Singapore: India's jet fuel demand is expected to succumb to the latest headwinds -- the mutant COVID-19 variant -- as many states in the country impose lockdowns and countries worldwide ban flights, or restrict movements, to and from the South Asian nation to curb the spread of the variant.
Register Now "ICRA [Investment Information and Credit Rating Agency] continues to maintain a negative credit outlook on the Indian aviation industry. The outlook reflects ICRA's view that the financial performance of Indian airlines is likely to remain weak in the near-to-medium term amid weak air traffic," the agency said recently.
The US, UK, Singapore, Kuwait, Canada, France, Australia are among some of the countries that have recently banned flights from India or imposed other restrictions due to the unprecedented spike in COVID-19 cases in the country as it battles an acute shortage of oxygen cylinders and medical supplies, including vaccines.
Reflecting the recent situation, a twitter post by the Directorate General of Civil Aviation, Government of India, on April 30 said the suspension of scheduled international commercial passenger flights to or from India had been extended till May 31. However, international travel may be allowed on selected routes by the authorities on a case to case basis, it added.
India's jet fuel demand registered a 12-month high of 475,000 mt in March, rising 9.7% from a month ago, according to the latest data from the Petroleum Planning and Analysis Cell.
The PPAC data released April 12 showed that India's jet fuel demand was last higher in March 2020, at 483,000 mt. Year-to-date, India's jet fuel demand registered at 1.35 million mt, down 561,000 mt, or 29.35%, from a year ago.
While heightened demand was attributed to rising domestic flight capacity in the country, domestic flights could become a casualty too, should a nationwide lockdown come into play, sources said.
"I think demand outlook from India should be lower moving ahead," a trading source said.
"April was a bad month as they saw a spike in infection rates, so maybe [international] flights will be impaired, but on the domestic front, I think we should also see lower numbers as the death toll is rapidly rising, and I think people will think twice about traveling and contracting the new variant of the virus," he added.
04/05/21 Ng Jing Zhi & Surabhi Sahu/S&P Global
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