At least three domestic airlines are on the verge of shutting down operations, following sharp increase in the price of aviation fuel, also known as JET-A1.
The Vice Chairman of Airline Operators of Nigeria, AON, Mr. Allen Onyema, raised the alarm yesterday at the ongoing maiden edition of Federal Airports of Nigeria, FAAN, National Aviation Conference, FNAC, with the theme, ‘’Advancing the Frontiers of Possibilities for Safe, Secure and Profitable Air Transport,’’ in Abuja.
Onyema, who refused to name the airlines, said aviation fuel challenge was not limited to Nigeria alone, but emphasised that the case is made worse in Nigeria because of the sharp fall in the value of the naira against major currencies, especially the dollar.
He said: “That is why we ran to the government and the Federal Government has given us about 10,000 metric tonnes of fuel at the cost of N580 per litre in Lagos and about N607 per litre outside Lagos.
“This is not the only issue. Since the COVID-19 crisis, most airlines all over the world, including Nigeria have not recovered except those whose countries have injected so much funds to assist them. This is no body’s fault. It just happened. Government has tried its best by giving us this aviation fuel. This aviation fuel can take airlines out, not only in Nigeria but everywhere in the world.
“Some airlines outside Nigeria have closed down because of the effects of rising aviation fuel. If these things are not addressed in Nigeria, it can affect the bottom line of all airlines in Nigeria.
“We have come to realise that there is little or nothing the committee set up can do because this is as a result of foreign exchange and price of oil all over the world now. The fuel marketers will sell according to what they are paying. The cost of aviation fuel has increased, even in London and every other country. Our own is worse because of the increase in foreign exchange.”
Recall that the Airline Operators of Nigeria, Nigeria National Petroleum Company, Limited, NNPC, Central Bank of Nigeria, CBN, and other relevant regulators, had reached an agreement last month to end volatility in the price of Jet A1.
The parties agree that six million litres of aviation fuel would be provided at N480 per litre for three months in what looked like FOREX subsidy, pending when the carriers would be granted licence to import the commodity.
The agreement was reached at the meeting summoned by the House of Representatives leadership to avert airline operators’ planned shutdown after aviation fuel reached an all-time high of N700 per litre.
However, an AON official, Ewos Iroro, in an interview with Vanguard yesterday, stated that the federal government’s intervention was not sustainable for the industry at a time like this.
He said: “Jet A1 fuel is very expensive at the moment. The last reviewed price was N714 for a litre, and that is why we are still engaging with the federal government.
“The federal government, through the NNPC, has about 10, 000MT available to airlines, which was discussed at the stakeholders meeting we had in May 2022.
“This price is not sustainable, we cannot keep buying aviation kerosene at such price, and it is a challenge for everyone. The aviation industry is very important, and I believe the federal government is working of finding a lasting solution to this.
Similarly, the Executive Director and Chief Operating Officer, United Airline, Osita Okonkwo, noted that the current hike in the price of aviation kerosene was putting the operators in a difficult situation.
He said: “We are battling to survive at the moment because of this development. Our businesses are really challenged by this development. Although, there is an intervention on the development by the federal government, but it is not sustainable.
“Today, we had our first lifting of product from the federal government intervention, but we got the product at N585 per litre, but the market price remains above N700 per litre.
“This price is for Lagos alone, outside Lagos, the addition of transportation amongst others pushes the price higher. Operators are just holding out to do the best they can, for the travelling public, but beyond that, it is not sustainable.
“Hopefully, this intervention will last for about two weeks, after that, we hope additional intervention will come and we will see what happens from there.
“Within the supply constraint that we have, there is no much the government can do, it is just for the marketers and NNPC to continue to do their bit to manage the situation.
“The next thing is for the operators to do the commercial things they need to do. If they need to increase prices to sustain themselves in the business, that will be a private decision to make.’’
It’s beyond our control
The Executive Secretary, MOMAN, Clement Isong, noted that, the current development could not be addressed at the moment.
He said: “The price of crude oil has surpassed $120 per barrel; the price of diesel has gone up to N730 per litre.
“I do not know of what anybody can do at the moment to push down the price. Nigeria is currently broke, and in situation like this, the country borrowing money and subsidizing petrol which is also not sustainable. This development is, indeed, out of our control.”