Aviation industry is estimated to consume around 15% of the global oil demand by 2030, as per the International Energy Association (IEA), this shows that the demand for aviation fuel is likely to increase, which drives the global Aviation Fuel Market.
Fortune Business Insights in a new report, titled "AVIATION FUEL MARKET: GLOBAL MARKET ANALYSIS, INSIGHTS AND FORECAST, 2018-2026" predicts that the aviation industry needs to focus on reducing carbon emissions and ensuring sustainable air travel. Use of high-quality aviation fuel will improve the efficiency of airplanes.
Moreover, air travel is set to increase rapidly, owing to its rising preference from tourism, socio-economic, and other sectors. This will further increase the Aviation Fuel Market share in the forthcoming years.
As per the report, the global Aviation Fuel Market is expected to rise at 5.22% CAGR between 2018 and 2026. The global market is anticipated to reach US$ 451.4 Bn by 2026, as against US$ 300.4 Bn in 2018.
Burgeoning Demand for Jet Fuel Drives the Market
Jet fuel also referred to as Aviation Turbine Fuel (ATF) is a petroleum-based fuel which powers turbo-propelled and jet engine aircraft. The rising demand for air cargo transportation is expected to boost the segment's growth. This, in turn, will drive the Aviation Fuel Market growth. Jet fuels are high-value light petroleum products processed from crude oil. These fuels are not only used in jet aircraft, but in jet turbine applications too. There are different grades of jet fuels called Jet A1, and Jet A. The former is used for commercial purposes in international aviation, and the latter is specifically for the U.S. domestic aviation.
A growing number of air traffic passengers is expected to expand the airline industry. As a matter of fact, Boeing recently receives the highest order for manufacturing commercial air buses and cargos on account of an increasing number of Boeing passengers. Other factors driving the jet fuel segment are better aircraft fuel-burning efficiency, growing international trade, rising industrial production globally, and better economic scenario. The global Aviation Fuel Market size is likely to increase owing to the rising demand for bio-jet fuel. The types of fuel intend to mitigate the pollution levels and ensure sustainable air travel.
British Airways and Shell Plans to Build a Green Jet Fuel Refinery in the UK
From a geographical standpoint, North America is anticipated to emerge dominant in the global Aviation Fuel Market through the forecast years. Strong economic growth in the U.S. is pushing the market to grow at a high pace. Rising investments in information communication and technology (ICT) and an increasing number of manufacturing units in this region are contributing to the growth of the market. Driven by these factors, the Aviation Fuel Market share is expected to increase during the forecast period in North America.
The market in Europe is expected to grow considerably in the forecast years. Consequently, British Airways and Shell are planning to build a sustainable and green jet fuel plant. This plant will be made from household waste. Furthermore, both the companies are funding £2.8m to a renewable waste company called Velocys. The aim of this plant is to produce 20 million gallons of carbon-free and sustainable jet fuel.
The market in the Asia Pacific is expected to witness high potential owing to the rapid developments in countries such as China, Japan, and India. China is the biggest consumer of aviation fuel in APAC. Following China, Other countries such as Japan, Indonesia, and India are consumers of aviation fuel. Moreover, the Indian government reduced excise duty on aviation fuel from 14% to 11% in October 2018.
Market to Benefit as Countries Plan to Increase their Defense Budget
As per the International Air Transport Association or IATA, the number of air skyrocketed as it surpassed 4 billion for the first time. This is attributable to the bettering economic conditions of developing economies and lessening airfares. The Aviation Fuel Market revenue is likely to increase as some of the countries are planning to increase their defense budget. This is primarily done to enhance national security and also, military plans a crucial role in aviation fuel consumption. Hence, not only commercial airplanes, private jets, and military jets consume aviation fuel. This acts as potential growth triggers for the market.
"Rising per capita income of middle-class people now opt for airplanes for comfort and luxury, thus boosting the Aviation Fuel Market potential," said a lead analyst at Fortune Business insights. This, coupled with instability in crude oil prices, enable growth in the market.
Among leading players in the global market, BP and Shell are presently leading the market. Other companies such as Total, Chevron, Gazprom, ExxonMobil, and Hindustan Petroleum Corporation Limited play a significant role in the market. Boeing is planning to invest around US$ 1 Million in the Roundtable on Sustainable Biomaterials (RSB) and World Wide Fund for Nature to build sustainable aviation biofuels in Brazil.