Aviation fuel price crisis

ec untitled x
ec untitled x

By Cosmas Omegoh,Christy Anyanwu and Agatha Emeadi

Perhaps, this is the worst of times to run an airline in Nigeria. In the face of soaring cost of Jet-A1 or aviation fuel, which powers aircraft, virtually every domestic airline has been incapacitated.

With the price of aviation fuel hovering between N600 and N700 in places where   it can be found, the airlines currently operating in the country can no longer pay, just as they can no longer cope with the scarcity of the product. And they are not pretending they can.Untitled9 25

Become a partner with USA companies, promote their offers and get paid in US Dollars weekly, Nigerians are earning about $465 weekly. Click here to see how you too can get paid .

Lately, the airlines were compelled to make uncommon move to survive by forming a Spring Alliance in order to sustain their operations and by extension assist the Nigerian flying public.

But they were quick to tell the citizenry – almost to the point of lamenting – that at the rate aviation fuel was being sold, a one-hour flight ticket might be soon be sold for N120,000. Or in the alternative, the government should hand over to them a licence to start importing the fuel by themselves.

The aviation fuel stress 

When Sunday Sun launched out to feel the pulse of the industry’s players on the ongoing aviation fuel debacle, the responses were overwhelming, just as they were revealing.

“Aviation fuel price challenge has tripled more than expected,” Comrade Ocheme Abbah, secretary general, National Union of Air Transport Employees (NUATE), recalled.

He said:“Even though there has always been importation of aviation fuel, but this situation is just hard to explain, as nobody has been able to give a comprehensive account for the scarcity.”

“We can also understand that crude oil price has shut up because of the Ukraine-Russia war; so the cost can be explained; but the scarcity is what one cannot understand.”

While at the airport, our correspondent caught up with a pilot who could not fly because of the unending aviation fuel crisis.

He expressed his frustrations thus:    

 “These days have been stressful for flights throughout the country.

 “There is no Jet A1 anywhere, and wherever it is found, the price has gone through the roof.

 “In January 2021, we bought aviation fuel at N190 per liter; at the end of the year we paid N360; that is almost double. By the end of February 2022, it had gone beyond that.

“Just over a week ago, the price hovered   around N415 and N440. With the recent development, it has gone to N579 per liter in Lagos and N599 in Abuja and Port Harcourt, then N607 in Kano; and that is if it is available.

“Currently, the airlines are almost grounded. You cannot find the fuel and where one finds it, you have to decide if it is worth paying for at those ridiculous rates.”

Airline importing fuel hard to explain

For Comrade Abbah, the request by airline operators to import fuel is difficult to understand and explain.

He said: “What is going on even with the blame game is hard to understand. Currently, the airlines themselves want to take up the responsibility of importing aviation fuel; but how that will work is what one cannot defend.

“The Nigerian National Petroleum Corporation (NNPC) has agreed to assist them to import aviation fuel, but where would they store it? How that will work out is difficult, except they join hands.”

Govt giving airline operators opportunity for blackmail

But there is a twist to the ongoing aviation fuel price rise saga, with the General Secretary of Association of Nigerian Aviation Professionals (ANAP), Abdulrazaq Saidu, saying that the airline operators are finding an avenue for cheap blackmail.

According to him, the government has to be blamed “primarily for refusing to let our refineries function. In spite of the huge billions of naira being invested over the years, we see that because of sabotage things cannot work. The government knows the people, and yet cannot do anything to them. Nobody has been punished, nobody has been sanctioned. We continue to import, (petroleum products); it’s a shame on the government.”

But he insisted that the airlines are only feasting on the crisis, accusing them of other sins.

He also asked them to explain what they have done with the surplus profit they made when the going was good.

“It is the government that gave the airlines the opportunity, and the audacity to give them stress; it’s an insult based on ineffectiveness and lack of political will of   government to get our refineries functioning. That is the crux of the matter.

“Talking about giving the government stress   – that they (the airlines) will increase airfare… they knew from the beginning that aviation business is capital intensive. And that anybody who is floating an airline must do that in line with Nigeria’s standard practices, in line with the regulatory body of the country.

“But when aviation fuel was cheap, they were carrying full loads every day. Now, where is the money they made, the surplus value they had?

“The money they made should have been reinvested in the running of the airlines. Sadly, many of them don’t know how to run air transportation business. What they often do is to divert the money to other businesses,” he noted.

He also accused the airline operators of failing to plan, saying “by the time the aviation business begins to make demands on them, they find it difficult to pay, they continue to owe.

“Now, the worst of it all is that they were spending the five per cent service charge which does not belong to them. That   belongs to the government. They are supposed to pay that to NCAA, but they don’t pay. They consume that. We say no to that. That it is stealing public funds. They are supposed to pay that money to NCAA; they don’t pay until we start closing up on them.”

To him, the airline operators are not sincere in their dealings, insisting that “they are using the situation at hand as a political blackmail. How can they say they will be charging N50,000 for an hour flight from Lagos to Abuja due to fuel shortage? What about the time when fuel was cheaper?

100% Natural Herbs to Finally End Premature Ejaculation, Weak Erection and Small Manhood. >>>Click Here for Details.

“Do they consider that their fares have not been stable? They jack them up as they like; they bring them down as they like. They increase them again the way they like, and bring them down a bit again. They have not been controlled; sadly, the regulatory body that is supposed to put checks and balances has not been there because when it wants to do that, they get order from above, maybe from Aso Rock to stop the body. All you hear is leave them, leave them, leave them! That is the order we get on this job.”


Airline operators like cheap labour

Saidu also accused the airline operators of oppressing the labour force in their establishments.

“We have a board of airline regulators. But they are saying they are Airline Operators of Nigeria (AON). Who are those people? Most of them there don’t even have an airline. It is only a few of them that have an airline; and those of them who have airlines operate according to their will. They like cheap labour. How many of them have sent staff for training as a pilot, or to be trained as professionals who will come and work for them?

“They have to invest; they don’t allow workers to belong to unions; they don’t want them to talk about their condition of service, whereas that is the law.”

Rising aviation fuel and proposed airfare hike

Abbah is unhappy that airfares have already gone up; and that is more than 30-40 per cent of the cost of flight.

“Some airlines are flying because they are able to sort themselves out, but flights are being delayed and cancelled as a result of aviation fuel scarcity.

“Again, there is also an alliance among the airlines; some that cannot fly would transfer their passengers to other airlines that are able to fly.

“The present cost of ticket has seriously reduced the number of passengers, so if some cannot get a full flight because of fuel, they transfer their passengers to other airlines that can get full load and buy the exorbitant fuel to operate,” he said.

N50,000 hike cheap compared to dollar

In his own remark, Captain John Ojikutu (rtd), former commandant, Murtala Mohammed International Airport, Lagos, noted that at the current dollar-naira exchange rate, it is cheap to pay N50,000  per passenger seat on an airline.

“In 1990, when I was at the airport, there was a policy in FCAA then for the airlines to factor in their tickets in dollars, because they were carrying passengers at fares ranging between N3,800 and N4,000. Then, the dollar was exchanging for N40. Now, when that dollar had risen above N400 and tickets were sold at between N26,000 andN30,000, I said that was wrong; they (airlines) could not make a head way.”

What fare increase means for airlines

Ojikutu was of the view that “out of five million passengers (being carried by various airlines), about 3,000 to 4,000 are regular passengers which include government officials, business men and women, politicians; so, if one million passengers were paying N25,000 and now 500 passengers are paying N50,000, the airlines are not losing anything. Some would carry 35 passengers and take off, while some will wait for full flights and that is where delay and cancellation of flights start from.”

Fare increase will lower patronage  

Saidu predicted that if the airlines increase their fares, passenger patronage will continue to go down as is being experienced.

“Let the few money bags fly. Let them bear in mind that you can’t be operating an airline without full capacity. If they do, they will be at a loss because people will find other means of travelling. We have railway, water  among others,” he pointed out.

Fuel price increase don’t affect international flights

Saidu disclosed that the international flights do not have problem with the ongoing aviation fuel challenge.

According to him, “they may fuel in Ghana; they have their flights and route schedules. Their own is to bring in the passengers. They can buy fuel in neighbouring countries; some will fill their tanks in their home countries; they pick up the fuel that will take them to and from their destinations.”

Equally, Prince Supo Atobatele, former general manager, Nigerian Airspace Management Agency (NAMA), agreed that the foreign airlines are not feeling the heat.

“This isn’t affecting foreign airlines,” he said “because most of them over the years have been picking fuel from countries like Togo and Ghana. They found out that buying fuel there is cheaper than buying in Nigeria.”

He regretted that “domestic airlines cannot travel to Accra to pick fuel and come back. Aside fuel, these operators have to pay other taxes like VAT, airport charges, and other operational costs. Passengers should be prepared to pay more because they are not in business to make losses.”

He tasked the government to reactivate the moribund refineries in the country so that there will be fuel for everyone to buy.

Fuel takes 70 per cent of airlines operational cost  

At the same time, Prince Atobatele is unhappy that the scarcity of aviation fuel has become such a perennial issue, lamenting how this is grossly affecting airline operations.

“Let’s look at the side effects, the daily operational logistics of these domestic carriers; fuel takes about 70 per cent of it,” he said.

Looking at the other sides, he emphatically warmed that “this scarcity is affecting travellers and that is leading to cancellation and delayed flights because no pilot will take off without enough fuel. For any aircraft, there is a mandatory quantity of fuel they have to have on board in addition to the normal fuel that would take them to their destination which is known as Endurance.

“You recall that two weeks ago, the Accident Investigation Bureau (AIB) reported that the helicopter that crashed in Opebi last year went down actually because of lack of fuel. Any operating aircraft must have enough fuel.

“Aviation fuel goes for N650 per litre; if an aircraft is taking like 30 tons of aviation fuel, you can just imagine by your arithmetic, the quantity of fuel an operator will have to pay for.

“You have to pass the bill to the travellers, and that’s why they formed a cartel,  saying that an economy ticket for Lagos to Abuja flight will cost N50,000. These are the side effects. You pay double the fare.”