Japan Airlines said Aug. 20 it will raise the number of weekly round-trip flights to Singapore in September to three from two, as well as resuming two one-way flights a week to Australia, indicating support for its jet fuel demand in coming months.
However, a JAL official told S&P Global Platts its jet fuel loadings would be lower than expected in August and September due mainly to fewer domestic flights because of a recent uptick in the number of coronavirus cases in Japan.
The rise in flights to Singapore follows a recent agreement between Japan and Singapore aiming to start "business track" entry, which, from September, would allow to some business to be conducted in the 14 days immediately after entry.
In Singapore, with the exception of SafeTravel Pass holders and visitors with son approval letter of entry from relevant agencies in Singapore, all short-term visitors have so far been barred from entering the country, according to the Immigration Checkpoints Authority of Singapore.
The extra international flights from September will support JAL's jet fuel demand as long-haul flights burn more fuel than domestic flights.
However, JAL has revised down its planned jet fuel loading volumes for the summer holiday months of August and September, following recent suspensions of domestic passenger flights because of an uptick in the number of coronavirus infections.
JAL now plans to load 25% more jet fuel in August from July, down from a 37% month-on-month rise it had expected on July 17, the company official told Platts.
JAL also now expects its jet fuel loading volumes in September to be 21% less than in August, a steeper drop than the 12% forecast on July 17, the official said.
JAL said Aug. 20 was cutting domestic passenger flights over Aug. 26-31 as well as for September 1-16 due to lower-than-expected demand as a result of the rise in coronavirus cases.
JAL now sees its August 26-31 domestic flight cancellation rate at 42% and 43% for September 1-16.
Supporting jet demand, prices
The imminent resumption of cross-border travel looks to provide some much-needed support to jet fuel demand after it was hammered by the coronavirus pandemic, industry sources said.
The eased travel restrictions would bolster jet fuel demand to a certain extent, and "may be beneficial for smaller countries, like Singapore and Hong Kong, which have no domestic air travel to rely on," a Middle Eastern trader said.
"That said, we cannot assume that travel demand is going to spike because of the [government-led] arrangement," the source said. "Although there is going to be some impact, but we cannot discount the fact that jet [fuel] is oversupplied at moment. Consumer confidence in traveling by flight matters too. In my opinion, the main bulk of demand stems from long-haul flights."
Regional jet fuel prices have been boosted by expectations of greater travel.
On Aug. 19, the jet fuel/kerosene cash differential rose 21 cents, or 26.9%, on the day to minus 57 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessment. The cash differential had previously tumbled to a near two-month low of MOPS minus 83 cents/b on Aug. 17, Platts data showed.
There was a similar uptick in the derivatives market, where the front-month September/October contango narrowed to 88 cents/b at the Asian close Aug. 19, from 92 cents/b on Aug. 17, Platts data showed.
