Global oil prices set to be relatively low in 2020 on weak global demand; airlines fuel bill will decline to $182 bn: IATA

  • Analysts expect oil inventories to rise early next year as a result and this is likely to keep oil prices stable

  • In 2019, the fuel spend of the world airline industry was $180 billion, which was 23.5% of average operating costs

  • In 2020, the world airline industry would consume 371 billion liters of fuel, up from 359 billion litre that was used in 2019

Geneva: Oil prices are set to stay relatively low during 2020 as the supply from the non-OPEC countries will remain plentiful and global demand weak, global airlines body IATA said on Wednesday.

Oil prices have a massive effect on Indian airlines, as Aviation Turbine Fuel (ATF) takes around 40 percent of the total revenues of an air carrier in India.

"Oil prices look set to stay relatively low over the next 12 months. Supply, particularly non-OPEC, is plentiful and demand is weak," said an economic outlook presented here by Brian Pearce, chief economist, International Air Transport Association (IATA).

 Global oil prices set to be relatively low in 2020 on weak global demand; airlines fuel bill will decline to 2 bn: IATA

Representational image. Reuters

"Analysts expect oil inventories to rise early next year as a result. This is likely to keep oil prices stable and our assumption for 2020 is an average price for Brent crude of $63 per barrel," the economic outlook added.

As per the IATA forecast released on Wednesday here, the airlines fuel bill will decline in 2020 to $182 billion, which will represent 22.1 percent of average operating costs.

In 2019, the fuel spend of the world airline industry was $180 billion, which was 23.5 percent of average operating costs.

In 2020, the world airline industry would consume 371 billion liters of fuel, up from 359 billion litre that was used in 2019.

"Fuel us such a large cost that it focuses intense effort in the industry to improve fuel efficiency, through replacing fleet with new aircraft, better operations and efforts to persuade governments to remove the airspace and airport inefficiencies that waste around 5 percent of fuel burn each year," said IATA's economic outlook for 2020.

According to the IATA forecast, the fuel efficiency - in terms of capacity use (available tonnes kilometres) - will improve by 2.1 percent in 2020 as deliveries of new aircraft grow.

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Updated Date: Dec 11, 2019 19:30:08 IST