Plane speaking: IEA says aviation fallout will hold back oil recovery

Plane speaking: IEA says aviation fallout will hold back oil recovery
The coronavirus crisis will leave lasting scars on the airline industry, slowing oil’s revival, according to the IEA. (Reuters)
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Updated 17 June 2020

Plane speaking: IEA says aviation fallout will hold back oil recovery

Plane speaking: IEA says aviation fallout will hold back oil recovery
  • The IEA estimates that demand for jet fuel and kerosene will fall by 62 percent in the second quarter from the same time last year

PARIS: Demand for petrol and diesel is set to heal by the end of the year, but the coronavirus crisis is likely to leave scars on the airline industry and the oil market, the International Energy Agency (IEA) said on Tuesday.

The IEA continued to upgrade its forecasts for the oil market in its latest monthly report as more countries ease lockdown measures that have pushed the world economy into its greatest crisis since the Great Depression.

It now expects 2020 oil demand to come in at 91.7 million barrels per day (mbd), a drop of 8.1 mbd from last year. That is an improvement on its May estimate an 8.6 mbd reduction and the April estimate of a 9.3 mbd drop.

The IEA noted that year-on-year consumption figures have been rising steadily since “Black April” when the lockdown measures were at their peak. The 21.8 mbd drop in April was pared to an estimated 18.6 mbd reduction in May. The drop is expected to narrow to 12.9 mbd in June and 7.4 mbd in July.

The IEA pointed to a number of encouraging signs of a recovery.

“For demand, increased mobility indicators in the March-May period provided support: in particular, China’s strong exit from lockdown measures has seen demand in April almost back to year-ago levels,” it said.

It also noted a strong rebound in India in May, although demand was still well below last year’s level.

“In the second half of the year the easing of lockdown measures in many countries should provide a boost,” it said.

The IEA released its first forecasts for 2021, when it sees demand rising by 5.7 mbd “as activity begins to return to normal across vast swathes of the economy.”

That will bring global oil demand back up to 97.4 mbd, which it noted will still be 2.4 mbd below the 2019 level, which it said “is largely explained by the dire situation of the aviation sector.”

The IEA estimated that demand for jet fuel and kerosene will fall by 62 percent in the second quarter from the same time last year, and only slowly recover as air travel is likely to be held back by restrictions and lower demand until a vaccine is found.

“Unlike gasoline and diesel, which are likely to recover to close to pre-crisis levels by the end of 2020, the outlook for jet fuel is more uncertain,” it said.


German startup to help Saudi hotels utilize empty spaces

German start-up NeuSpace, established during the coronavirus disease (COVID-19) pandemic to help hotels overcome a slump in occupancy rates, is now working in Saudi Arabia. (Shutterstock/File Photo)
German start-up NeuSpace, established during the coronavirus disease (COVID-19) pandemic to help hotels overcome a slump in occupancy rates, is now working in Saudi Arabia. (Shutterstock/File Photo)
Updated 21 January 2021

German startup to help Saudi hotels utilize empty spaces

German start-up NeuSpace, established during the coronavirus disease (COVID-19) pandemic to help hotels overcome a slump in occupancy rates, is now working in Saudi Arabia. (Shutterstock/File Photo)
  • COVID-19 pandemic has brought slump in average hotel occupancy rates in Saudi Arabia

RIYADH: A German start-up established during the coronavirus disease (COVID-19) pandemic to help hotels overcome a slump in occupancy rates is now working in Saudi Arabia.

NeuSpace aims to assist operators in coming up with new ways to generate revenue from their empty spaces.

Anne Schaeflein, a co-founder of the Dusseldorf-based company, told Arab News: “For hotel properties still in the completion phase, we feel it is best to evaluate the perspective, and to diversify pre-opening.

“To be empathic to the existing (or planned) infrastructure and environment of the location, we run a feasibility study and look at how the space could be best used from an ROI (return on investment) as well as community perspective. Turning function spaces into day nurseries, delis, and bakeries,” she said.

Anne Schaeflein, Collaborative Founder NeuSpace. (Supplied)

According to the company’s website, it aims to address the needs of hotel investors, operators, and the wider community surrounding the property.

“We deliver quick solutions to retain some of the hospitality jobs, and add others, and offer attractive living space for communities, all within one to four months, depending on the individual projects,” the company said.

A report in November by global hotel data analysis company, STR, found that the average occupancy rate in Saudi Arabia was 34.7 percent, down 38.7 percent on the previous year. As a result, the average revenue per available room fell 35.5 percent year-on-year to SR172.70 ($46.05).

Looking to the future, real estate consultancy firm, Colliers International, has forecast that average occupancy rates in Riyadh and Alkhobar will be 55 percent, 51 percent in Jeddah and Madinah, and 37 percent in Makkah.

On innovative solutions, Schaeflein said the startup’s concept was formed around the key pillars of value preservation, creating new housing space, and innovative housing concepts.

She pointed out that the company looked at how areas such as roof gardens or social spaces could be used by the wider community, or how pools and spas not being used by guests could be utilized by local residents.

NeuSpace also studies how back-office services and facilities could be offered to residents to better utilize staffing levels. This could include offering dog-minding services, turning rooms into office or retail areas, or renting out restaurant and entertainment spaces when footfall was low.