Global Aviation Fuel Market – Braving COVID and Climate Change
Besides being an important enabler of achieving economic growth and development, it is an established fact that air transport facilitates integration into the global economy by making a decisive contribution to people’s individual mobility, among other aspects such as trade and employment generation. The swift and safe means of travel extended by air transport has made aviation fuel an indispensable aspect for both business and leisure travel despite the characteristics and needs of the aforesaid two categories of travelers being different. By providing vital links between the tourist-generating areas and destinations enabling a healthy number of individuals to engage in cultural exchange enabling the tourism industry to continuously aspire for unprecedented growth. Thus, exists a bidirectional relationship between tourisms and air transport which in turn has an influence over the demand for aviation fuel which in part contributes to the expansion of the aviation fuel market.
In the first instance, air transport, among others is responsible for providing good accessibility enabling the development of the tourism industry and contrarily substantial benefits are reaped by the air transport industry which is derived from the additional demand generated by air travel, making aviation and ever-increasing essential mode for tourism markets. Further, the emergence of the low-cost carrier sector, the general climate deregulation which has resulted in substantial developments within the airline industry has increased the significance of the dominant mode for short and long-distance travel and a majority of international travel. The advent of charter and low-cost carriers, the nature of the network, and the manner in which the leisure markets are served by various kinds of service providers which comprises scheduled and chartered services, legacy airlines, and low-cost carriers are changing as so is the distribution channels which are used. Further, airports have also become increasingly proactive and experienced in their endeavor to attract leisure demand and expanding their capabilities to extend an enhanced level of services to several carriers.
To the context of tourism at the center it is pertinent to note that as of January 2020, according to UNWTO (United Nations World Tourism Organization), 2019 marked an increase in global International tourist arrivals (overnight visitors) which grew by 4% and attained a figure of 1.5 billion. It was also a year that witnessed the strongest growth albeit being slower in comparison with the unprecedented rate registered during 2017 which was in the order of +7% and that of 2018 which registered a growth by 6%. All the regions reportedly experienced an increase in arrivals Viz. the middle east experienced growth by 8% which at the topmost position, followed by the APAC which registered a growth of 5%. Whereas bit Europe and Africa experienced an increase in international arrivals which was in the order of 4% in accordance with the world average, and Americas registered a growth of 2%. Besides from the perspective of source of tourists, France had reported the greatest increase in international tourism expenditure among the top 10 markets whereas growth in absolute terms was led by the USA. While such estimates are conducive for the growth of the aviation fuel market, the onset of the COVID 19 pandemic had has caused unprecedented disruption to travel and tourism and thus the global aviation fuel market.
According to UNWTO, international tourist arrivals plummeted to 93% in June and dropped by 65% during the first half of 2020. A loss of 440 million international arrivals that resulted from the massive declines in international travel demand registered during the period January-June 2020 translated into a loss of US$ 460 billion in export revenues from international tourism. This figure is reportedly 5 times the loss in international tourism receipts which was registered during 2009 amidst the global economic and financial crisis. At the regional level in the first half of 2020, the APACA was hardest hit of all global regions registering a decline by 72%, Europe registered a decline of 66% in tourist arrivals, the Americas registered a decline by 55%, Africa and the Middle East both registered a drop by 57%. Whereas at a sub-regional level North-East Asia and Southern Mediterranean Europe suffered a decline by 83% and 72% respectively. Such abysmal tourism market condition is anticipated to impact the global aviation market growth in unprecedented ways., especially when according to UNWTO, reverting to 2019 levels in terms of tourist arrivals has been forecasted to be achieved between 2 ½ – 4 years. Besides, as per the estimates by EIA (U.S. Energy Information Administration) consumption of jet fuel by commercial passenger flights averaged 1.6 million barrels per day (b/d) during the first two weeks of July, which was reportedly 69% less than the same period of 2019. Between February and March consumption of jet fuel by commercial passenger flights around the world declined by 0.7 million b/d and between March and April a decline of 2.4 million b/d was estimated.
Further, as of December 2019, it was estimated that emissions from tourism derived from transport are anticipated to account for 5.3% of all man-made CO2 emissions by 2030. Further, the majority of international travel is carried out by air. Further, Air travel contributes to climate change through the emissions of aerosols and their precursors (soot and sulfate), CO2, nitrogen oxides (NOx), Sulphur dioxide (SO2), and water vapor. The aforementioned collectively translates to the fact that CO2 emissions from international tourism are predominantly caused by air travel which translates to the fact that. Further, UNWTO forecasts that by 2030 regional emissions (in Mt of CO2) from international tourist arrivals will amount to 41, with respect to Africa, 149 with respect to Americas, 146 with regards to the APAC, 223 concerning Europe, and 42 with respect to the Middle East. In this regard, a myriad of initiatives and investments are being undertaken to facilitate increased adoption of biofuels, which are expected to witness an expansion of their market share during the forecast period. For instance, in November 2020, it was announced that Total would be using Honeywell UOP Ecofining™ process technology brought about by Honeywell (NYSE: HON) to produce renewable fuels, indented for the aviation industry.
Leave a ReplyWant to join the discussion?
Feel free to contribute!