New Delhi: India's jet fuel demand is projected to rebound to pre-pandemic levels by the first quarter of 2024, according to S&P Global Commodity Insights, defying earlier predictions as robust flight data indicates a promising recovery in the aviation sector.
Despite domestic and international flights returning to pre-pandemic levels, jet fuel consumption has struggled to keep pace in 2023. This could be attributed to the slow resurgence of long-haul travel and persistent challenges faced by the beleaguered airline industry.
Data from India's Directorate General of Civil Aviation (DGCA) shows that domestic commercial flights averaged around 88,400 a month during January-June 2023, surpassing 2019 levels by 2.5%. International flights, too, have experienced a more significant surge, with an average of 14,000 flights a month during the same period, compared to 12,500 a month in 2019.
Passenger footfall has mirrored this resurgence, with DGCA data indicating an average growth of 8% in domestic passenger numbers during the first half of 2023 compared to the same period in 2019. In the international segment, passenger footfall surged by an impressive 13% during this time, propelled by pent-up demand and the reopening of long-awaited international routes.
Himi Srivastava, an analyst at S&P Global Commodity Insights, said, "Although flight numbers have returned to 2019 levels, the distance these flights cover has yet to fully recover. The slow return of long-haul routes has led to shorter flights. During January-June, the average monthly kilometers traveled domestically was 79.5 million, just shy of the 79.6 million km logged in 2019. In the international segment, the recovery lagged even further, with an average of 43.8 million kilometers traveled per month in 2023, down from 45.6 million in 2019. The failure of longer flights to rebound has been a primary factor dampening the recovery of jet fuel demand, as jet fuel consumption is closely tied to the distances flown."
Jet fuel demand resurgence remains a focal point for India and the global aviation sector in 2023 and 2024. S&P Global Commodity Insights predicted that India's jet fuel demand will hover slightly below pre-pandemic levels in 2023, with a full recovery expected by Q1 2024 if the current growth trajectory continues. However, the recovery is not without risks, as concerns persist about the susceptibility of this rebound to global economic downturns. Any sudden surge in fuel prices or a weakening of discretionary income and employment could cut flight schedules, potentially leading to decreased fuel consumption.
Simultaneously, residential kerosene demand in India has seen a significant decline in recent years , owing to various government initiatives promoting cleaner fuels. This trend is projected to persist, and as a result, total jet fuel and kerosene demand in India are unlikely to return to 2019 levels until 2025.
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Updated: 21 Aug 2023, 01:12 PM IST
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