The commercial aircraft aviation fuel market in Europe is expected to grow at CAGR of more than 14% during 2020 - 2025. The increasing number of air passengers, on account of the cheaper airfare in recent times, stronger economic conditions, and increasing disposable income are few major driving factors for the market. However, the recent outbreak of COVID-19 has significantly affected the consumption of aviation fuel in the region. With the closure of international and domestic airlines to curb the spread of the virus, the demand for aviation fuel is expected to decline during the pandemic.
- Aviation turbine fuel (ATF) is the most common fuel used to power commercial flights and is dominating the market of aviation fuels in the region.
- The European Commission is aiming to increase the Sustainable Aviation Fuel (SAF) to 40% by 2040 to reduce greenhouse gas emissions. The initiative is expected to create significant opportunities in the commercial aircraft aviation fuel market.
- With the largest market size in Europe, Russia is leading the market in the region and is likely to continue its dominance during the forecast period as well.
Key Market Trends
Air Turbine Fuel to Dominate the Market
- Air transportation of passengers in European countries is increasing considerably. Germany reported around 227 million passengers' traffic by air in 2019. With growing air passengers, the demand for ATF is rising significantly.
- Jet fuel consumption in European countries is increasing significantly. France recorded the consumption of 170 thousand barrels of jet fuel in 2019. However, the demand slumped in 2020 due to the COVID-19 outbreak.
- Air transport is a critical economic activity in the United Kingdom, accounting for about 4.5% of the United Kingdom's GDP in 2018 (IATA). The country has the most significant air connectivity in Europe, which grew by 36% between 2013 and 2018 (IATA).
- In 2019, the total number of passengers carried by commercial airlines rose to around 4.54 billion globally, which was 5.58% higher than the previous years. Europe accounted for 26.4% of the total world aviation traffic in 2018.
- The countries are slowly easing the lockdowns and are reopening air travel markets, particularly in European and Asian countries. This is expected to increase the demand for the ATF from the low levels registered in the first and second quarters of 2020, and the consumption of ATF is likely to increase after 2021.
Russia to Dominate the Market
- In 2019, Russia's airlines collectively carried a record number of 128.12 million passengers, registering a 10.2% growth, as compared to the previous year (Federal Air Transport Agency, Russia).
- According to Boeing, Russia and other CIS nations would require a total of 1,300 aircraft in the next two decades, owing to the increasing air passengers and air connectivity. With the expected increase in aircraft, the market is likely to grow significantly.
- Furthermore, the number of passengers on domestic routes grew steadily by an average of 11% from 2011 to 2018 (IATA). Since 2012, the share of domestic routes in the air passenger market has been growing, which bolstered the demand for aviation fuel in the country.
- During 2014-2018, due to subsidized programs, the annual average growth rate in air passengers, despite the impact of the crisis in 2014, kept at 9.6 % in 2016 and about 10% in 2018.
- However, due to the COVID-19 pandemic, until the end of 2021, the market studied is expected to be restrained, post which, with increasing passengers and air travel demand, the aviation fuel market is expected to grow for the rest of the forecast period.
The Europe commercial aircraft aviation fuel market is moderately fragmented. Some of the major companies include PJSC Gazprom, BP PLC, Royal Dutch Shell PLC, Total SA, Neste Oyj.
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