The aviation fuel market in North America is expected to grow at CAGR of more than 15% in the forecast period of 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 among the major 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, in turn, 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 aviation fuel is expected to decline during the pandemic.
- With increasing connectivity globally and decreasing airfares, the commercial sector is expected to dominate the aviation fuel market during the forecast period.
- The air passenger number is expected to touch 8.2 billion by 2037. North America is expected to hold a significant share in this, creating ample opportunities for market players.
- The United States is leading the market in the North America region. With forecast growth, the United States is likely to continue its dominance.
Key Market Trends
Commercial Sector 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, and it accounts for a quarter of total operating expenditure for an airline operator.
- The market share is dominated by the commercial sector in 2019 in North America, followed by general aviation and defense, respectively.
- As of 2019, aviation fuel accounted for more than 20% (IATA) of the total expenses for the commercial airlines. Hence, as the number of passengers is increasing on commercial flights, the demand for aviation fuel is expected to increase, in turn, 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 22.4% of the total world aviation traffic in 2018.
- 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, in turn, is expected to hamper the market growth severely during the next two years.
The United States to Dominate the Market
- The defense sector consumes a large amount of aviation fuel. On average, the United States Air Force consumes approximately 2 billion gallons of aviation fuel annually, about 81% of the total Air Force energy budget. With around USD 732 billion military spendings in 2019, the United States Is leading in defense expenditure.
- As part of the United States, Air Force’s goal of achieving half of its domestic fuel needs drawn from alternative sources, the military and commercial airlines tested alcohol-to-jet (ATJ) fuel on A-10 ground attack aircraft. Moreover, companies, such as Honeywell, use this renewable jet fuel process technology for the US Navy and Air Force.
- General Aviation included a total of 440,000 general aircraft flying worldwide (GAMA), as of 2019, ranging from two-seat training aircraft and utility helicopters to intercontinental business jets. Over 211,000 general planes are based in the United States, which makes the nation to dominate the sector.
- According to the Airlines for America (A4A), in 2019, the country’s airlines carried 2.5 million passengers worldwide, daily, which was an all-time high number of passengers in the country airline history.
- Moreover, 58,000 metric ton of cargo per day was ferried by the country’s airlines in 2019 (A4A). Therefore, the country’s robust growth in air travel and cargo volumes has resulted in higher demand for aviation fuel in past years.
- 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 North America aviation fuel market is moderately fragmented. Some of the major companies include Exxon Mobil Corporation, BP PLC, Royal Dutch Shell PLC, Total SA, Chevron Corporation, and others.
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