Global Aviation Fuel Market Growth – Enabling Global Network of Multi-Modal Supply Chain

aviation fuel market

Global transport infrastructure is a huge machine with many proverbial moving parts sans which it would come to a standstill. When it comes to the various modes of transport, air transportation (besides maritime and road transportation) air transportation is integral in facilitating global economic developments. The global cognizance of the instrumental role which air transportation plays in extending a global network of multi-modal supply chains that benefits a majority of developed and emerging economies among others enabling them to partake in manufacturing, trade, and tourism, among others, as evidenced around 67 years ago when a loan of $7 million was granted to then KLM Dutch Airlines by the International Bank for Reconstruction and Development in 1952 to support its $33.5 million reequipment program that encompassed the acquisition of 23 aircrafts.  Further, the advent of emerging markets in certain regions and rapid technological innovation has brought about a sea-change in the ways air transport is being carried out around the world.  Such criticality of air transportation underscored the importance of aviation fuel and has aided in the augmentation of aviation fuel market growth during the coming few years.

Air Transport, Registered Carrier Departures Worldwide

aviation fuel market


As the years progressed the global economy witnessed the opening of markets and liberalization of trade and services promoting the global airline industry expansion.  The global airline passenger demand registered a growth by 4.2% in 2019 which was reportedly under a long-term growth rate of around 5.5%. Since it was not a healthy figure with regards to growth of RPK (revenue passenger-kilometer) compared to the growth registered since 2009 and a decrease from 7.3% in 2018. Despite such estimates by the World Bank, the global gross domestic product (GDP) was surpassed by global airline passenger demand, which is noteworthy because growth in air transportation is normally subsequent to global economic growth. Also, 2019 marked an increase in airline passenger capacity by 3.4%, which brought about a load factor increment of 0.7% and reached a historical high of 82.6%. From a regional perspective, Africa and Asia-Pacific had registered the strongest growth rate which was in the order of 4.9% and 4.8% respectively whereas Europe and Latin America both registered growth rates which were in the order of 4.2%, followed by North America which registered a growth rate of 4.1%, while the Middle East witnessed a growth of only 2.4%. However, North America registered net post-tax profits of USD16.5 billion which made it the region to experience the strongest financial performance of its airlines.

This also represents a net profit of USD16.0 per passenger reportedly twice the level that was registered in 2013. While due to the highly competitive open aviation market and high regulatory costs the breakeven load factors in Europe remained relatively high at 70.4%. In conjunction with the depiction of Registered Carrier Departures Worldwide and the brief snapshot of the global air transport system further substantiates the possible upward trajectory of the aviation fuel market which has been forecasted to grow at a CAGR of 6.00% from the market value of US$178.560 billion that has been estimated in 2019 to attain a total market size of US$253.261 billion in 2025. Nevertheless, the COVID 19 crisis effectuated a downward draft in the aviation fuel market because of the huge toll on the aviation industry around the world which was exacerbated by travel bans, plummeting demand and ultimately grounding of passenger flights.  There has been a significant disruption in cross-border trade carried in passenger widebody aircraft. As of May 2020, only 20% of widebody passenger was operational. Also, because approximately 50% of the air cargo is transported via commercial scheduled passenger flights mostly in the belly hold compartments of widebody aircrafts, there has been a decrease in daily international cargo capacity by approx. 35-40 % in March 2020 in compassion to 2019.  On the other hand, cargo operations i.e., airlines using freighters and integrator carriers have continued to extend their services and also increased their capacity between early February and the end of March 2020.

Military Expenditure, in Constant Us Dollars (World Total)

aviation fuel market

Source: SIPRI

In billions of US$

The military segment is estimated to create sizable opportunities enabling the growth of the global aviation fuel market

The global expenditure towards military during 2019 was approx. $1917 billion as per SIPR (Stockholm International Peace Research Institute) which was reportedly the highest since the estimates of 1988. Additionally, during the same year, the global military expenditure as a share of global gross domestic product (GDP) was reportedly in the order of 2.2% which was a slight increment from that of the preceding year. The USA was the largest expender during 2019 which was in the order of $732 billion and constituted 38 % of global military spending. Compared to 2018 it was an increase by 5.9%. Thereafter the estimated budget allocation of China was in the order of $261 billion in 2019, constituting 14% of the global military expenditure, making the country the second-largest expender after the USA. Moreover, based on the geopolitical tensions that prevail between China, Pakistan, and India India’s military spending during 2019 was in the order of $71.1 billion, making it the third-largest military spender.

India’s military expenditure increased by 5.1% in comparison with that of 2018. Besides the aforesaid, the largest military spenders in Asia and Oceania were Japan and South Kore which was in the order of $47.6 billion and $43.9 billion respectively. As far as Europe is concerned Germany occupied the top spot in military expenditure that increased by 10% in 2019, the largest increase in spending amongst the top 15 military spenders in 2019, reaching a figure of $49.3 billion. Also, central European NATO members like Bulgaria and Romania had registered harp increases in military expenditure. Bulgaria’s military expenditure increased by 127% primarily owing to payments for new combat aircraft and Romania’s military expenditure increased by 17%. Additionally, the military expenditure registered by all the 29 NATO member states during 2019 was in the order of $1035 billion.  Above, all Russia had reportedly increased its military expenditure by 4.5 % reaching a figure of $65.1 billion which was 3.9% of its GDP making it the fourth largest military spender.