It could be coming to a heaven near you at any moment: a plane full of people going on vacation, with wispy white contrails in its wake and memories of COVID-19 that seem like a bad dream.
The world flies again.
According to industry data, 10.5 million flights are scheduled to cross the airspace in the third quarter. The International Air Transport Association expects record numbers of passengers this year and planes that will be about as full as before the virus, and will use record amounts of fuel.
For environmentalists, this trend will be greeted with dismay as it leads to an accompanying increase in carbon emissions and a new watermark in a tourism revival. However, the revival is a welcome boost for the oil industry.
This is a world in which OPEC and its allies have been forced – since the early days of the virus – to artificially limit the supply of oil. Jet fuel consumption took a far bigger and more lasting hit than any other mainstream petroleum product.
“As a human race, we’re starting to travel more again,” said Eugene Lindell, head of refined products at industry consultant FGE. We are “shaking off the pandemic years.”
It is international travel that will see the biggest increase. That will grow 9.7% this year, with huge increases in Asia, Europe and North America. International flights from Asia should increase by 23%, but there are substantial gains to be made almost everywhere.
In Singapore, another intermediate point between Asia and the West, passenger numbers at Changi Airport in the first three months of 2024 – with 16.5 million people – exceeded 2019 levels. Pent-up demand made China the airport’s top destination this quarter, following the introduction of a 30-day visa waiver between the two countries.
It translates into record passenger numbers for key long-haul hubs in Asia and the Middle East. For example, Dubai International recorded its busiest quarter ever in terms of passenger numbers in the first three months of the year, with 23 million visitors. The airport’s CEO expects a record number of 91 million by 2024.
Nevertheless, it is precisely the shorter distance that has driven the rebound, according to Simon Warren, an analyst at Vitol Group, the world’s largest independent oil trader. He expects jet fuel demand to increase by 650,000 barrels per day this year.
“Global aircraft demand has now returned to pre-corona levels for the first time since 2020,” he said. “The recovery was mainly led by the short-haul sector. Jet is one of the key drivers of overall oil demand growth.”
Oil traders assessing aircraft prices often look at how much it costs compared to diesel, a relatively similar fuel type that has a much larger share of the global petroleum market. In Europe, the measure shows jet fuel has risen in value since March, with a similar picture in Asia and the United States, according to fair value data.
“We’re seeing nice increases based on booking data for jet fuel demand globally, especially in Asia, in places like China,” said Daan Struyven, head of oil research at Goldman Sachs. “For example, last year the number of international flights was still very, very low, and we will continue to see positive year-on-year demand growth on the back of a recovery there.”
Efficiency gains
IATA predicts fuel consumption of 99 billion gallons (375 billion liters) this year by the global aviation industry, a 3% increase from 2019.
However, the increased efficiency holds back fuel consumption.
Both the International Energy Agency and FGE do not expect demand for aviation fuel – including kerosene used for heating – to exceed 2019 levels this year.
“Air travel is essentially back to pre-pandemic levels,” said Jeffrey Barron, an analyst at the U.S. Energy Information Administration.
“However, they have also tried to increase their efficiency by getting more people on planes so that they use slightly less jet fuel than before the pandemic.”
