JET FUEL{JP54-JET A1}

Recent years have not been kind to aviation, but with a recovery in demand taking place in 2010 and bullish projections for this year and the next, the future for jet fuel demand appears to be looking brighter

In its Global Market Forecast 2011–2030, aircraft manufacturer Airbus anticipates that world annual traffic growth will average 4.8% over the forecast period, with much of the growth coming from the Asia-Pacific (+5.7%), Europe (+4.0%) and North America (+3.3%), and strong growth also being seen in the Middle East (+7.4%) and Latin America (+6.1%).According to a presentation by Andrew Herdman of the Association of Asia Pacific Airlines (AAPA) at the New Geneva Forum 2011 in February, overall passenger volumes have returned to pre-recession levels and the industry made a welcome return to profitability in 2010, after incurring net losses in 2008 and 2009. The AAPA projected that the global airline industry will make a net profit of around $9 billion in 2011.

Boeing's Current Market Outlook 2011–2030 report expects airline traffic to grow at 5.1% a year over the 2010-30 period, with departures growing eventually from the 70,000 a day seen in 2010 to 300,000 a day in 2050, and notes that: "Looking back at our forecasts over the past 10 years reveals that our projections for long-term market growth tend to be conservative, compared with actual industry performance." Given the already bullish estimates, this should be welcome news to refiners. However, the growth is expected to be distributed unevenly, with 78% of demand for new airplanes over the next 20 years expected to come from outside North America, with the Asia-Pacific expected to take the lion's share.

The Middle East is also proving to be a source of robust growth. Qatar Fuel Company has seen its jet fuel volumes rise at a compound annual growth rate (CAGR) of 30% over the past five years. In addition, Boeing expects the UAE, despite having a population of only 9 million, to become the third largest market by value. An important growth factor is likely to be the emergence of low-cost carriers, which according to Boeing "are stimulating demand for travel, targeting the young local population and the large migrant workforce".

Latin America is another strong market, with total traffic carried by its airlines projected by Boeing to grow at a rate of 6.9% a year. The International Energy Agency's (IEA) projections are slightly more modest, predicting an average growth rate of 4.3% over the 2009-15 period, to reach 320,000bpd in 2015. Some support will come from the Olympic Games and the World Cup, with Brazil's Petrobras expecting jet fuel demand to spike by $20-30 during the latter.