Global aerospace and defense (A&D) fuel market valuation was around USD 8.4 billion in 2014 and is expected to grow at an estimated CAGR of over 6% from 2015 to 2022. Global economic growth, increasing entry of low cost airlines, and rising aircraft demand from emerging economies such as China and India is expected to foster industry development.
Increasing global passenger traffic of around 10 to 12% annually is likely to boost aerospace fuel demand. Rapid recovery from a steep decline in recent years and expanding production plans in the aircraft manufacturing sector are also expected to drive phenomenal growth over the forecast period.
Expansion of production activities by major market players such as Boeing and Airbus of around 46 and 42 per month respectively is likely to increase fuel demand. Increasing access to low-cost carriers, particularly in Asian and Latin American countries, coupled with enhancements in global fiscal conditions is expected to increase market revenue as well.
Rising demand for surveillance aircrafts and pilot training in civil and military applications is another major factor promoting industry development. Growing need for transportation of goods owing to increased trade activities as well as rising per capita income and positive GDP growth in emerging economies such as Brazil, Mexico, Thailand, China, and India is also likely to boost market demand.
Stringent governmental regulations and increasing awareness regarding carbon emissions, after the Copenhagen Climate Conference 2009, are likely to foster replacement of older airplane models with new, efficient carriers that promote fuel savings and reduce overall emissions. Despite the fact that carbon emissions from aircraft account for only around 2% of global emissions, the aviation segment is actively taking steps towards carbon-neutral growth by improving average fuel efficiency by 1.5% per annum until 2020.
Changing nature of warfare and increasing global security concerns are also promoting the development and investment in unmanned drones and defense aircrafts. Fuel demand is anticipated to increase even further with addition of innovative aircraft in civil and defense applications.
Several companies are increasing their capacities for network expansion by adding new routes and carriers in their existing services. Recently, IndiGo, an Indian airline, launched eight new direct flights connecting major cities across the nation along with induction of new Airbus A320 into its fleet. Increasing application of civilian helicopters of around 5% is also expected to boost fuel demand over the forecast period.
However, high oil and jet kerosene prices and defense program cancellations along with delays of major weapons programs are expected to negatively impact the global aerospace and defense fuel industry. The airline industry witnessed a drop in revenue of around USD 0.5 billion in 2012 as per International Air Transport Association (IATA) estimates.
The market can be segmented on the basis of product type into avgas, avtur, rocket propellants, and aviation biofuel among others. Avgas, also known as aviation spirit, is gasoline used in the spark-ignited combustion engines. Avtur (aviation turbine fuel) is commonly known as jet fuel and utilized in aircraft powered by gas-turbine engines. Jet fuel can be further segmented into Jet A, Jet-1, and Jet B.
Regional segmentation includes North America, Asia Pacific (APAC), Europe, Central and South America, and Middle East and Africa (MEA). European market is likely to remain the weakest in terms of growth; however, positive trend is anticipated from the outbound freight and business travel sectors.
The global industry is expected to benefit greatly from increasing airline expansion in Asia Pacific, CSA, and MEA. APAC is the largest source of order backlog for most aircraft manufacturers and is likely to emerge as the fastest growing region. The U.S. is the largest market and is expected to remain so over the forecast period, generating overall high revenues for North America.
Key participants in the A&D fuel industry include Kuwait Aviation Fueling Co., Chennai Petroluem Corp. Ltd., Royal Dutch Shell Plc., Reliance Industries Ltd., Essar Oil Ltd., Hindustan Petroleum Corp. Ltd., Indian Oil Corporation Ltd., Bharat Oman Refineries Ltd., and Sinopec among others.
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