Domestic airlines face hard times as liter of aviation fuel increases to N714

Indications have just emerged that at least three Nigerian domestic airlines may shut down any time from now following the unbearable hike in the price of aviation fuel, otherwise known in aviation circle Jet A1.

This is just as Airline Operators of Nigeria (AOC) has raised the alarm of how the price of the commodity has further increased to N714 per liter in some airports.

The present increase in the price of aviation fuel according to the airlines will further complicate issues regarding domestic airline business in the country.

The Vice-Chairman of the airlines, Mr Allen Onyema declared this at the ongoing maiden edition of the Federal Airports Authority of Nigeria (FAAN) National Aviation Conference (FNAC) in Abuja with the theme: ‘Advancing the Frontiers of Possibilities for Safe, Secure and Profitable Air Transport’.

Onyema therefore warned that if the federal government fails to intervene in the precarious situation that more airlines may shutdown operations in the coming months.

Equally, other companies in the Nigerian aviation industry including: aviation fuel marketers, airline operators, ground handling companies and catering services among others have lamented the scarcity of foreign exchange and the collapse of naira against major currencies.

The AON Vice-Chairman though did not reveal the names of the troubled airlines that may soon fold up in the coming months, but information making the rounds is that the affected airlines are facing difficulties in their operations due to aviation fuel prices and other challenges.

While acknowledging the fact that the aviation fuel challenge was not peculiar to Nigeria alone, Onyema emphasised that “ours is made worse because of the slump of naira against major currencies, especially the dollars.”

According to Onyema, in order to address the challenge, though the Federal Government had approved 10,000 metric tonnes of aviation fuel to the airlines, the carriers were yet to access it even as he expressed hope that the airlines may start lifting the 10,000 metric tonnes of aviation fuel from Thursday, June 16th 2022.

Lamenting on how about 16 months ago, a liter of aviation fuel which was sold for N200 per litre, has now skyrocketed to over N700 per litre today in the local market.

His words: “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 from COVID-19, except those whose countries have injected so many funds to assist them. This is nobody’s fault. It just happened. The 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.”

Besides, other players like aviation fuel marketers, ground handling companies and catering services in their separate presentations, complained about the state of infrastructure at some of the airports, but said FAAN in the last three years had done a lot to improve the facilities at the aerodromes.

On the occasion, the Vice-Chairman, Aviation Ground Handling Association of Nigeria (AGHAN), Mr Bashir Ahmed, decried the level of infrastructure at most airports, saying that it limited the turnaround time of operators at the apron.
According to Ahmed, the scarcity of foreign exchange further reduces the operations and expansion of ground handling businesses in Nigeria.

Appealing to the Federal Government to take a critical look at the challenges in the industry and devise a means to addressing them, Ahmed commended FAAN for installing two explosive detective scanning machines each at the warehouses of the ground handling companies in Lagos, saying this had gone a long way to enhance the performances of the handling companies in the industry.

“We still want to appeal to the Federal Government to grant waivers to handling companies on importation of ground handling equipment. Also, we need more scanning machines by FAAN to further improve our operations and create seamless services for our clients and the airlines.

“The Nigerian Civil Aviation Authority (NCAA) has also done well with its regulation of the industry. This shows that the Nigerian aviation industry is changing,” Ahmed declared.

A representative of aviation fuel marketers at the conference, Mr John Abegunde appealed to the government not to step into the commercial-related issues in aviation fuel supply, warning that this foremost jeopardizes safety in the system.

Abegunde explained that FAAN and the Nigerian Civil Aviation Authority (NCAA) and other government agencies should show more concern about the importance of the aviation fueling requirement.

His words: “We should be wary of portfolio investors who come in when there are opportunities in the sub-sector, but moves out with their briefcases immediately there is a challenge.”

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