Airline Operators Lament As Aviation Fuel Price Hits N315/litre
Airline operators have lamented the hike in aviation fuel price, saying the price instability is taking a toll on their operations.
The increase in the price of aviaton fuel, also known as Jet A-1, has been an issue of concern in the industry in recent months.
Our correspondent gathered that the price of Jet A-1 has risen to N315 per litre from N250-270 per litre between January and June. It increased to over N300 per litre towards the end of July.
Crude oil and jet fuel prices have continued to trend upwards in recent times. In the first half of July, the average price of Brent crude was $75.3 per barrel, while that of jet fuel hovered around $80 per barrel globally.
The Chief Operating Officer of Ibom Airlines Limited, George Uriesi, in an interview with our correspondent, said logistics was an issue to consider in addressing the challenges surrounding the increase in aviation fuel.
He said, “Since January, the price of aviation fuel has gone up every month until now. It has doubled from January till now, which means we are paying twices what we were paying for fuel in January. This is like doubling the fuel cost of the airline.
“Part of the problem is the difficulty of logistics; carting fuel around the country has become very harsh; the roads are so bad. The trucks are taking longer to get where they are going; they are also breaking down regularly.”
He said, “If there were proper infrastructure for good roads and security, the price would be cheaper.
“We have to fly, so we have as much as possible tried to take as much fuel as we can out of Lagos which is the cheapest fuel. But you still have to refuel everywhere you go. Every two or three days, they announce a new price to us, and on the average, we are paying double.”
Highlighting the impact of the aviation fuel price hike on airlines, he explained that increasing ticket fares did not necessarily mean that airlines would efficiently run its operations as there were limits to increasing airfares.
He said “When you are paying twice the amount of what you were paying before for fuel, which is your agent cost, you then have to try to be efficient in all your other expenses .You have to look for a way to add a little to the ticket price.
“There is a price at which your ticket would be sold, and the flight would go empty. You have to increase it to the point where the elasticity of demand of the passenger does not slack.”
“Some people might be forced out of business when it becomes unsustainable.”
The General Manager, Total Energies Nigeria, Mr Rabiu Abdulmutalib, at a conference held recently in Lagos, urged the Federal Government to intervene in making foreign exchange accessible to aviation fuel importers.
An airline official who spoke to our correspondent on condition of anonymity said what Nigerian airlines were urging the government to do was to encourage local crude oil refining.
“For us, we would continue to advocate local refining, which will reduce cost for airlines because Jet A1 remains one of the major cost issues for airlines and it keeps fluctuating with variation because the industry is deregulated.”
He explained that with local refining, airlines would pay less for aviation fuel and that would also play a key role in reducing the burden on passengers.