Asia jet fuel demand slumps as airlines cancel flights


Several airlines across Asia have suspended flights to Wuhan, and some tour operators are cancelling trips to China.

SINGAPORE: Asian jet fuel demand is taking a beating from an outbreak of a flu-like virus in China that has led airlines to cancel scores of flights during the peak Lunar New Year travel season.

Jet fuel prices have dropped and refiners’ profits for the product have slumped to the lowest in more than 2½ years, while industry analysts are cutting their 2020 forecasts for jet fuel and overall oil demand.Airlines and passengers are on guard against the respiratory coronavirus that originated in the central Chinese city of Wuhan, so far killing more than 100 people in China and spreading to more than 10 countries, including France, Japan and the United States.

Passengers have called off travel plans for the Lunar New Year holiday, prompting airlines to offer refunds.

“Market participants, already wary of slow demand growth from last year, are weighing the effects on global oil demand of the lockdown in several cities in China, and likely reduced travelling in the broader Asia-Pacific region, ” Barclays analyst Amarpreet Singh said in a note.

During the 2002-2003 outbreak of SARS – also caused by a coronavirus that originated in China and which killed nearly 800 people globally – air passenger demand in Asia plunged 45%.

If air passenger traffic in China were to decline by half in the first quarter of this year, it would likely lead to a 300,000 barrels-per-day decline in jet kerosene demand from China from a year ago, Barclays analyst Singh said.

Several airlines across Asia have suspended flights to Wuhan, and some tour operators are cancelling trips to China.

“Flight departures from the top five biggest Chinese airports fell by nearly 800 flights this past weekend relative to (the previous) weekend, while traffic in the five airports closest to Wuhan have fallen by nearly 50% over recent days, ” analysts at RBC Capital Markets said in a note. — Reuters

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