The demand for air travel is set to double by 2040 compared to pre-pandemic levels in 2019, with an annual growth rate of 3.4%, according to forecasts by the International Air Transport Association (IATA).
Report informs that the Asia-Pacific region is expected to lead this growth, contributing over half of the global net increase in passenger numbers. Meanwhile, Europe and North America will experience slower demand growth at 2.3% and 2.7% per year, respectively.
However, the gap between passenger numbers and aviation fuel demand will only widen as sustainable aviation fuel (SAF) gains momentum. While aviation fuel is expected to remain the most resilient part of the refined oil barrel in the coming years, SAF will play a crucial role in decarbonizing the aviation sector and displacing conventional jet fuel, according to S&P Global Commodity Insights.
Despite uncertainties surrounding the pace of SAF adoption due to uneven technological progress, policy support, and market dynamics, Commodity Insights estimates that jet fuel production will likely peak around 2035 at 7.8 million barrels per day, with SAF accounting for about 11% of the global aviation fuel mix. The contribution of SAF could then sharply increase to 36% of the global aviation fuel volume by 2050.
The recovery in aviation fuel demand post-pandemic has been significant, but the outlook depends on both the pace of decarbonization and the demand for air travel. While short-term demand stabilizes, the long-term successful adoption of policy-driven alternative fuels and other sustainable technologies plays a more critical role than ever in shaping demand.
"Although significant growth in air travel demand is expected in the coming decades, the introduction of more fuel-efficient technologies and operational improvements will help mitigate the impact on aviation fuel consumption," the S&P study states.
Since 2020, the average aircraft has also become more fuel-efficient as new models enter the global fleet. Next-generation models like the Airbus A320neo and Boeing 737 MAX consume 30% less fuel compared to older models. Further efficiency gains are on the horizon, with Airbus already considering an upgrade to the A320neo that would boost fuel efficiency by another 20-25%.
According to the author of the study, regulatory measures aimed at reducing carbon emissions, such as the International Civil Aviation Organization's (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), will also incentivize airlines to adopt more efficient technologies and alternative fuels.
Azerbaijan Airlines (AZAL) plans to acquire over 20 new-generation aircraft from Boeing and Airbus, including the Boeing 787 Dreamliner and the Airbus A320Neo. Since early 2023, AZAL has been operating three new Airbus A320neo aircraft, which have proven to be reliable and feature new-generation engines, improved onboard systems, and larger winglets. The addition of Boeing 787 Dreamliner aircraft to AZAL's fleet will allow the airline to expand its flight network on long-haul routes.