The global aviation fuel market is expected to grow at a CAGR of more than 2.5% over the period of 2020-2025. The demand is majorly driven in response to the air traffic and aircraft fleet in both commercial and military applications in the emerging economies along with increasing demand for air freight transportation in terms of volume and freight traffic, which in turn drives the aviation fuel market. These factors contribute to the increasing demand for aviation fuel, which has been one of the strongest performers among transportation fuels in recent years. However, carbon emissions and volatile crude oil prices are restraining the growth of aviation fuel market.
- In commercial airlines, around 4.23 billion people traveled by aircraft in 2018, in comparison to 3.9 billion in 2017 and the air cargo business registered 3.4% of growth in demand from 2017. The constant increase in demand is further promulgating the aviation fuel market in comparison to other end users.
- Boeing has collaborated with World Wide Fund in 2019 and has invested USD 1 Million in Brazil for sustainable aviation fuel (SAF) industry. Owing to increased environmental concerns, the SAF poses immense opportunity for the aviation fuel market.
- Asia-Pacific is the fastest growing aviation fuel markets during the forecast period, with the rise in urbanization and increasing disposable incomes in the emerging economies across the region has resulted in the growth of air passengers from this region.
Key Market Trends
Commercial Aircraft Segment to Dominate the Market
- Commercial segment accounts for the largest share in the aviation fuel market. In 2018, around 4.3 billion passengers were carried by air transport on scheduled services, representing an increase of 6.9% over the previous year. The number of departures rose to approximately 38 million globally, and world passenger traffic, expressed in terms of total scheduled revenue passenger-kilometers (RPKs), grew solidly at 6.7% and reached approximately 8.2 trillion RPKs performed in 2018.
- The passenger airline network has expanded to exceed 20,000 unique city pairs and freight tonnes carried by cargo airline was valued at USD 111.3 billion in 2018. The increase in air travel demand outstripped the industry capacity expansion. In 2018, the total capacity offered by the world's airlines, expressed in available seat-kilometers (ASKs), increased globally by around 6.0% over the previous year.
- Asia-Pacific is expected to contribute half of the new passengers, globally, between 2015 and 2035. By 2035, 1.8 billion additional annual passengers are expected to be transported to, from, and within Asia-Pacific, led by India and China.
- The low-cost carriers (LCCs) consistently grew at a faster pace than the world average growth, and its market share continued to increase, both in advanced and emerging economies. In 2018, the LCCs carried an estimated 1.3 billion passengers and accounted for approximately 31% of the world total scheduled passengers.
- Therefore, factors such as positive trend in the air passenger traffic and freight tonnes are expected to boost the demand for aviation fuel in the commercial application over the forecast period.
Asia-Pacific to be the Fastest Growing Market
- Asia-Pacific has emerged as one of the largest aviation fuel markets in the recent years. With the rise in urbanization and increasing disposable incomes in the emerging economies across the region has resulted in the growth of air passengers in this region.
- Routes to, from and within Asia-Pacific are expected to witness an extra 2.35 billion annual passengers by 2037, for a total market size of 3.9 billion passengers. On a global level, the number of trips per person is expected to increase by 4-8% per year for many emerging countries but could be as high as 10-11% per year in the case of China and India.
- China is expected to surpass the United States as the world's largest aviation market (defined as traffic to, from and within the country) in the mid-2020s. The re-balancing of the country's economy towards consumption is expected to support strong passenger demand over the long term.
- India is expected to take 3rd place after the US, surpassing the UK around 2024. Indonesia is expected to be a standout performer-climbing from the world's 10th largest aviation market in 2017 to the 4th largest by 2030.
- Therefore, with the increasing air passenger and air freight traffic in the region especially from the emerging economies such as India, Indonesia, and Thailand, the aviation fuel market in Asia-Pacific is expected to witness huge growth over the forecast period.
The aviation fuel market is fragmented. Some of the key players in this market are Exxon Mobil Corporation, Chevron Corporation, Royal Dutch Shell PLC, Total SA and BP PLC among others.
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