New Delhi More Indians are travelling via air for business and leisure, a development that has propelled jet fuel demand to record highs in the world’s fastest-growing air passenger market. The trend is likely to continue in FY25 and beyond.

Domestic air traffic hit a record 154 million in FY24, and the rally is expected to continue in the current financial year, aided by rising disposable incomes, increasing airport infrastructure, and airline operators’ stable cost structures, India Ratings & Research (Ind-Ra) projects.

ATF consumption during FY24 increased to 8.3 million tonnes (MT) approaching the previous high of 8.2 MT consumed during FY19 driven by air traffic in India, Ind-Ra Associate Director Bhanu Patni told businessline.

“Domestic air traffic during FY24 increased to 154 million surpassing the previous high of 142 million during FY20. Domestic traffic is expected to increase further on account of improvement in airport infrastructure, stable cost structure of airline operators and in general improvement in disposable income in the country driving leisure travel. IND-Ra expects 4-5 per cent increase in consumption of ATF in India,” she projected.

More air travel

Paras Pal, a Senior Analyst at Ind-Ra, said “Before looking at jet fuel demand in FY25, we have to look at the kind of capacity addition domestic airlines are undertaking. If you correlate this with their delivery schedules, we see that this number is expected to increase.”

He explained that the trend of people moving outdoors is gaining traction and has become “quite prominent” after the Covid-19 pandemic.

“We see that this demand will directly correlate with airline ticketing demand that we see. Over the next few years, we will see ATF demand increasing. For instance, if we just talk about numbers, 615,000 tonnes was the monthly demand at the start of last year, and by the close, it was around 750,000 tonnes. These numbers correlate to the kind of airline demand that we are seeing, and it is likely to stay till the time this entire shift in travel pattern of people moving domestically is there,” he added.

India consumed 758,000 tonnes of ATF in March 2024, the highest on record.

Patni emphasised that growing access to air travel supports higher jet fuel demand.

“This is also supported by the increasing accessibility, I mean, from wherever you see new airports getting built up and all of those things on the infrastructure side are also happening, which is also leading to the increase in travel domestically. So that accessibility factor is also something that’s playing a big role in terms of how people are now choosing to travel,” she added.

Higher exports

India’s aviation turbine fuel (ATF) exports increased to 8.6 MT during FY19, surpassing previous high of 7.4 MT.

“Export demand for ATF is driven by air traffic picking globally post Covid and export demand from European countries in also supported by Russian refineries going offline after Russia Ukraine conflict. IND-Ra expects export demand to increase by 4-5 per cent during FY25,” Patni noted.