Regaining Altitude
Assessing the ongoing recovery in aviation activity and jet fuel demand with high-frequency nowcast estimates
This post is my first piece of nowcasting to assess the recovery of global jet fuel demand using real-time, daily observations of aviation activity. Readers will know that I’ve started by laying a strong foundation of historical data analysis and context. Going forward, my development plan also includes building out my nowcasting models en route to solid data-driven forecasting.
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Global jet fuel demand, today, is estimated to sit just above 6.2 MMbpd vs a January 2019 average of 6.9 MMbpd and appears set to continue rising markedly into the 2023 summer flying season
Global aggregate air traffic has more or less recovered already to the level last experienced in 2019, however, and the discrepancy versus still-lagging jet fuel demand reflects continued efficiency gains experienced across the global aviation fleet.
Going forward, air travel and jet fuel demand appear to have substantial momentum as we begin 2023 and are both likely to set fresh all-time highs later this year or next on pent up demand and the recovery of still-beleaguered international travel; however, longer-term questions remain concerning the post-COVID structural growth trend in air travel demand (do we really just pick up where we left off?) and jet fuel demand has a few years of cumulative pandemic-era fuel economy gain headwinds through which to digest.
The pandemic shocked global oil demand to the extreme but the extent of both the initial carnage and residual damage has varied widely between specific end-use petroleum products. Unsurprisingly, the jet fuel that underpins commercial aviation was hardest hit by lockdowns, border closures, etc. in what was easily the single-largest disruption in the airline industry’s history. Compared to consumer fuel segments like gasoline and diesel, jet fuel faced a far steeper initial collapse—upwards of 80% in many countries around the world—and has been relatively slower to recover. Thanks to high-frequency mobility data that proliferated in the pandemic era, we can see the full extent of this 2020 collapse in gruesome detail and track the lurching, ongoing recovery in aviation activity.
(For anyone interested in an even more granular view of country-level flight activity, I’ve used data from Airportia throughout this report and they have a fantastic Flight Monitor dashboard available here.)
Unless something derails 2023, we are now poised to see global aviation activity re-reach all-time highs through this summer, which should yield nearly all-time high demand for jet fuel. I estimate that global jet fuel demand is sitting around 6.2 MMbpd as of late-January 2023 (see chart above), based on reported jet fuel consumption data through November and daily reported air traffic data. These estimates suggest that jet fuel demand has nearly recovered; jet fuel demand remains roughly 10% lower than the seasonally comparable January 2019, but global air traffic has more-or-less entirely recovered on a seasonal basis. So, what’s going on here? The crux of the divergence is the cumulative trend of ongoing fuel efficiency gains that continued to chug along even as the industry was roiled by the pandemic, and volatility through the initial recovery disguised the full extent of these fuel economy gains. Of course, these estimates are inherently imperfect and you can find more discussion about my assumptions in the Data Note at the end of this report.
Let’s dig into why aviation was, prior to COVID, one of the most reliably steady sources of petroleum product demand growth, how the pandemic-era recovery has diverged between major consuming regions, and get a better appreciation for how the industry’s fuel economy gains have made it much harder to hit those 2019 jet fuel demand numbers.