Aviation Fuel Market Size, Share & Industry Analysis, By Fuel Type (Jet Fuel {Aviation Turbine Fuel}, Aviation Gas, Bio Jet Fuel), By End-user (Commercial, Private, Military), and Regional Forecasts, 2022-2029

The global aviation fuel market size was valued at USD 177.32 billion in 2021 and is projected to grow from USD 351.85 billion in 2022 to USD 654.79 billion by 2029, exhibiting a compound annual growth rate (CAGR) of 9.3% during the 2022-2029 period. 

The global COVID-19 pandemic has been unprecedented and staggering, with aviation fuel experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of -66.5% in 2020 as compared to 2019.

Aviation fuel is used to power airplanes. All types of fuel are the by-products of crude oil. The primary function of jet fuel is to power an aircraft; energy content and combustion quality are key fuel performance characteristics. Other essential performance properties are lubricity, stability, volatility, non-corrosiveness, and others. In addition to providing an energy source, fuel is used as a hydraulic fluid in engine control systems and as a coolant for specific fuel system components.

COVID-19 IMPACT

COVID-19 Negatively Impacted Market Growth Due to Reduced Passenger Traffic 

The COVID-19 pandemic has significantly impacted the airline industry, which relies on commercial passenger traffic. As demand for air travel declined and remained low in 2020, various sectors were affected, including passenger airlines, airports, aerospace manufacturers, and repair station owners.

The demand also depends on tourism, and tourism was negatively impacted during COVID-19. Despite the recovery in demand for vacation travel in some countries in 2021, operational issues and concerns about COVID-19 hampered the recovery. However, many countries still have testing and vaccination requirements to protect against transmission of COVID-19 throughout the travel process.

Constantly changing regulations and travel guidelines were the most significant challenges. This messy situation was not allowing companies to navigate at best, and companies with global operations faced challenges such as keeping their employees safe.

Business travel will be the slowest to recover as companies and teams become accustomed to virtual gatherings. Still, most leaders were ready to return to in-person conferences and meetings with partners and clients. However, quarantine measures in different regions continue to hamper this return to face-to-face business for many companies.

Business travel spending is highest in many destinations and is thus critical to global economic development. Leading companies should consider supporting the return to travel responsibly.

The demand for aviation turbine fuel decreased significantly owing to COVID-19 pandemic, as flights were down by 40% to 50%. This decline led to a supply-demand imbalance, which resulted in a drop in crude prices. However, the demand is still expected to recover in the coming years, but oil prices have recovered and now risen above pre-pandemic levels.

LATEST TRENDS

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Rising Shift toward Sustainable Alternatives to Generate Lucrative Opportunities for the Industry 

There is an increase in the shift toward sustainable fuel, also referred to as bio jet fuel. It is used to power aircraft and has properties similar to traditional jet fuel but with a lower carbon footprint, depending on the raw materials and technologies used to produce it. It can drastically reduce lifecycle greenhouse gas emissions compared to conventional jet fuel. Manufacturing bio-jet fuel from waste resources can create new economic prospects for farmers, improve the environment, and even enhance aircraft performance.

The entry of renewable fuels in the aviation fuel industry offers the most promising opportunity for the market. These fuels are made from organic waste such as agricultural waste and cooking oils. The aviation industry in almost every country is looking for options to decarbonize the sector. Renewable fuels can reduce CO₂ emissions by 80% compared to conventional ATFs.

DRIVING FACTORS

Increased Sports Tourism and North America’s Dominance in Commercial Airlines to Boost Aviation Fuel Demand

Sports tourism means traveling to either attend or follow sporting events. Sporting events attract spectators. The Olympic Games and World Championships boost tourism development. In addition, increasing bilateral series between two countries in sports such as cricket is also a factor driving sports tourism. For example, the Indian cricket team is a significant driver of sports tourism in India. In addition, it is also one of the teams in world cricket that travels the most for bilateral series. In addition, Europe is an essential region for football tourism as it hosts most football matches. Football's fan base is found worldwide, leading to increased travel domestically and internationally. The increasing franchise tournaments in cricket and football are also driving air travel as it involves the participation of international players. These factors encourage sports tourism and air travel, thereby driving the market.

According to the Airports Council International (ACI) World, eight of the top 10 airports for passenger traffic are in the U.S. These airports have a large share of domestic traffic, and thus the traffic segment is leading the global recovery. Orlando International Airport in the U.S. witnessed the most significant improvement, jumping from 27th place in 2020 to seventh place in 2021. Jackson Atlanta International Airport (ATL) has also been one of the busiest airports in the world in terms of passenger numbers for many years. According to the U.S. Census Bureau, Atlanta has a population of almost 500,000. This factor makes it only the 38th largest city in the U.S. and well behind many other global cities. However, well over six million people live in the metropolitan area, which is one of the main factors for the excellent performance of the airport. Another critical reason for Atlanta's success is Delta Air Lines' strong presence at the airport. The legacy U.S. airline and SkyTeam establishing member uses Atlanta as one of its major hubs.

Increasing Tourism in the Middle East to Promote Infrastructural Development

Middle East countries, such as the United Arab Emirates and Saudi Arabia, focus on tourism by developing attractive infrastructure. On the tourism front, Saudi Arabia aims to welcome over 100 million visitors yearly by 2030, according to the International Trade Administration U.S. Department of Commerce. To this end, it has executed several initiatives, such as an e-visa system for tourists from 49 countries, opening its UNESCO World Heritage Sites, constructing resorts on the Red Sea coast, and establishing a cruise line. In 2020, the Ministry of Tourism announced it would invest up to USD 4 billion in strengthening the tourism industry by launching the novel Tourism Development Fund. The ministry also said it would actively work with private sector investors to capture new growth opportunities in the coming years as tourism enters a post-COVID-19 recovery phase.

RESTRAINING FACTORS

High Aviation Fuel Costs to Hamper Market Growth

The biggest reason expected to hamper the aviation fuel market growth is fuel price. The high cost is likely to hamper the market growth. The increased fuel cost is due to the increased Brent crude oil price as jet fuel is the derivative of Brent crude oil. The price of Brent crude oil is increasing due to the supply-demand gap. The rising demand for Brent crude oil, but the lack of crude oil production increases the prices.

Saudi Arabia - one of the Organization of the Petroleum Exporting Countries (OPECs) founding members – slashed its crude oil production. They claimed that the ailing global economy, and interest rate hikes in some western countries prompted the production cut (equivalent to 2% of global supply).

These factors result in high airfares, which is likely to hamper the market as low-income countries may not be able to afford. Asia Pacific and Africa are among the price-sensitive regions. The area includes developing countries with lower per capita incomes, which does not allow them to spend on high ticket prices.

SEGMENTATION

By Fuel Type Analysis

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Jet Fuel Segment Garnered Highest Market Share Fueled by Robust Adoption in Commercial Airlines

Based on fuel type, the market is classified into jet fuel (aviation turbine fuel), aviation gas, and bio jet fuel. The jet fuel (aviation turbine fuel) segment accounted for 97.58% of the aviation fuel market share in 2021. Jet fuel (aviation turbine fuel) demand increased in 2021 but not at pre-pandemic levels. The need for jet fuel might surpass the pre-pandemic in the coming years. However, the price of jet fuel has reached pre-pandemic levels. The higher costs of jet fuel might hamper the market in the coming years.

The bio jet fuel segment is expected to offer lucrative opportunities during the forecast period due to its excellent characteristics such as reliability, safety, and low carbon emissions. In addition, there are significant developments when it comes to bio jet fuel. For instance, In October 2022, Honeywell announced a new technology for processing ethanol-to-jet fuel (ETJ). The technology allows manufacturers to convert corn, cellulosic or sugar-based ethanol into renewable jet fuel. The technology uses high-performance catalysts and thermal management features to maximize production fuel efficiency, resulting in a low-cost, lower-carbon intensity jet fuel.

In July 2022, Twelve, Microsoft Corp., and Alaska Air Group Inc. inked a Memorandum of Understanding (MOU). The MOU aims to advance the Sustainable Aviation Fuel (SAF) market to include fuels derived from reclaimed CO2 and renewable energy and has worked toward the first commercial demonstration flight in the U.S., powered by Twelve’s e-jet.

By End-user Analysis

Commercial Segment to Dominate Owing to Rising Air Traffic in Developing Regions

Based on end-user, the market is classified into commercial, private, and military. The commercial segment garnered the highest market share and is expected to be the fastest-growing segment. The commercial segment is expected to grow significantly during the forecast period due to growing commercial airlines and international traffic in developing regions such as Asia Pacific and the Middle East & Africa. Increasing fuel prices might create challenges for the commercial segment.

The private segment is also expected to be one of the fastest growing segments during the forecast period. Moreover, the private segment is also one of the significant segments. In addition, increasing disposable incomes and high living standards fuel private aircraft demand.

REGIONAL INSIGHTS

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The Asia Pacific region dominates the global market. Asia Pacific is now relatively open to foreign visitors and tourism, helping foster recovery. Given the prevailing economic uncertainties, travel demand is developing well. There have been some instances of lifting or easing of travel restrictions in some vital Asian destinations. As airline travel is associated with economic growth, the presence of developing countries in the region is expected to foster airline travel during the forecast period.

Besides, North America is also set to witness the second-highest growth rate between 2021 and 2029. North America's market is likely to grow at the second-highest rate during the forecast period. According to the International Air Transport Association, North American airlines saw traffic increase by 203.4% in May 2022 compared to 2021. As most restrictions on travelers from this region were lifted, tourism and a high willingness to travel continued to fuel the global recovery.

Furthermore, Europe is likely to hold a substantial share of the market. According to the European Organization for the Safety of Air Navigation (Euro control), in 2021, commercial flights were still severely affected by the COVID-19 pandemic. In 2021, the EU carried 373 million passengers, an increase of 34.9% compared to 2020. All EU member states recorded a significant increase in air passenger traffic in the second quarter of 2021 compared to a similar period in 2020. However, the air passenger traffic was still -59% below pre-pandemic 2019 levels.

Latin America has potential growth opportunities for the market. The private segment is one of the major segments in Latin America. The development of new helicopter models specifically for business aviation and VIP transport is likely to enhance the demand from corporate and private helicopter operators in the region.

The Middle East & Africa is also expected to grow in the coming years. The demand for jet fuel is expected to grow in the coming years attributable to tourism recovery. In addition, Middle Eastern countries, such as the UAE and Saudi Arabia, have a workforce from outside the region. These factors boost international travel and the demand for aviation jet fuel.

KEY INDUSTRY PLAYERS

Shell to Dominate Backed by its Wide Product Offerings and a Reputed Brand Name

Royal Dutch Shell focuses on the critical aspects of its business, giving it a competitive advantage in the marketplace. Some of its strengths are following the market trend (such as renewable fuels), investments in R&D, experienced employees, geographical presence, and others. In addition, it serves private pilots to global airlines. It creates value for its customers through safe and timely delivery of excellent-quality aviation fuels and a broad range of high-performance aviation lubricants and fluids.

• In June 2022, one of the world's first blockchain-based digital SAF solutions for business travel was launched following a collaboration between American Express Global Business Travel (Amex GBT), Shell, and Accenture. They have unveiled Avelia, which is a carbon accounting mechanism. Industry bodies approve it as an acceptable form of emissions reduction. Avelia could enable airlines and companies using sustainable fuel to record the associated benefits of emissions reduction through SAF against their voluntary ESG and to report regardless of where in the world it is used in a flight.


• In September 2021, Royal Dutch Shell plc (Shell) announced a final investment decision to construct an 820,000 tons per annum (TPA) biofuels facility at Shell Energy and Chemicals Park Rotterdam, Netherlands, formerly known as the Pernis Refinery. Once built, the plant will be among the largest in Europe, producing renewable fuel and renewable diesel from waste.

LIST OF KEY COMPANIES PROFILED:

• Vitol (Switzerland)


• Exxon Mobil (U.S.)


• Chevron Corporation (U.S.)


• Shell Plc (U.K.)


• Indian Oil Corporation Limited (India)


• TotalEnergies SE (France)


• BP Plc (U.K.)


• Valero Energy Corporation (U.S.)


• Marathon Petroleum Corporation (U.S.)


• World Fuel Services Corporation (U.S.)


• Essar Oil (UK) Limited (U.K.)


• Bharat Petroleum Corporation Limited (India)


• Rosneft Deutschland GmbH (Germany)


• LUKOIL (Russia)


• China Aviation Oil (Singapore) Corporation Ltd (Singapore)


• Viva Energy Group (Australia)


• Q8Aviation (U.K.)


• PT Pertamina (Persero) (Indonesia)


• ADNOC (Abu Dhabi National Oil Company) Distribution (United Arab Emirates)


• Neste (Finland)

KEY INDUSTRY DEVELOPMENTS:

• January 2022- ExxonMobil acquired a 49.9% stake in Biojet AS, a Norwegian biofuels company that plans to convert forest and timber construction waste into lower quality ones.


• April 2022- Chevron joined the Clean Skies for Tomorrow Coalition, working to fast-track the deployment and utilization of sustainable alternative fuel technologies to achieve 10% of the global supply by 2030.


• October 2021- IndianOil and Praj Industries Ltd. inked a Memorandum of Understanding (MoU) to discover and collaborate on business opportunities in biofuels, including CBG, SAF, biodiesel, ethanol, and so on, through the formation of a JV company in India.


• October 2021- Air France, TotalEnergies, the Metropole, and the Airport of Nice Côte d’Azur operated a flight from Nice to Paris fueled with 30% of SAF, made from waste and residues generated by the circular economy.


• June 2021- Vitol Aviation and Neste enabled Heathrow to become the U.K.'s first major airport to launch sustainable alternative fuel. Vitol Aviation's expertise in handling kerosene combines Neste's market-leading SAF production capabilities. Neste MY SAF is made from 100% renewable and sustainable waste and residual raw materials such as used cooking oil and animal fat waste. Neste It reduces up to 80% of greenhouse gas emissions in undiluted form and over the entire life cycle compared to fossil fuel.

REPORT COVERAGE

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The global aviation fuel market research report highlights leading regions worldwide to offer a better understanding of the competitive landscape of the market. Furthermore, the report provides insights into the latest industry trends and analyzes technologies that are being deployed at a rapid pace at a global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the industry.

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