Market Trends of Jet Fuel Industry
The Commercial Segment to Dominate 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, accounting for a quarter of the total operating expenditure for an airline operator.
- Air travel became more accessible than ever. In 2022, 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 as per International Air Transport Association (IATA). Therefore, commercial airlines' growth is underpinned by the direct connection between cities, enabling the flow of goods and people.
- As per International Air Transport Association (IATA)'s World Air Transport Statistics 2022, in 2022, the global airline industry's passenger air traffic revenue amounted to USD 732 billion, a 43.81% increase compared to the previous year. 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.
- Domestic aviation markets are more resilient than international ones, as control measures are typically less stringent within a country. However, As of 2022, international traffic started to catch up with domestic traffic, increasing from 24.6% of pre-pandemic levels in 2021 to 62.1% in 2022.
- Therefore, factors like ease of travel restrictions for domestic and international travelers will build a positive trend in air passenger traffic. These are expected to boost the demand for jet fuel in commercial applications over the forecast period.
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Asia-Pacific to Dominate the Market
- China is one of the largest aviation fuel markets globally and one of the largest in terms of air passengers carried. As of 2022, 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% annually in China and India.
- In the coming years, China is expected to surpass the United States as the world's largest aviation market (defined as traffic to, from, and within the country). 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 stand out, climbing from the world's 10th-largest aviation market in 2017 to the 4th-largest by 2030.
- Because of inconsistencies in virus management and outbreaks, regions had varying degrees of traffic growth in 2022 and early 2023. Notably, in the Asia-Pacific region, International travel lagged behind other regions and only began to pick up steam in March 2022, when fears over the Omicron variant abated.
- Therefore, with the increasing air passenger and air freight traffic in the region, especially from 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.
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