Aviation Fuel Market

Market Overview

The global aviation fuel market size was valued at USD 205.27 billion in 2022. It is predicted to reach an expected value of USD 275.93 million by 2031 at a CAGR of 3.3% over the forecast period (2023 – 2031). Factors like the increasing demand from the military and growing air transportation drive the market growth.

Several varieties of aviation fuel are produced as byproducts of crude oil and are used to power aircraft. Aviation fuels are any fuel types derived from petroleum, or a blend of petroleum and synthetic fuels, used to power aircraft. These fuels have to meet stricter regulations than the ones used on the ground for things like heating and driving. Gas turbine aircraft use kerosene-based fuels (JP-8 and Jet A-1). Leaded gasoline is used by piston-engine planes, while jet fuel (kerosene) is used by diesel-powered planes. All U.S. Air Force aircraft were approved to use a 50-50 kerosene and synthetic fuel blend by 2012 to help offset rising fuel costs. Synthetic fuel is made from coal or natural gas.

Market Dynamics

Market Drivers

Increasing Demand from the Military

In military aircraft, regular aviation fuels are not used for military purposes. Therefore, different types of kerosene-based fuels are produced with different octane for suiting military applications. Majorly used fuels for military applications are JP 8 and JP 5. These fuels require the addition of corrosion inhibitors, which offer higher lubricity. They offer higher efficiency and have higher flash points. In addition, many nations are increasing their military strength by adding newer and faster aircraft. They demand aircraft based on the latest technology, offering fuel efficiency. The increased demand for aircraft drives the requirement for military-grade aviation fuel.

Growing Air Transportation

The rise in the number of passengers traveling by air mode significantly fosters the growth of the global aviation fuel market. The surge in the number of travelers increases the demand, which further leads to growth in fleet size. New aircraft are joining the existing fleet to meet the rise in demand. Such factors drive the growth of the global market. Moreover, aviation demand is particularly high in the Asia-Pacific region, where growing economic wealth is opening new travel opportunities and driving the growth of the global market. An estimated 4.3 billion people were transported via scheduled air travel in 2018, an increase of 6.9% from the year before. In 2018, there were 1.4 billion tourists who crossed international boundaries, and more than half of them were transported by plane.

Market Restraint

High Aviation Cost

The fuel price is the main factor predicted to restrain the global market's growth for aviation fuel. The high price will probably impede market expansion. Since jet fuel is a derivative of Brent crude oil, the rising price of Brent crude oil is to blame for the rising cost of fuel. The disparity between supply and demand is what's driving the price of Brent crude oil. The supply of Brent crude oil is decreasing, which, combined with increased consumer demand, is driving up prices.

Market Opportunities

Emerging Sustainable Biofuels for Aviation

Sustainable aviation fuel (SAF) is produced from common feedstocks, including cooking oil, non-palm waste oils from plants or animals, and household and commercial solid waste such as packaging, paper, textiles, and food scraps that would otherwise be disposed of in landfills or burned. Energy crops, like rapidly growing plants and algae, and forestry waste, like scrap wood, are potential sources. This fuel reduces carbon emissions by 80%, which benefits the environment. For instance, SkyNRG, a prominent SAF manufacturer, estimates that aviation currently contributes between 2 and 3 percent of all carbon emissions produced by humans worldwide. By 2050, aviation could use up to 22% of the global carbon budget if prompt action is not taken. In order to maintain growth while addressing its environmental impact, the aviation industry has pledged carbon-neutral growth by 2020 and will reduce net aviation carbon emissions to 50% levels by 2050.

Air BP and Fulcrum BioEnergy joined forces in 2016, initiating their partnership with a USD 30 million investment. The Californian Company is building its first facility in Reno, Nevada, to produce sustainable transportation fuel from household waste. Fulcrum wants to build other facilities and eventually supply Air BP with more than 50 million US gallons of SAF annually. Similarly, Air BP and Neste, a leading renewable fuel producer, entered into an agreement in 2018. Nestle creates sustainable fuel from waste products and residues other than palm oil, making it readily available. Such factors are expected to create opportunities for global aviation fuel market growth over the forecast period.

Regional Analysis

North America Dominates the Global Market

Region-wise, the global market share is segmented as North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global aviation fuel market shareholder and is expected to exhibit a CAGR of 3.5% over the forecast period. The North American market is analyzed across the U.S., Canada, and Mexico. The region holds a significant market share of aviation fuel owing to the presence of big market players in the US and Canada. According to the Aviation Benefits Beyond Borders report of Air Transport Action Group (ATAG), the aviation sector in North America directly employed an estimated 2.4 million people in 2016. Similarly, according to General Aviation Manufacturers Association (GAMA) and International Trade Association (ITA), 211,000 aircraft are based in the US. The presence of strong market players in the aviation fuel industry and developed countries also contributes largely to the strong growth of the aviation fuel market.

Europe is expected to grow at a CAGR of 2.6% over the forecast period. Germany is one of the most developed economies, with a large aviation industry and aircraft manufacturing presence and a big transport infrastructure network. It also has the presence of aviation fuel producers. The country had 929,900 flights in 2017, expected to rise due to new airports and increased fleet sizes. Such factors are expected to drive the growth of the global market.

Asia-Pacific is expected to grow significantly over the forecast period. China is the largest manufacturing-based economy in the world. The country is engaged in oil and gas, construction, automotive, electric car, energy, telecommunications, and services. The country witnessed 556.1 million air travelers in 2017 and experienced a rise in the tourism industry. Moreover, increasing fleet size and introducing new air routes increase demand for aviation fuel, thus driving market growth.

LAMEA has a presence in the mining industry on a large scale. The presence of oil and gas and mineral mining industries drives growth in the region. In addition to mining, the region's industries include services, manufacturing, energy, and transportation. According to Air Transport Action Group (ATAG), the rise in several air travelers and new airports being constructed and under construction are expected to boost the growth of the aviation fuel market.

Segmental Analysis

Based on fuel type, the global market share is divided into jet A, jet A1, jet B, JP 5, JP 8, avgas, and biofuels. 

The global aviation fuel market is segmented by fuel type, aircraft type, and end-user.

The jet A1 segment is the highest contributor to the market and is predicted to exhibit a CAGR of 4.02% during the forecast period. Jet A1 is a clear, bright, and solid matter-free liquid. It is a petroleum distillate of kerosene blend. It is the most commonly used jet fuel in the general aviation industry. It has a flash point of 100ᵒ Fahrenheit (F) and a maximum freeze point of -52ᵒF. It meets the requirements of the latest UK Specification Def Stan 91-91 versions, ASTM Specification D1655 (Jet A1), and the IATA Guidance Material (Kerosene Type). In addition, Jet A-1 fuel is suitable for all gas turbine engines. It offers fuel efficiency and is easily available in most countries, driving the jet A fuel market growth. However, the rising concerns for carbon emissions and emerging biofuels are expected to impact the market growth.

Jet A is a kerosene-based aircraft fuel available only in the US and Canada. This fuel was developed to have high flash points and high freezing points. It is heavy and has low vapor pressure. Jet A is widely approved by engine and airframe manufacturers. It is particularly tailored and appropriate for American and European aircraft. The US's general aviation and military industries have a sizable demand for them. In addition, the fuel can be used as an alternative when the availability of military-grade fuel is low. The rise in demand from the military drives the market for jet A fuel. However, feasibility should be checked because the freezing point of –40ºCelcius (C) maximum may impose aircraft altitude restrictions or other operational limitations on certain very long-range flights.

Based on aircraft type, the global market is classified into fixed wings, rotorcraft, and others.

The fixed wings segment owns the highest market share and is predicted to exhibit a CAGR of 3.92% during the forecast period. Fixed-wing aircraft use an engine to keep the plane moving. The airflow around the wings generates lift. In level flight, the engine reduces drag on the aircraft. The plane's form drag and the wing-generated lift are responsible for this drag. Fixed-wing aircraft find use in civil, military, and recreational markets. Fixed wings are widely used when compared with other aircraft. They generally have piston, turboprop, or turbojet engines. The wide use of fixed-wing aircraft in the civil sector and the increase in air passengers boost the demand for new aircraft, further driving the market growth for aviation fuel.

Based on end-user, the global market is classified into civil, military, private, and sports and recreational.

The civil segment is the highest contributor to the market and is predicted to exhibit a CAGR of 3.2% during the forecast period. Civil aircraft make the best use of top executives’ time by freeing them from commercial airline schedules and airport operations. Civil aircraft include those used for forest-fire fighting, agricultural operations, medical evacuation, traffic reporting, freight hauling, pipeline surveillance, and other applications. Such wide applications of business aircraft drive the growth of the global market. Moreover, the rise in air transportation leads to increased aircraft fleet sizes. The increased fleet size and new routes being introduced, both domestically and internationally, drives the aviation industry, further driving the fuel industry market growth.

Private aircraft are personal aircraft that are single-engine monoplanes with non-retractable landing gear. They are sophisticated and may include such variants as warbirds and ex-military planes. There are homebuilt aircraft built from scratch or kits by the owner and range from Piper Cubs to high-speed, streamlined four-passenger transports. In addition, antique and classic aircraft remodeled older aircraft and aerobatic planes designed to be highly maneuverable and perform in air shows are mostly considered private aircraft as customers own them for personal use, hobby, or social statement. They also serve as an executive perquisite and sophisticated inducement for potential customers. The developing market for private aircraft drives the growth of the global market.

Recent Developments

• May 2023- Honeywell announced a tech to turn hydrogen and CO2 into lower-carbon aviation fuel. Honeywell said its process could reduce greenhouse gas emissions by 88% compared with traditional petroleum-based jet fuel, Stephanie Kelly reports for Reuters).
• June 2023- Indian Oil Corp partnered with LanzaJet to establish an aviation fuel plant in Haryana (India).