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 affect on Indian airlines, as Aviation Turbine Fuel (ATF) takes around 40 per cent 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).
"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 USD 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 USD 182 billion, which will represent 22.1 per cent of average operating costs.
In 2019, the fuel spend of the world airline industry was USD 180 billion, which was 23.5 per cent of average operating costs. In 2020, the world airline industry would consume 371 billion litres of fuel, up from 359 billion litres 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 per cent 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 per cent in 2020 as deliveries of new aircraft grow.