The global aviation market is a notoriously intricate business. Supplying fuel to aviation businesses is, by degrees, that much more complex.
Aviation customers are, by their very nature, mobile. They demand fuel wherever their aircraft may be. Putting aside the challenges surrounding logistics, aviation fuel suppliers also need to understand differing regulatory environments around the world, complex and changing tax and duties, increasing environmental concerns, and domestic politics. And all in a competitive market with price sensitive buyers.
Avfuel, headquartered in Ann Arbor, Michigan, has grown over the past 45 plus years into one of the world’s most successful and respected aviation fuel suppliers. The company is built on a foundation of outstanding service and a culture of innovation, as Michael Zultowski, director of finance at Avfuel, explained.
“Avfuel is a leading global supplier of fuel and services with a 100% focus on aviation. As such, we hold nearly a 25% market share of the U.S.’ branded fixed base operators (FBOs), and serve every major aviation customer segment, including airports, airlines, cargo carriers, the military, rotary wing fleets, and 5,500+ flight departments representing more the 20,000 aircraft. With an established infrastructure, and relationships with more than 90 refiners and 300 supplier terminals, we excel at delivering fuel wherever it’s required. As such, we operate in 120 countries across more than 3,000 fuelling locations, keeping our customers airborne wherever they may be.”
It is a business that looks to constantly innovate to exceed customer needs and stand apart from the competition. Toward this end, Avfuel offers its customers aviation insurance, flight planning and trip support, credit services, payment processing solutions, rewards programmes for pilots and FBO employees, equipment leasing, bulk fuel supply, training, sustainability solutions, marketing, and more.
Its growth can, in part, be attributed to 31 acquisitions—the latest in 2019 being CBL Trading, a fuel supply subsidiary offering Avfuel enhancements to its existing supply and logistics infrastructure along two pipelines. But its development can also be attributed to organic growth, one customer at a time around the globe.
“An international footprint is vital to our business,” explained Zultowski. “To better serve our customers on a global scale, we have a great team in Michigan with tax and financial specialists from around the world. Furthermore, in 2010 we established a UK operation for our European arm.”
“The UK’s decision to leave the EU has caused us to think through our European operations,” said Zultowski. “Not knowing the final shape of Brexit has made it difficult to plan ahead, but we will be keeping our business footprint throughout the EU.”
And while the UK and EU navigate through the Brexit challenge, a major challenge facing the global aviation industry at large is the move to decarbonise air travel.
“Avfuel is leading the way in sustainability initiatives, including sustainable aviation fuel,” explained Zultowski, “but we’re quite a ways out from the industry seeing the fuel produced at a commercial scale; the infrastructure is in place, the demand is there, we just need production to ramp up, which will take time. Additionally, Avfuel is launching a carbon offset program in 2020 to assist its customers in purchasing carbon credits to ‘cancel’ their emissions. We have an expert team in place working through the challenges of these initiatives—from infrastructure and logistics, to accounting and taxes—to bring such sustainable solutions to fruition.”
Building a truly global operation in a highly regulated industry with a complex tax environment presents unique challenges, and the need for informed advisers who can offer guidance is essential.
Kreston Reeves has worked with Avfuel in the UK since 2010, helping it open its office, and providing a blend of services from audit, VAT and duties, to company secretarial and payroll. The Kreston Reeves team is led by partners Scott Miles, Rob Sellers and Rupert Moyle, partner and head of VAT and duty.
“Kreston Reeves has been invaluable,” said Zultowski, “and even more so throughout the UK’s protracted Brexit negotiations. Rupert and his team have made a real positive impact helping us understand where the risks are, explaining the complex VAT and duties landscape and how that might change. They have helped us shape our plans, making us comfortable in our future in the UK and Europe. They are part of the Avfuel team.”
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