Global aerospace and defence (A&D) fuel market is estimated to grow at 6% CAGR during the period of 2016 to 2022. The main drivers for the growth of the global aerospace and defence fuel market are rise in global air passenger traffic and entry of low cost carriers, and aircraft demand from emerging economies like India and China. However, the rising aviation fuel price is poised to fluctuate, the ticket price, which in directly affect the growing trend passengers in carrier. Other factors challenging global aerospace defence and fuel market are fuel efficient jet engines, use of simulators in training, and new upcoming renewable jet fuel. Both Airbus & Boeing recorded highest number of deliveries for the month of august 2016. The increasing demand of air passengers is resulting into the growing orders for new aircraft.
The aerospace and defence fuel market is segmented on the basis of defence aerospace, commercial aerospace and fuel. Defence aerospace is further sub segmented into military aerospace, surveillance, and training. Commercial aerospace is sub segmented into large commercial, medium commercial, small commercial, and helicopters. Both large commercial and medium commercial segment is further classified on the basis of passengers and cargo. Small commercial is sub segmented into business jets, and regional jets. The fuel segment is further classified as jet fuel, Avgas, CNG/LNG and others. Increasing global passenger air traffic has spiked increase of fuel demand in commercial aerospace sectors.
The global air passenger traffic, according to the International Air Transport Association (IATA) has increased by 7.1% in January 2016 as compared to that of 2015. Positive outlook of the economy, economic recovery of the countries were some of the factors resulting into the growth of the traffic. Geographically, Asia-Pacific recorded growth of 10%, in Europe the air traffic climbed to 4%, North America air traffic increased around 2.4%, while Middle-east, Africa, and Latin America, showed increment in air traffic around, 10.9%, 12.1% and 8.9% respectively in 2016. Low cost carriers are also the driving factors in the global air passenger traffic in emerging economies. The growth in air traffic is well reflected with respect to seating capacity of airlines. Both Boeing and Airbus, has recorded to have boost in number of orders and sales of large commercial air carriers having seating capacity close to 300-350. Seating capacity offered by the world’s biggest airlines in 2016, expressed in terms of available seat kilometres and has increased globally by around 6.1 per cent. While capacity growth ranged from 0.1 per cent in Africa to 13.8 per cent in the Middle East, the average global passenger load factor improved by 0.5 percentage points over 2016; ranging from 68.9 per cent for Africa to 83.5 per cent for North America. Despite an increase in capacity offered in all regions, continued to increase in air carrier’s efficiency and has resulted in average passenger load factors reaching 80.2 per cent compared to 79.7 per cent in 2016.
The defence aerospace fuel markets are growing due to increasing political tensions. The demand for new jets and cargos planes in defence has increased. Countries like India and China, investing heavily in defence sectors, the growth in defence aerospace fuel is positive for the upcoming forecasted period. The commercial aerospace fuel market is led by low cost carriers particularly in the developing economies.
Low cost carriers, discount airlines, or low cost airlines tend to offer low fares in exchange for reduced passenger comforts. Low cost carriers carried more than $950 million passengers in 2016, approximately 28 per cent of total scheduled passengers. Low cost carries in Asia-Pacific represented 31 per cent of total low cost carrier passengers carried, followed by Europe with 30 per cent and North America with 26 per cent. The increasing presence of low cost carriers in emerging economies is considered to have an important contributing factor to overall growth in passenger traffic. Government are offering good degree of subsides to the low cost air carriers for promoting tourism industry. Emerging economies like India and China, with majority of middle class population are banking on low cost carriers for transportation regionally.
Geographically, the aerospace defence and fuel market are classified into North America, Europe, Asia Pacific, Latin America, Middle East, and Africa and Rest of the World. Countries in Latin America, Asia-Pacific, and Africa, are the main markets for aerospace and defence fuel market. Economic outlook, increased middle class travellers and low cost airlines are the factors contributing to the growth of air traffic in the region. With growing security concerns, Middle East and Europe are driving the defence aerospace fuel demand. With the recovery of the economy, both North America and Europe are looking forward to positive growth in outbound freight and business travel.
Some of the leading players in the aerospace and defence fuel market are, Royal Dutch Shell Plc, Air British Petroleum, Exxon Mobil Ltd, Chevron Ltd, Gazprom Ltd, Indian Oil Corporation Ltd., China National Petroleum Corporation., Kuwait Aviation Fuelling Company., Bahrain Petroleum Co., Bharat Oman Refineries Ltd. The biggest challenge for companies in aerospace and defence fuel markets are the increasing fuel prices.