The market for jet fuel is expected to grow at a CAGR of more than 11% during the forecast period of 2020 – 2025. Stronger economic growth is pushing air passenger traffic ahead of capacity growth in the recent past. Additionally, falling travel costs have been adding to the airline market growth over the past several years. Therefore, aircraft are being flown more intensively to meet the increasing demand. Factors such as increasing air passenger traffic, increasing number of low-cost carriers (LCC) across the globe, and growing demand for air cargo transportation are expected to drive the jet fuel market in the coming years. However, increasing penetration of sustainable aviation fuels (SAF), strict emission regulations and a positive trend in the piston engine aircraft deliveries is expected to increase the demand for aviation gasoline (AVGAS) are expected to have a slight impact on the jet fuel market in the coming years.
- Commercial application accounts for the largest share in the jet fuel market owing to the increasing number of air passengers and aircraft fleet across the globe.
- Increasing concerns over emissions from the airline industry and initiatives by the governments in developed economies to reduce airline emissions are expected to provide significant opportunities for renewable jet fuel in the future.
- Asia-Pacific dominated the market across the globe as the region witnessed increasing passenger traffic, especially from the emerging economies.
Key Market Trends
Increasing Air Passenger Traffic across the Globe
- Commercial segment accounts for the largest share in the jet 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.
- Over half of the world’s 1.4 billion tourists who traveled across international borders in 2018 were transported by air.
- The low-cost carriers (LCCs) consistently grew at a faster pace than the world average growth, and it's 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.
- 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.
- Therefore, factors such as positive trend in the air passenger traffic and number of departures are expected to boost the demand for jet fuel in the commercial application over the forecast period.
Asia-Pacific to Dominate the Market
- In terms of the domestic market, Asia-Pacific, one of the world’s largest domestic market with 42% of traffic share in 2018, continued to grow double-digitally at 10.4%, contributed by the strong demand in India and China, owing to their increasing GDP per capita and growing domestic air connectivity.
- 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 jet fuel market in Asia-Pacific is expected to witness huge growth over the forecast period.
The global jet fuel market is consolidated. Some of the major companies include BP PLC, Exxon Mobil Corporation, Royal Dutch Shell PLC, and Total SA.
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