The jet fuel market is expected to register a CAGR of more than 1% in the forecast period, reaching a market size of USD 120 billion in 2026, up from USD 114 billion in 2019. The COVID-19 pandemic, leading to lockdowns globally and very restricted national and international travel, severely hit the aviation industry. From February 2020 to April 2020, passenger traffic was down by 94% in comparison to 2019. The COVID-19 pandemic, which resulted in the closure of international commercial flights, except for cargo, tremendously impacted aviation fuel consumption. For 2020, commercial airlines currently had around 960 new aircraft scheduled for delivery (IATA). After the recovery from the pandemic, the increasing number of air passengers, on account of the cheaper airfare in recent times, improving economic conditions, and increasing disposable income, are driving factors for the market. The defense aviation sector is also expected to increase and pave the way for adding new aircraft in the defense sector, increasing the demand for aviation fuel. However, the recent outbreak of COVID-19 tremendously affected the consumption of aviation fuel. With the closure of international and domestic airlines to curb the spread of the virus, the demand for jet fuel is expected to stay low during the pandemic.
- With the increasing connectivity globally and decreasing airfares, the commercial sector is expected to dominate the jet fuel market during the forecast period.
- The increasing concerns over the emissions from the aviation industry led several governments across the world to implement mandates that require a blending of renewable aviation fuel with conventional fuel types. This is expected to create significant opportunities for the companies involved in the market in the near future.
- Asia-Pacific dominated the market globally, as the region witnessed increasing passenger traffic, especially from the emerging economies.
Key Market Trends
Increasing Air Passenger Traffic to Drive the Market
- Commercial aviation includes operating scheduled and non-scheduled aircraft, which involves commercial air transportation of passengers or cargo. The commercial segment is one of the largest consumers of aviation fuel, and it accounts for a quarter of the total operating expenditure for an airline operator.
- Air travel has become more accessible than ever. In 2019, airfares in real terms averaged less than half of what they were in 1995. The airline network expanded to exceed 20,000 unique city pairs (IATA). Therefore, the growth of commercial airlines is underpinned by both the direct connection between cities, enabling the flow of goods and people.
- As of 2019, aviation fuel accounted for 23.7% (IATA) of the total expenses for commercial airlines, amounting to USD 188 billion (IATA). Hence, as the number of passengers is increasing on commercial flights, the demand for aviation fuel is expected to increase, driving the market studied during the forecast period.
- In 2019, the total number of passengers carried by commercial airlines rose to around 4.54 billion, which was 5.58% higher than the previous years. North America accounted for the major share in the total share.
- However, in 2020 and 2021, the new aircraft deliveries would be limited, and airlines are expected to retire a few old aircrafts in the current business condition and low fuel prices. This is expected to hamper the market growth severely during the next two years.
Asia-Pacific to Dominate the Market
- China is one of the largest aviation fuel markets globally, and it is also one of the largest in terms of air passengers carried. As of the end of 2019, domestic passengers in China were the second-largest in the aviation market after the United States (IATA).
- 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 it can be as high as 10-11% per year in 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 coming years. The re-balancing of the country's economy toward consumption is expected to support strong passenger demand over the long term.
- India is expected to take third place after the United States, surpassing the United Kingdom 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 jet fuel market in Asia-Pacific is expected to witness huge growth over the forecast period.
The jet fuel market is moderately consolidated. Some of the major companies operating in the market include BP PLC, Exxon Mobil Corporation, Royal Dutch Shell PLC,Chevron Corporation, and Total SA.
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