Airlines face jet fuel shortage at Japanese airports

  • Market: Oil products
  • 11/06/24

Airline companies are grappling to secure jet fuel at Japanese airports partly because of labour shortages in the country's logistics sector, and some foreign airlines have abandoned plans to open up new routes to Japan.

Korean Airlines (KAL) in May scrapped its plan to launch a new flight route from Seoul, South Korea to Obihiro airport in Japan's northern Hokkaido province, according to an Obihiro city official that spoke to Argus on 11 June. The city had anticipated an increase in tourists from South Korea with the opening of this new route, under which there was supposed to be two flights a week.

KAL scrapped the plan mostly because the airline cannot procure enough jet fuel at the airport on the back of limited domestic transportation, the Obihiro official added. Logistics have been affected by a driver shortage,which has been a major economic issue in Japan, especially after the country in April introduced a new law imposing an upper limit of 360 overtime working hours/yr for the land transportation industry.

Jet fuel is carried by lorry to the Obihiro airport after it arrives at a nearby major port, an official from the country's ministry of land, infrastructure, transport, and tourism (Mlit) told Argus. Obihiro had already been facing a driver shortage as the region's population is shrinking, the Mlit official added.

This is also part of a wider labour shortage problem in Japan as there is lack of fuelling staff at domestic airports nationwide.

Domestic vessels are also facing crew shortage problems as the aforementioned law was also imposed in 2022 on the maritime transportation sector, according to Mlit.

The number of voyages by domestic vessels carrying jet fuel between refineries and the country's major Haneda airport in Tokyo has fallen to around 15/month, down by 40pc after the country imposed the law, the Mlit official added.

The law initially did not have such a significant impact on jet fuel demand as the country was still under Covid-19 restrictions, with air travel limited at that time.

But jet fuel demand is likely continue rising, following an increase in foreign tourists visiting Japan after the pandemic. The number of foreign arrivals surged to 11.6mn during January-April, according to the Japan National Tourism Organisation, up by 72pc from the same period a year earlier.

Airlines are also becoming increasingly concerned as domestic vessels are also supposed to carry kerosine to Hokkaido around this time of year, as residents in the coldest part of the country will stockpile the fuel for the upcoming winter season. Using domestic vessels to transport jet fuel instead of kerosene is a controversial issue, the Mlit official added.

But there is enough jet fuel supply domestically, said the country's minister of trade and industry (Meti) Ken Saito on 11 June, reiterating that Meti along with Mlit and domestic refiners have been tackling the issue since March.

Japan's jet fuel stocks on 1 June totalled 5.18mn bl, according to the country's industry group Petroleum Association Japan, up by 6.4pc from the previous month.


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