How Coronavirus is Affecting Aviation Jet Fuel Demand and Prices

by Admin on March 18, 2020

The coronavirus outbreak has affected global aviation industry with flights being cancelled, travel restrictions being imposed worldwide, leading to fuel demand fears and price drop. Aviation fuel or aviation jet fuel market is expected to be the hardest hit fuel market due to the COVID-19 spread. It is predicted that demand for jet fuel will remain low for the near future. Aviation jet fuel could take years to recover from the coronavirus hit, as it struggles to survive with low demand for flights.

Worldwide demand for aviation jet fuel is expected to drop by 70% due to the coronavirus outbreak with countries still limiting travel. With commercial flights being cancelled all over the world, the demand for Jet-A has being the lowest ever. This lack of flying due to the coronavirus impact has led to Jet-A oversupply.

Today we look at how jet fuel sector is affected by the corona impact around the globe.

How COVID-19 has affected the Asian aviation jet fuel market?

Aviation fuel market in Asia has been suffering since February as many airlines have suspended flights to affected areas and travelers cancelling plans because of the coronavirus spread. In Singapore itself, jet fuel demand drop has led to aviation fuel prices being lowered to 30%. This in turn has caused Asian refining profits to collapse by 50%. The corona impact on aviation fueling in Asia is expected to linger for months. With COVID-19 already spread to over 77 countries worldwide, the impact on jet fuel will continue to worsen. Aviation fuel demand in Asia in February had dropped to 740,000 barrels per day (bpd). It is further estimated to fall in March to 620,000 bpd.

Coronavirus impact on aviation fuel in US?

Aviation fueling prices drop in US has been the lowest in the last five years. In January itself travel restrictions to different parts of the world, had led fuel demand fears leading to 20% drop in jet fuel in US.

Corona impact on China aviation fueling market

In China, corona fears, has led to cancellation of more than two-third of its international flights. Aviation fueling or jet fuel, which is considered one of the biggest expenses in aviation industry, has gone down sharply. The fuel demand fears have led to sharp prices drop of jet fuel. Airlines in China are estimated to lose over $12.8 billion in revenue due to the coronavirus outbreak.

Aviation jet fuel demand drop in Europe

With many European countries being affected badly by COVID-19, travel restrictions is being imposed in and around Europe. This has led to jet fuel demand drop by 70% which is around 1 million barrels per day.

Ghost flights and fuel demand fears

Due to the corona fears many airlines have accepted to fly empty flights in fear of losing coveted airport slots. Such flights are called ghost flights. According to European rules, if airlines do not use 80% of their allocated flights, they can lose their airport slots. Many airlines thus are wasting aviation fuel or jet fuel flying ghost flights in and out of airports. Such flights are not only wasting aviation fuel but are affecting the environment too.

Europe relaxing rules for Ghost flights

With airlines wasting aviation fuel on ghost flights many countries are relaxing their airport slot rules.

In wake of corona fears leading rise to ghost flights, Brussels is currently suspending the use-it-or-lose it EU rule on airport slots for airlines to stop flying empty flights.

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