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China Aviation Oil striving to tap mainland boom in foreign travel

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2015-10-21 09:54Global Times/Agencies Editor: Li Yan

Asia's biggest jet fuel buyer, China Aviation Oil (CAO), aims to expand its operations overseas to provide fuel to meet a boom in the number of Chinese flying overseas, the firm's chief executive said.

CAO is refocusing on its core business to tap a growing appetite for passengers from the Chinese mainland to travel abroad, its chief executive Meng Fanqiu said.

"With the changes in the market, we're making some adjustments [to our strategy] and we're focusing on our core product which is jet fuel," Meng told the Reuters Global Commodities Summit.

"There are still a lot of opportunities, especially overseas as Chinese airlines are flying globally."

Last year, China's outbound leisure travelers topped 100 million, a new record. That number is expected to rise 10 percent this year as countries including the US, France and Australia relax visa policies.

To meet this demand for jet fuel, CAO is scaling back some of its trading of other oil products. It halted its petrochemical trading this year due to weak Chinese demand and rising credit risks.

CAO's market share in China has fallen to 30 percent from a peak of 40 percent due to a rise in domestic refining capacity and production of jet fuel.

Faced with hotter domestic competition, the company will focus on trading in bonded jet fuel, which is exclusively for the use of CAO's parent company, China National Aviation Fuel Group, to supply for international flights, Meng said.

CAO plans to expand into international markets by first supplying fuel to Chinese airlines overseas and then to other airlines.

The company wants to cash in on more arbitrage opportunities and it is looking at logistics and merger opportunities while considering turning the London office into a full trading center.

  

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