… Say N50K Air Fare Undervalued
May 15, (THEWILL) – There is an indication that air travellers in the country may finally bear the brunt of the lingering aviation fuel scarcity that is threatening the industry.
Investigations have shown that, with the unending negotiation between the Major Oil Marketers Association of Nigeria (MOMAN) and domestic airline operators on one side and the refusal of the Nigeria National Petroleum Corporation (NNPC) and Central Bank of Nigeria (CBN) to fix the price of the product, on the other hand, airline operators may be left with no option, other than to increase air fares from N50, 000 base for one-way economy ticket to N100, 000.
Apart from the issue of fuel, the airlines’ operational costs are further bloated due to over 30 charges embedded in a single one-hour flight ticket by government agencies and other stakeholders. In addition, some airports have equally increased their charges, while ground handling companies have also jerked up their own charges.
For aviation fuel, available statistics show that, as at February, 2021 aviation fuel was bought for N190 per litre. In February, 2022, within the span of one year, it climbed up to as high as N440 per litre in most airports across the country. Today, the price is hovering between N600 to N700 per litre.
With the rapid fluctuation of the price of aviation fuel, the industry has witnessed a lot of inconsistencies in the past one year. For instance, when Jet A1 was sold for N190 a year ago, a flight ticket for a one-way economy trip was purchased at N23,000.
Although the oil marketers and the airline operators have been asked to meet and agree on a transparent basis of pricing, three months after, both parties are yet to reach a concrete agreement.
On his part, the Managing Director of Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, has said that the corporation could not have a fixed price because JetA1 is a deregulated product.
Consequently, airline operators cannot hold onto any price, even though reports give N700 reference points. But the reality is that N700 per litre cannot be a reference point as the current price depends on the market condition, just as it can be higher than N700 depending on the market.
For instance, THEWILL has learned that there is usually a build-up to that price because when the customer takes marine at N435, he has to transport to the charter vessel, bring it to his depot, to his fuel station and transport it. So there cannot be two same prices in two different locations, such as Lagos and Maiduguri.
One way out of the tight situation, experts say, is for the airline operators to commence the process of securing a license for the importation of aviation fuel so as to avoid suspicion over the landing cost of the product and other associated logistic issues.
As a result of these challenges, domestic airline operators in the country had a few weeks ago threatened to embark on suspension of operations in response to the astronomic and continuously rising cost of JetA1.
Reacting to these challenges that operators are facing, the President of Aviation Round Table (ART) Dr. Gabriel Olowo said that aviation fuel has been an issue for an upwards of 20 years in Nigeria without serious attention.
“Yet airlines keep operating out of being patriotic. Regrettably this is planning for an accident.
“This has been the essence of my consistent advocacy for upward review of tariffs all the time. But how high can tariffs go given the average passenger purchasing power? If any airline pretends about this problem, such airline must be receiving subsidies for the business or ‘cutting corners’.
“No operational and management skill can answer for this uncontrollable factor of the business. Government must provide a lasting solution once and for all at this time. While I also appeal to the airlines to heed the Minister’s appeal to endure and stretch a little more but not beyond their elastic limit,” he said.
Also commenting, the Secretary General of the Association of Nigerian Aviation Professionals (ANAP), Comrade Abdulrasaq Saidu blamed the government for the difficulties airline operators are facing in getting fuel.
Comrade Saidu opined that if the refineries were in a good shape, the issue of fuel scarcity would not arise. He therefore cautioned the airline to operate only at their convenience based on their cost of operation.
“I will blame the government for the fuel crises we have at hand because if the refineries were working, the challenge wouldn’t have been there. I advise the operators to be very careful and operate within the limits of their convenience, so that they don’t overstretch themselves”, the ANAP scribe said.
About the Author
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.
