A view of the Kempegowda International Airport Bengaluru. File
| Photo Credit: G.P. Sampath Kumar
Demand for jet fuels is yet to recover to pre-pandemic levels in India and may only do so by the first quarter of 2024, S&P Global Commodity Insights said in a research note on Monday.
Although aviation traffic as well as passenger footfall levels have outgrown levels seen before the COVID-19 outbreak, a relatively slower rebound in long-haul travel and a distressed airline industry have resulted in lower demand for jet fuel which is likely to persist through 2023, the firm said.
The number of flights has returned to corresponding levels of 2019 this year, but the distance travelled by them is yet to recover, said Himi Srivastava, South Asia oil markets analyst at S&P Global Commodity Insights. An analysis of data from the Directorate General of Civil Aviation (DGCA) for the first six months of 2023 suggests traffic on long-haul routes is still to recover.
“…Average kilometres travelled per month were 79.5 million between January and June 2023 against 79.6 million in 2019 for the domestic segment,” Ms. Srivastava said. “But the numbers lag quite a bit for the international segment, from per month average of 45.6 million in 2019 down to 43.8 million in 2023. The lack of recovery of longer flights accounting for lower kilometers travelled is one of the main reasons pulling back jet fuel demand as jet fuel demand is highly correlated to distance travelled by flights,” she added.
Jet fuel demand is expected to remain “slightly below the pre-pandemic level in 2023 and to fully recover by Q1 2024, assuming the growth continues at the same pace”. However, if fuel prices surge again or discretionary income and employment weaken then lower load factors could necessitate reduced flight schedules and thus, lower fuel consumption, the note concluded.
