The South America defense aircraft aviation fuel market is expected to rise at a CAGR of more than 4% during 2020 - 2025. Factors such as the security threats from a neighboring country and local or regional terror group intensified, requiring governments around South America to continue increasing their defense budgets. Moreover, in recent decades South America witness an increasing number of aircraft fleet for the air force as well as for navy. In 2019, Brazil received 36 fighter jets from SAAB and had begun manufacturing fighter jets in Brazil with the help of SAAB in 2020, which is likely to drive the defense aircraft aviation fuel market. However, the South America region economy is severely impacted by Covid-19; therefore, the government is reducing defense expenditure, which is likely to hinder the South Africa defense aircraft aviation fuel market in the coming future.
- Air turbine fuel is likely to dominate the South America defense aircraft aviation fuel market. Most of the fighter aircraft or military helicopter in the region are operating engines which is designed to use air turbine fuel.
- Increasing concerns over emissions from the aircraft and initiatives by the governments for adopting modern engine and bio-fuel blended aviation fuel to reduce emissions are expected to provide significant opportunities for defense aircraft aviation fuel market in the future.
- Brazil is likely to dominate the South America defense aviation fuel market owing to the growing defense budget.
Key Market Trends
Air Turbine Fuel to Dominate the Market
- Defense expenditure is expected to grow between 3-4% in 2020, as governments in the region continue to modernize and recapitalize their militaries. Subsequently, the defense aviation sector is also expected to increase and pave the way for adding new aircraft in the defense sector.
- The governments of many countries maintain separate specifications for jet fuel for military use. The reasons for different specifications include the operational and logistical differences between the military and civilian systems and the additional demands high-performance jet fighter engines place on the fuel.
- However, South American countries are widely using aircraft designed by the United States, European countries, or Russia. These aircraft are using air turbine fuel (majorly jet A-1 fuel) and therefore, likely to drive the South America defense aviation fuel market during the forecast period.
- Moreover, due to COVID-19 region witness a significant slowdown in the economy, which force countries to cut down their expenditure. Therefore, the government postponed the project, which includes modernizing aircraft for using bio-fuel. This, in turn, factors such as operating technology, government regulation are driving air turbine fuel, which is expected to drive the South America defense aviation fuel market.
Brazil to Dominate the Market
- Brazil is the largest consumer of aviation fuels in South America. The products specified for use in aircraft in the country are aviation kerosene (QAV), aviation gasoline, and alternative aviation kerosene (alternative QAV). The country holds the most significant air force and navy in the region with a total strength of 715 aircraft.
- The sales of total aviation fuels have remained stable in the past years, with a monthly average of 3,658.81 thousand barrels for aviation kerosene in 2019 and 25.40 thousand barrels of aviation gasoline sales same years. In which only 6% to 8% is used for defense purposes.
- Further, in South America, Brazil is expected to pioneer the development of renewable fuels from sugarcane, which is expected to replace traditional jet fuel. Currently, although there are no specific federal policies in place for sustainable aviation fuel (SAF), initiatives are in place at the state level. However, in 2018 Brazil, one fighter jets, is tested with bio-fuel blended aviation fuel.
- Over the years, many organizations, such as The Boeing Company, have been working aggressively to initiate the supply of sustainable aviation biofuels while reducing Brazil's carbon emissions.
- This, in turn, factor mention above, is likely to boost the defense aviation fuel market in the country, which is expected to support the growth of the South America defense aircraft aviation fuel market during the forecast period.
The South America defense aircraft aviation fuel market is moderately concentrated. Some of the key players in this market include Petróleo Brasileiro S.A., Royal Dutch Shell plc, BP plc, Total S.A, Repsol S.A., and others.
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