Aviation Fuel Market - Forecasts from 2022 to 2027

The global aviation fuel market was valued at US$79.729 billion in 2020 and is expected to grow at a CAGR of 17.45% over the forecast period to reach a total market size of US$ 245.771 billion in 2027.

Aviation fuel is a kerosene-based fuel that is used to power planes. Aviation fuels reduce the risk of icing or explosion due to high temperatures. They are primarily used by military aircraft as well as commercial airlines to maximize fuel efficiency while lowering operational costs.

The booming travel and tourism industry is one of the primary drivers of the global aviation fuel market. According to the United Nations World Tourism Organization (UNWTO), international tourist arrivals grew 5 percent in 2018, reaching a figure of 1.4 billion, which was reached two years ahead of the UNWTO forecast. This high growth in the number of international tourists is significantly driven by a relatively strong global economy with expanding middle-class population base in emerging economies, new business models, technological advances, affordable travel costs, and visa facilitation. In conjunction with this, export earnings generated by tourism also increased to US$1.7 trillion in 2018, thus making the sector a truly global force for economic growth and development by way of creating more and more employment. With a growing number of air travel passengers worldwide, the demand for commercial aircraft is also rising among different airlines. According to the World Bank Group, the number of air passengers carried globally has surged from 2.787 billion in 2011 to 4.233 billion in 2018. With the rising number of aircraft on duty, the demand for aviation fuel is also escalating, fuelling market growth at a substantial rate. New flight routes and a heavy flow of investments in new airports worldwide is also contributing factor to the global aviation fuel market growth. In September 2018, for instance, the Russian government announced its plans to invest US$24 billion in the country’s infrastructure, including new airports and highways, over the next three years. In October 2019, India announced its plans to start with 100 additional airports by 2024, including 1,000 new routes connecting smaller villages and towns. The construction of the second airport in Sydney, Australia, began in 2018 and is planned to be completed by 2026.

Rise in military budget across different countries

The rising focus of governments on the military sector is another factor spurring the growth of the aviation fuel market. This continuous increase in military and defence budget is majorly attributed to political tensions among different nations and rising cases of terrorist attacks worldwide. According to the latest report of the Stockholm International Peace Research Institute (SIPRI), global military expenditure totalled $1,917 billion in 2019, which was the highest level since 1988. Also, the global military burden (global military expenditure as a share of GDP) increased from $243 in 2018 to $249 in 2019. This rise in military expenditure also includes heavy investments in new military aircraft by different nations. Recently in July 2020, the Government of India approved Rs. 38,000 crore deal with Russia to purchase MiG-29 fighter jets while upgrading over 50 MiG-29s amid political tensions with China at the Line of Actual Control (LAC). The Pentagon asked for $56.9 billion in the fiscal budget of 2021 to be invested in the military’s air domain, out of which the Defense Department planned to buy 79 F-35 Joint Strike Fighters worth US$11.4 billion. In November 2019, the United Arab Emirates (UAE) Ministry of Defense signed a $618 million contract to purchase 24 B-250 light-attack aircraft from domestic manufacturer Calidus.

Continuous focus on reducing the carbon footprint

As the global aircraft industry is expanding at a decent pace, competition among aircraft fuel production in all sectors is also getting intense. Stringent regulations regarding the sustainability of aviation fuel are further boosting the competition among aviation fuel manufacturers, positively impacting the overall growth of the global aviation fuel market. As such, biofuels that can significantly reduce carbon emissions and sustainable aviation fuel (SAF), which are still under research and development, offer lucrative opportunities for the growth of the aviation fuel industry shortly. Recently in July 2020, the operator of the Gazprom Neft aviation refuelling business, Gazpromneft-Aero, launched an integrated laboratory information system (LIS) for analyzing both qualitative and quantitative characteristics of aviation fuel. The commercial aviation industry is also moving towards sustainable environmental practices and gradually increasing the use of sustainable aviation biofuel (SAF). United Airlines was the first U.S. airline to begin using sustainable aviation fuel (SAF) for regularly scheduled flights, with the departure of United Flight 708 from Los Angeles International Airport. In March 2019, airplane manufacturer Boeing announced that the company would be offering airlines and operators the option of powering their new commercial jet with biofuel for return flights. This initiative of Boeing aims to drive down emissions by up to 80 percent and protect the environment. Governments across nations are also focusing on using sustainable aviation fuel (SAF), which will offer great potential for overall market growth during the next five years. Although SAF is not widely available in Canada, the continuous rise in demand across the airline industry to reduce its carbon footprint encourages the Canadian government to increase its supply. In November 2019, SKyNRG, the Green Aviation Research and Development Network (GARDN), Waterfall Group, and Vancouver Airport Authority launched the BioPortYVR project in Canada. This project aims to ramp up the supply of sustainable aviation fuel (SAF) in the country.

The Asia Pacific region offers good growth opportunities

By geography, the global aviation fuel market has been segmented into major regional markets- North America, South America, Europe, the Middle East and Africa (MEA), and Asia Pacific (APAC).

North America accounts for a substantial share in the global aviation fuel market owing to the continuous rise in demand for different types of aircraft, including military, commercial, and private. Europe is also a leading aviation fuel market on account of the well-established aviation industry coupled with the presence of major aircraft manufacturers in the region. However, Asia Pacific (APAC) is projected to witness a substantial compound annual growth rate during the forecast period. This growth is majorly attributed to the rapidly growing travel and tourism industry across APAC countries. There has been a rise in investments in the tourism sector by India, China, and Southeast Asian economies in the past few years. The number of both international and domestic tourists is continuously rising in this region. Increasing disposable incomes and living standards with a hectic work lifestyle encourages people to take vacations regularly. Furthermore, the increased rate of globalization has also led to a rise in business air travel trips across the region as well as the globe. Thus, the burgeoning rise in air travel passengers, both international and domestic, is supporting the growth of the aviation fuel market in the Asia Pacific. Supportive government policies to construct new airports to manage this rising influx of tourists are also driving factors for the growth of this regional market.

Recent Developments

British Airways announced a deal alongside Philips 66 Humber Refinery in December 2021 to buy SAFs to power a number several in 2022. The fuel will be delivered using an existing pipeline network that connects directly to UK airports.

Neste & Shell Aviation entered into an agreement in September 2020 to deliver SAF to the British aviation sector. Neste's production experience would be merged alongside Shell Aviation's excellent fuel supply management under the terms of the arrangement. The contract began in October 2020 and will end in October 2021.

The severe impact of COVID-19 on the global aviation industry

The recent pandemic outbreak caused by COVID-19 has negatively impacted almost every industry, including automotive and construction. However, the global travel and tourism industry has been hit the hardest by this pandemic. The novel coronavirus disease, which broke out in Wuhan, China, at the beginning of 2020 and then continued to spread like wildfire throughout the globe, pushed governments to impose nationwide lockdowns and close national borders to contain the spread of the pandemic. The duration of the pandemic is still uncertain, and since the inability of governments to contain the spread can increase the burden of this disease significantly, air travel remains restricted. A steep decline in the number of commercial flights across the globe has been driving down the demand for aviation fuel. Although some airline carriers continue to operate while complying with strict government guidelines, it is not enough to recoup the slump. The reluctance of people towards air travel, on account of a high degree of fear of contracting the disease, also limits the number of flights per month. This trend is expected to continue until the world has at least one reliable vaccine or cure for the virus. The market growth is expected to remain restricted till then. Some recovery is expected from 2021 and beyond.

Competitive Insights

Prominent key market players in the global Aviation fuel market include Shell Plc, Neste Corporation, Total Energies, BP LPC, Chevron Corporation, and Exxon Mobil Corporation, among others. These companies hold a noteworthy share in the market on account of their good brand image and product offerings. Major players in the global Aviation fuel market have been covered along with their relative competitive position and strategies. The report also mentions recent deals and investments of different market players over the last two years.

Segmentation

By Fuel Type

• Jet Fuel
• Biofuel

By Aircraft Type

• Fixed Wing
• Rotorcraft

By End-User

• Military
• Commercial
• Private

By Geography

• North America
• United States
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Europe
• Germany
• France
• United Kingdom
• Spain
• Middle East and Africa
• Saudi Arabia
• UAE
• South Africa
• Asia Pacific
• Japan
• China
• India
• South Korea
• Vietnam
• Australia
• Indonesia