Local Airlines Seek 40% Fuel Surcharge, Waivers As Jet A1 Hits N822/litre

Local airlines, yesterday, sought approval to impose a new fuel surcharge of between 25 and 40 per cent on consumers as part of measures to cope with an upswing in the price of aviation fuel.

The operators, apparently hard-hit by the surging cost of fuel and operations, said their survival is dependent on the new surcharge, though with imminent effects on the already high cost of airfares.

Similarly, the airlines, under the aegis of Airline Operators of Nigeria (AON), urged the Nigeria Civil Aviation Authority (NCAA) to sacrifice the five per cent it receives as fuel surcharge and adopt the new 25 to 45 per cent regime on aviation fuel consumption.

This came as the operators also flayed the Federal Airport Authority of Nigeria (FAAN) for the alleged abrupt closure of Runway 18L at Murtala Muhammed Airport Lagos, without due notice.

The airlines, last month, raised the alarm that a number of the risk collapse without affordable aviation fuel to sustain commercial operations. They said besides the fuel scarcity disrupting scheduled operations, the prevailing market rate of N690 to N714/litre is unsustainable.

Aero Contractors has indefinitely shut down its operations, just as aviation fuel now sells for N822/litre in Lagos and much more in the North, The Guardian learnt.

Chairman of AON, Abdulmunaf Sarina, in a memo to NCAA, lamented that in addition to the crippling effect of intermittent shortages of Jet A1, the price rose from N420 per litre in February 2022 to over N780 last week.
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This has greatly increased the operational cost of airlines by well over 130 per cent. Yet, airlines are unable to increase fares and suffer the unavailability of foreign exchange to conduct operations.

“To forestall a backlash and total shutdown of the system, airlines are hoping to resort to introduction of a fuel surcharge of between 25 and 40 per cent of Neutral Unit of Construction (NUC) as a way of offsetting the additional burden brought about by increased fuel cost, bearing in mind that jet fuel accounts for about 40 per cent of total operational expenses.”

AON also sought immediate review of an extant rule that airlines are required to obtain approval for an initial three months before implementation of a fuel surcharge and waiver of the demand that airlines pay an additional five per cent on the fuel surcharge.

“Unless this is done, it will mean, in effect, that whatever is collected by the airlines as fuel surcharge, to cushion the effect of the high fuel price, will be taken away once again by NCAA. This will amount to double jeopardy as airlines will be unable to offset the additional cost, which the fuel surcharge is meant to address in the first place,” Sarina said.

The operators added that those waivers would help airlines weather the tough operating environment, being a standard cushioning practice in countries, like Britain, the United States and Singapore.

IN another development, the airlines faulted FAAN’s closure of the local runway for airfield lighting repairs, but without any work done on the critical facility in the last week.

In a letter to FAAN, the group flayed the 90-day period stipulated for the installation of the lighting.

It said due to the ever-rising cost of Jet A1, the closure of the main domestic runway of MMA, automatically, adds an additional 10 to 15 per cent more fuel costs, based on additional flight and taxing time incurred.

The operators urged the Managing Director of FAAN, Captain Rabiu Yadudu, to convene an urgent stakeholders’ consultation meeting, to review the closure of Runway 18L and enter into discussion with users towards ameliorating impacts.

The letter reads: “AON contends that in line with international best practices, runways of airports are only closed when there is no other option. For infrastructure projects, such as this one on 18L, to limit the impact on flight operations, FAAN ought to have ensured that the contractor does the work at night when the runway is not in use. If there is an absolute need for work to be done during daylight hours, then an agreement should have been reached with runway users on what time window would allow this.

“For the major airport in Nigeria, AON notes with disappointment that Runway 18L has been closed for a week now, with no evidence of any work going on. Yet the airlines have been burdened with huge but unnecessary additional costs and flight delays. Surely, this situation is not in the best interests of the industry.”