Slower revival in long-haul flights impeding India’s jet fuel demand recovery: SPGCI

India’s total domestic commercial flights averaged around 88,400 per month in January-June this year, around 2.5 per cent higher than the corresponding period of 2019, according to the agency’s analysis of data provided by the Directorate General of Civil Aviation (DGCA). As for international flights, the recovery was even steeper with the number of flights averaging at 14,000 per month against 12,500 a month in the first six months of 2019. Similarly, domestic passenger footfall grew by 8 per cent and international passenger volumes were up 13 per cent.

“Further analysis of data provided by DGCA shows that although the number of flights has returned to 2019 level, the distance travelled by them is yet to recover. This means that flights are now shorter than before, as long-haul routes are slower to recover,” said Himi Srivastava, South Asia Oil Markets Analyst at SPGCI.

In January-June this year, the average monthly distance travelled in the domestic flights segment was 79.5 million kilometres (km), marginally lower than 79.6 million km in the corresponding period of 2019. The difference in distance travelled in the international segment, however, was notable. Against 45.6 million km per month in the first six months of 2019, the average monthly distance in the corresponding period of this year was 43.8 million km.

“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,” Srivastava said.

According to SPGCI, jet fuel demand recovery is a key theme in 2023 and 2024 in India and across the world. The agency estimates India’s jet fuel demand 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, there remains an underlying vulnerability to global economic recession. 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 agency said.