind of a monopoly company, but must guard against risks at all times. In terms of operating risks, Singapore companies' losses from futures trading are a special case. Daily risks mainly come from large amounts of debt owed by customers. This is a major problem in the operation process of China Aviation Oil.

This is a "rule" left over from history: refuel first and pay later.

The airline’s debt arrears have put heavy financial pressure on China Aviation Oil. By the end of 2008, a considerable number of airlines were owed fuel for about 50 days, much higher than the normal cycle of 15 days. At its peak, airlines owed China aviation fuel 16 billion yuan, overwhelming the company.

Once the arrears for goods exceed the company's ability to bear, causing a strain on the capital chain, China Aviation Oil's operations will face difficulties. Once a customer who defaults on payment declares bankruptcy, China Aviation Oil will suffer even greater losses.

The Eagle United grounding incident occurred under such circumstances. Starting from July 17, 2007, flights of Chengdu Eagle United Airlines in Shijiazhuang were suspended one after another. The reason was that Eagle United Airlines had long been in arrears with fuel payments. China Aviation Oil North China Company, in accordance with the law, ordered the airline to pay the debt in accordance with the law despite its long-term reminders being ineffective. Flight supplies were suspended, but the public pointed the finger directly at China Aviation Oil.

Pu Guangji, general manager of the Corporate Culture Department of China National Aviation Oil Corporation, introduced: Eagle United Airlines has long been in arrears with fuel payments. The short payment period is 50 days, and the longest is 109 days, while the contract period is 15 days. This means that China Aviation Oil has to spend a lot of money to advance fuel costs and provide services. The service was in vain, and the fuel money advanced for it was a loan borrowed by China Aviation Oil from the bank. The airline will never pay the loan interest to China Aviation Oil. At that time, the price of one ton of oil was four to five thousand yuan, and the amount of refueling required for aircraft was huge. Especially a small company like our Hebei branch of North China Company could not afford that much money to advance fuel payments for airlines, let alone It's been more than 100 days since I last said it. A small branch company is in arrears with tens of millions of dollars in oil payments. It will continue to borrow money from banks to buy oil and continue to pay a large amount of free interest to the airline. Originally it was 15 days, but it was suddenly extended to more than 100 days. This is a bit excessive. North China Company really has no other options to think of. It is our mission and duty to provide customers with the best quality services. We tried our best.

I have worked so hard that it directly threatens the basic conditions for us to provide services to customers. In other words, if I continue like this, I will not be able to survive, so how can I serve customers?

When Pu Guangji said this, people can’t help but think of predatory mining of mineral resources.

“We are never willing to announce such news,” Pu Guangji said, “because it is very detrimental to airlines. For example, Eagle United Airlines is our customer after all. We hope that through consultation and negotiation How to solve the problem! Why must one party have to take "legitimate defense"? Because the public does not understand the internal situation of the Eagle United flight incident, it is misunderstood that China Aviation Oil is using its "hegemony" to challenge China Aviation Oil, which was always reasonable, turned out to be unreasonable; we were not only pressured by passengers, but also under great pressure from public opinion. If similar incidents occur again in the future, we will take action in advance. An announcement was made to passengers and the media, and relevant agencies were notified. This time, although Eagle United was notified several days in advance according to the contract, firstly, Eagle United did not listen to our advice on handling the aftermath of passengers, and secondly, we did not make an announcement. Society and passengers. This is why we are misunderstood.

Zhou Rucheng said that as an enterprise integrating transportation, commerce, and logistics, China Aviation Oil has always emphasized that harmony is a win-win and harmony is a profitable enterprise. Culture. Mr. Zhou himself often visits airlines. His superior, Sun Li, general manager of China National Aviation Oil Corporation, is also the top leader of China National Aviation Oil Corporation, visiting and communicating with customers all year round. "We should use reason and emotion to find ways to reduce the airline's arrears."

There has been a long history of arrears with China Aviation Oil. Some airlines thought that China Aviation Oil's profits came from them. However, we were in operational difficulties, so we tried our best to default on the payments. In addition, China Aviation Oil did not communicate adequately with customers in the past, which resulted in the accumulation of oil arrears, which became a major problem for China Aviation Oil's operation and development. problem.

With the joint efforts of the company’s senior leaders and many employees of China National Aviation Oil, airlines have gradually understood the difficulties and pressures faced by China National Aviation Oil and have settled their debts. Reporters from China. A report from Aviation Oil showed that as of the end of June 2009, the company's accounts receivable balance dropped to 5.08 billion yuan, a decrease of 2.22 billion yuan from the beginning of the year; of which 2.883 billion yuan was in the settlement period and 2.197 billion yuan was in historical arrears, respectively. 1.117 billion yuan and 1.103 billion yuan less than at the beginning of the year. All historical arrears of Eagle United Airlines were successfully recovered, and historical arrears of Hainan Airlines and Shenzhen Airlines were basically settled, greatly reducing the risk of bad and bad debts.

3. Professional power

Zhou Rucheng said that some companies have two misunderstandings. One is that it is easy to refill aircraft, and the other is that the profits are very high. In fact, the profits of refueling are very thin in the aviation industry chain. It is also a very professional job. The professionalism is reflected in the fact that aviation fuel supply is a very technical job. If you are not careful, it will cause accidents. In addition, non-professional companies are involved in procurement, storage, and transportation. Failure to improve in fueling and refueling skills will greatly increase costs. Most outside companies cannot make money in the aviation fuel business.

But this does not affect the development of China Aviation Oil Company, said Zhou Rucheng. In fact, China Aviation Oil Company has a lot of room for development. The key is to develop characteristics and standards in specialization to adapt to this kind of low-profit operation. Among them, a very important one is to reduce costs.

Only when we have an in-depth understanding of China's aviation fuel market and its operating mechanism can we deeply understand the science of Zhou Rucheng's understanding.

In 2006, China National Aviation Oil Corporation proposed the "three major strategies" of resources, market and internationalization. On the basis of the "three major strategies" of the parent company, China National Aviation Oil Co., Ltd. has added a "low-cost strategy" based on its own situation, which has been recognized by Sun Li, general manager of the group company.

Zhou Rucheng believes that if we want to provide value-for-money services to airlines, we must reduce our own operating and management costs. Expanding scale does not necessarily mean that profits will increase. Unless costs are effectively controlled, the importance of low-cost strategy will emerge.

Zhou Rucheng requested that efforts should be made to strengthen procurement cost calculations and strengthen the refined management of aviation fuel procurement. Reduce procurement costs by actively communicating with suppliers to strive for preferential purchase prices, adopting centralized bidding procurement and fixed-price procurement, etc.; continue to strengthen budget control over ton oil purchase costs and ton oil purchase costs to ensure that ton oil purchase costs are passed Measures such as optimizing resource allocation and reducing business process links have been reduced year by year.

For a company with annual sales of tens of millions of tons, if the cost of purchasing goods is reduced by 5 yuan per ton, it will be a profit of 50 million yuan. China Aviation Oil will also introduce systems such as infrastructure technical specifications, project accounting management methods, equipment supply catalogs, and project payment management methods to reduce costs institutionally, including carefully studying domestic and international jet fuel price trends and accurately grasping jet fuel prices. Procurement timing, rational allocation of international and domestic aviation fuel resources, timely control of inventory, minimize procurement costs, and increase gross profit margins.

In the first half of 2009, China National Aviation Oil Co., Ltd.’s jet fuel sales increased by 10.78% year-on-year, but operating, financial and management expenses fell by 21%.

4. Social sentiments

Pu Guangji said that for a company like China Aviation Oil that is struggling to operate, if we must talk about monopoly, it means monopolizing those businesses that lose money. Monopoly social responsibility.

China Aviation Oil currently operates aviation fuel supply to more than 140 airports in China, of which more than 80 airports are losing money. Especially in the Midwest, almost every airport is losing money. For example, in Tibet, the average transportation fee per ton of oil in the mainland is only 120 yuan, while the transportation fee to Tibet increases to 3,000 yuan. Knowing that supplying oil to Tibet would result in losses, China Aviation Oil established a Tibet company together with the local Civil Aviation Administration and organized a fleet of dozens of oil trucks to transport oil from Lanzhou via the Qinghai-Tibet Highway, which took nearly a week. time. Due to the rising costs caused by long-distance transportation, the cost of aviation fuel per ton has increased by more than 2,000 yuan. The more supply, the greater the losses. "However, we still have to ensure supply. First, because of the mission of China Aviation Oil - 'Serve global civil aviation customers wholeheartedly and ensure the security of national aviation oil supply'; we must do what we say. Second, for the economy of Tibet development, and assume the social responsibilities that China Aviation Oil has to bear as a central enterprise. "It is impossible for the public to understand these situations, and even people in the civil aviation industry may not understand them," Zhou Rucheng said.

In 2008, China Aviation Oil won a huge reputation due to their outstanding work in fighting rain, snow and ice disasters, earthquake relief, and ensuring aircraft transportation during the Olympics.

In 2008, the southern rain, snow and ice disasters and the Wenchuan earthquake suddenly struck. When transportation conditions in the disaster area deteriorated and aviation fuel supply became urgent, China Aviation Oil responded quickly. On the one hand, it coordinated with the petroleum, petrochemical, State Reserve Bureau and other units to quickly organize oil sources. On the other hand, it urgently coordinated with the General Logistics Department, the Ministry of Railways and other units to increase oil supply. The large-scale transportation adjustment ensures the supply of aviation fuel with the fastest speed, the shortest time and the best service, ensuring the smooth flow of the "air disaster relief lifeline".

During the "5.12" Wenchuan earthquake disaster relief period, China Aviation Oil, while ensuring normal flights, refueled 1,809 disaster relief aircraft with 11,500 tons of fuel, and guaranteed 65 special flights, ensuring timely support. It meets the refueling needs of military and civilian Chinese and foreign aircraft for transporting disaster relief personnel, disaster-stricken casualties, disinfecting and epidemic prevention aircraft, transporting supplies, etc., and is exempt from refueling service fees. In order to ensure the fuel supply for the giant helicopter for the Tangjiashan barrier lake rescue in Beichuan, Pu Mingzhong, the winner of the "May 1st Labor Medal", led the convoy, risking the risk of car crashes and fatalities due to aftershocks, and entered Tangjiashan, Beichuan three times. At all costs, he fulfilled his mission The promise of “China Aviation Oil will add aviation fuel to wherever disaster relief planes fly” has attracted attention and praise from all over the world.

During the Olympic Games, China Aviation Oil faced the difficulties of unprecedented concentration of flights and extremely frequent changes, and properly responded to the complex situation of the increase, decrease and temporary rescheduling of dedicated and chartered flights for heads of state, with 122,100 flights. It provided 830,400 tons of refueling and guaranteed 8,857 Olympic-related flights, achieving the goal of zero errors, zero accidents, zero delays and zero complaints in refueling for the Olympics.

In the history of civil aviation development, it has created a series of records such as 8,422 tons of refueling at a single aviation gas station in a single day, 13 special flights, 85 VIP charter flights, and 162 Olympic-related flights. "The best condition and the best service to ensure a foolproof oil supply for the Olympic Games".

After being called “the three most beautiful battles in 2008” by China Aviation Oil employees, China Aviation Oil’s external environment has undergone major changes.

Before 2008, given the high proportion of jet fuel in flight costs, many airport and airline leaders wanted to launch their own jet fuel supply projects. China Aviation Oil's performance in the 2008 ice and snow disaster, earthquake, and Olympic fuel supply allowed many airlines to see the professional requirements and difficulties of aviation oil supply operations, thus deepening their knowledge and understanding of China Aviation Oil.

Now, more and more airports are willing to hand over aviation fuel refueling to China Aviation Oil, believing that it is safer and more cost-effective than doing it at the airport or other companies. This change was described by China Aviation Oil Corporation as "the professional division of labor has been recognized by the market."

5. Gratitude

The history of China Aviation Oil can be traced back to 1990. Before 1990, the aviation fuel business was mainly managed and allocated by the Air Force and the government, and the game rules of the planned economy were played. In 1981, civil aviation separated from the military, and the Civil Aviation Administration became an agency directly under the State Council. Aviation fuel and related business were handled by the Civil Aviation Administration and the fuel divisions (sections) of various regional administrations and provincial bureaus. With the deepening of the reform of the civil aviation system and the birth of modern Chinese airlines, it is clear that the situation of the government allocating jet fuel to enterprises cannot continue. As a result, China Aviation Fuel Company was established in early 1990, and aviation fuel supply has since become corporate.

The realization of enterpriseization does not mean the realization of marketization.

The key change in China Aviation Oil occurred in 2002. This year, nine airlines and four service assurance companies under the former Civil Aviation Administration of China underwent joint reorganization. As a reorganized civil aviation support enterprise, China Aviation Fuel Group Corporation was officially established in October 2002, and has since become a large central enterprise directly under the State-owned Assets Supervision and Administration Commission of the State Council.

In the past six years, China Aviation Oil has refueled a total of 7.41 million aircrafts and has never had any safety accidents.

In 2008, the number of fuel supply airports of China National Aviation Oil Co., Ltd. expanded from 126 in 2007 to 142; the annual sales volume of aviation fuel was …………million tons. China Aviation Oil Group's guarantee of domestic airport aviation fuel supply is mainly completed by China Aviation Oil Co., Ltd.

Now China Aviation Oil Group has proposed to enter the world's top 500 companies in 2015, double the sales volume, sales revenue and asset size of aviation oil compared with 2008, and have strong competitiveness and industry influence. Jet fuel company. In this goal, China Aviation Oil Co., Ltd. still plays the most important role. President Zhou Rucheng is ambitious and determined to build the company into a professional international aviation fuel company that is “leading in Asia and first-class in the world”.

China National Aviation Oil Group, a company established only 7 years ago, has proposed to enter the Fortune Global 500 in its 13th year of establishment. This is exciting news anyway.

According to the medium and long-term development plan of China’s civil aviation, by 2015 and 2020, the number of airports nationwide will increase to 200 and 244 respectively, and aviation fuel consumption will increase to 27.97 million tons and 43.04 million tons respectively. tons, which gives China Aviation Oil sufficient confidence to propose “double sales and enter the Fortune Global 500”.

One doubt is: Since China’s aviation fuel is not a monopoly, the huge development of China’s civil aviation market does not mean that all the aviation fuel demand provided by this market will inevitably be occupied by China’s aviation fuel. Why is China Aviation Oil so optimistic? Zhou Rucheng replied: Our technology, equipment, and services are all moving towards internationalization. Moreover, generations of China Aviation Oil have accumulated extremely valuable material foundation and operation and management experience for us over decades. It has built a jet fuel supply system that others cannot build in a short period of time, including storage, supply, transportation, testing, refueling equipment and facilities, and a huge sales network.

Compared with new competitors, our costs are definitely low and our channels are mature. Therefore, it is difficult for other domestic and foreign companies to squeeze out our market share, because they also have to calculate costs.

Zhou Rucheng hopes to provide aviation fuel service support for airlines to expand their markets at more regional airports. The passenger and cargo transportation turnover of regional airports is not large, and the operating costs of airlines are high. If regional airports cannot provide jet fuel supply, airlines will have to reduce load because they carry extra jet fuel for the return trip, which will increase transportation costs. At the same time, China Aviation Oil's social responsibility also requires it to provide aviation fuel services to airlines at more regional airports. China Aviation Oil is currently signing fuel supply contracts with some newly opened regional airports. "Whether it makes money or not, China Aviation Oil must do this!" Sun Li said.

What is particularly noteworthy is that Sun Li, general manager of the group company, constantly emphasizes internally that China Aviation Oil must always be grateful. This is even more true when China Aviation Oil puts forward the goal of becoming one of the world's top 500 companies and expanding its market share.

Zhou Rucheng said that China Aviation Oil is grateful to both our upstream and downstream companies.

The upstream is grateful to the two major groups of PetroChina and Sinopec, as well as suppliers such as CNOOC and Dalian West Pacific (7.14, 0.02, 0.28), as well as international suppliers. Imported aviation oil accounts for more than 40% of China's domestic demand. China Aviation Oil has signed some strategic intentions for long-term cooperation with several large foreign oil companies.

In the past, the outside world generally believed that PetroChina and Sinopec would conflict with China Aviation Oil in terms of aviation fuel supply. Zhou Rucheng explained that we actually cooperate very well. In 2006, the shares of China Aviation Oil Co., Ltd. were reorganized. PetroChina and Sinopec became shareholders of China Aviation Oil Co., Ltd. This equity change produced good results. The fuel supply volume of PetroChina and Sinopec to China Aviation Oil increased from 82% in 2006 to 114% in 2007. Over 14 and under 18, two simple numbers have great meaning, because they reflect the social responsibilities of these two major groups when domestic and international aviation fuel prices are upside down.

Downstream should be grateful to the airlines. Because of gratitude, every time we talk about the airline's arrears, China Aviation Oil, from the president to ordinary staff, emphasize that airlines are our customers, and we must do our best to maintain the reputation of our customers and try our best to negotiate. way to solve the problem. Zhou Rucheng said that we must always remember: China's aviation oil has developed along with the rapid growth of China's civil aviation business, and we must also develop together in the future. As required by our President Sun, we must always be grateful and repay our gratitude to our customers at any time.