EU eyes easing nonessential air travel in boost for jet demand

London — The European Commission is considering allowing nonessential flights from outside its member state territory for travelers vaccinated against COVID-19 amid hope of firming demand in the jet fuel market, as holiday season looms.

The commission is proposing member states allow people who have received an EU-approved vaccine to enter the economic bloc, the EU said in a statement May 3. Under the proposal, travelers arriving in the EU from countries with a "good epidemiological situation" and those who have received the last recommended dose of an EU-authorized vaccine would given entry, the European Commission said.

Separately, the UK's travel task force is expected to reveal this week this list of "green countries" for which a quarantine will not be required upon return when leisure travel resumes on May 17.

Market participants have said jet fuel demand remains weak but is seen improving in May and is expected to improve further in June before ramping up more significantly in July. However, even if leisure travel resumes in the summer within Europe and between Europe and the US, the number of long-haul flights will still be very limited compared with pre-COVID-19 levels and thus jet demand will be far from a full recovery compared with 2019 volumes.

Platts Analytics expects jet fuel and kerosene demand in Western Europe to recover by 246,000 b/d this year to average 971,000 b/d after more than halving in 2020. Due to expected behavioral changes in the wake of the pandemic and the growth of alternative aviation fuels, jet demand in the region is not expected to recover to 2019 level of 1.5 million b/d before 2040.

European commercial flights rose in the week to May 4 by around 5% but remained the worst-hit globally at some 71% below 2019 levels for this time of the year, according to activity data from Radarbox.com. By contrast, airline capacity in the US and South Asia are at about 30% and 40% below pre-pandemic levels respectively.

Rising jet prices

NWE CIF jet fuel cargoes rose $9.75/mt on the week to $557.25/mt April 30, while being assessed at a $24/mt premium versus front-month ICE LSGO futures, up from a $22.75/mt premium April 23, S&P Global Platts data showed. On April 28, CIF NWE cargoes hit a fresh three-and-a-half-month high of $26.50/mt over the front-month ICE LSGO.

While demand is expected to increase so too is supply as soon as crack spreads rise relative to other refined products, sources said.

Member states could also extend air travel permission to those inoculated with a vaccine granted Emergency Use Listing (EUL) by the World Health Organization in a further boost to aviation fuel demand.

This inoculation-based easing should be facilitated once the planned Digital Green Certificate becomes operational. Until the Digital Green Certificate is operational, Member States should be able to accept certificates from non-EU countries based on national law, the EU said.