Every rule has an exception. That axiom is true with regards the law of gravity that states that what goes up must come down, that law, however, does not apply to prices in Nigeria with particular reference to the ever skyrocketing Jet A1 (Aviation fuel) or its availability either.
And with the current development as painted by the Director General of the Nigeria Civil Aviation Authority (NCAA), Dr. Harold Demuren, that there is nil supply of Jet A1, the situation just got worse.
A fortnight ago, Dr Demuren made it categorically clear that the major reason for the disruption of flight operations all over the country was the increase in prices of aviation fuel with marketers insisting airlines pay before they supply coupled with the fact that of recent, it has been hard to come by the product.
The situation got cornier with the recent scarcity of kerosene which affected jet A1 making it nigh impossible for some airlines to get the product and coupled with the high prices plus the fact that they have to pay for it before hand.
Jet A1 is a type of jet fuel used commonly for commercial aviation and produced to international specification, it is also a mixture of a large number of different hydrocarbons.
Kerosene-type jet fuel (including Jet A and Jet A-1) has a carbon number distribution between about 8 and 16 carbon numbers; wide-cut or naphtha-type jet fuel (including Jet B), between about 5 and 15 carbon numbers.
Demuren who was speaking to reporters at a recent event chalked the problem up to the fact that the country is not refining the product on its own and said they were doing all within their powers to ensure that that happens.
Will this, however, reduce the price of the product and will it make the product available for air transporters and how will this impact on the marketers who have used the country’s negligence of the gross income earner to grip it like a vice?
Only time will answer these questions
But stakeholders have not failed to express their dismay at what they feel is an embarrassment to the country which is considered the sixth largest producer of crude.
Captain Dele Ore, President of industry think tank group, the Aviation Round Table (the ART) recently said:
“It is a shame because we have everything here; there is no reason for aviation fuel to be very expensive in Nigeria among all the African countries. Nigeria has the crude and capacity to refine aviation fuel locally. Aviation fuel should be less than N55 per litre. Anything above N55 is a rip-off. Government should give priority to aviation fuel so that the airlines may not die,” he stated.
The Airline Operators of Nigeria (AON) has not failed to decry in clear cut terms, the high cost of air fare, occasioned by the scarcity of aviation fuel.
The indigenous airline body has appealed to the Federal Government to set up a committee to look into the high cost and seeming scarcity of the commodity.
Secretary General of the AON, Alhaji Muhammed Tukur said government should tackle the problem the same way it tackled the high cost of cement.
He said the committee should help to stop the oil marketers from their exploitative tendencies that have crippled the aviation industry, “The government should help to look at this situation by setting a committee that will help to look at the high cost of aviation fuel. We understand that the marketers are causing artificial scarcity to make the product expensive and this has taken a huge toll on the sector”.
Almost all the methods used to ameliorate increase in the price of Jet a1 in the past seems to be failing today as there is non-availability of aviation fuel with airlines scrambling to pay ridiculously high prices for the product that consumes at least 40 per cent of the total cost of operation when it is available.
The airlines which are bedevilled by many operational constraints that have really been dazzled at the impact of jet fuel pricing on their economics.
An industry player Captain Tunde Adekoya once asked how the country’s aviation industry can achieve its goal of making Nigeria a thriving hub in the sub-region with vibrant local airlines with these kinds of scenarios.
Sadly, the plethora of measures being adopted to confront the twin dilemma of availability and prices of Jet A1 has not been going well for the airlines.
The oldest and most used measures is to pass on the cost to the customer under any guise such as fuel surcharge and the limitation of this has changed recently as passengers have turned to the roads rather than pay between N23, 000 and N25, 000 for a ticket.
Recall, air transport fares hiked two months back when airlines could no longer continue to bear the brunt of fuel cost, passengers complained over the hike and some even decided to go by road no matter how bad since even the airlines were not reliable.
Another measure airlines normally use is to invest in more modern and fuel efficient aircraft. This is however not an option in Nigeria as all the airlines, save Arik Air, cannot boast of the capacity to acquire these aircraft viewed against a backdrop of dwindling resources and exorbitant funding.
The fuel and maintenance savings, indigenous aircraft owners have learnt, does not match the initial acquisition costs for newer aircraft and more often than not such acquisition end up being repossessed.
Airlines have also tried to improve on consumption patterns through several fuel saving strategies such as: clean skin surface (often polished) to reduce friction, weight reductions (excess body paint, fly away kit, passenger service waters, vacuum toilets, catering items), but how can you save a non available fuel.
Fuel hedging – A financial tool to combat rising fuel prices by helping to lock future fuel requirements at predetermined and hopefully cheaper prices.
This however is a two edged sword in that it is based on speculation and can cut either way. It also requires large commitment of funds which the airlines and its promoters struggle hard to access.
Arik Air a while back commissioned its mini-depot for the storage of aviation fuel, located within the Arik Air Aviation Centre at the Murtala Muhammed Domestic Airport, Ikeja, Lagos.
The Depot which will serve as a strategic reserve, according to Arik Air managing director, Mr. Chris Ndulue is to assist the airline manage its fuel requirements properly.
The fuel depot has capacity for 100, 000 litres of Jet A1 and comes equipped with the full compliments of a depot and is an above ground facility which makes the fuel free from water.
However, may not have hedged enough fuel to fill its depot, the situation with the fuel in the country needs intervention and fast or airlines in the country will close shop and pack it up.