Sunday , 3 July 2022
An aircraft refuelling before departure.

Jet A1 price increases again to N265 per litre, threatens Nigerian airlines’ existence

THE naira’s further slide against the dollar may have far-reaching consequences in the aviation industry with the recent hike in the price of  Jet A1(aviation fuel) jumping to about N265 per liter in Nigeria, despite a drop in the international market.

A source with one of the major oil marketers  who disclosed this hike  said that the dollar, which exchanged at N490 a few weeks ago, now does for N506 in the black market.

This new situation has provoked panic in the aviation sub- sector, implying that airlines could be forced out of business by staggering operating cost of which Jet A1 is at least 45 per cent at present.

In Northern states of Kano, Kaduna, the price of the product currently ranges between N255 and N265 per liter. In Lagos, it sells for between N240 and N250, depending on the quantity being bought and the marketer doing the selling.

Just about two weeks ago, the product sold for N220 per liter in Lagos and N230 in airports outside Lagos.

Between January and February 2016, a litre of Jet A1 cost N120, implying that the cost has risen by over 110 percent increase in  12 months. Some airlines are apprehensive that the price may move to N270 or worse N280 in no distant time.

In oil-rich Saudi Arabia,  for instance,  local carriers pay 20 cents per liter, while foreign airlines pay  41 cents.

Our source said,”No one can blame the major oil marketers for the recent increase in the price of Jet A1. We all buy dollars from the black market, though Federal Government, through the banks sell dollars to investors at a relatively cheaper rate. But the unfortunate thing is that when you approach them, they collect your money and close up. The money may not be available to you even in the next three months.

“The industry we are in does not wait for anyone. We can’t wait for three months to do business. So, we have to approach the black market for dollars, which is at a very high rate when compared to what government sells. You can see that subsidy has been re-introduced to Premium Motor Spirit (PMS). It is because of the continuous free fall of naira,” he explained.

An airline staff also warned that the high price of Jet A1 fuel is likely to force more airlines out of operation except the Federal Government comes up with an intervention.

While confirming the price from N220 in January to between N240 and N265 per liter in February, he wondered how airlines could still be selling tickets for one-hour flights at N18, 000 in the country. His suspicion is that some of them are cutting corners in their operations.

He argued that with the current situation, a ticket for a one-hour flight cannot possibly cost lower than N40, 000. He called on the Nigerian Civil Aviation Authority (NCAA) to look closely at the operations of some airlines to avert air crashes arising from lax supervision.

“As at today, fuel is going for N240 to N250 in Lagos and higher in other airports like Kaduna, Sokoto and Port Harcourt. At those places, a liter sells for between N255 and N265 per.

“How much are we selling one-hour flight tickets to passengers? I learned some airlines are still selling tickets at N18,000 to Abuja. I don’t know how they can break even. A ticket should not go for less than N40, 000 for an hour flight,” he reasoned.

He also explained that airlines have been hamstrung by foreign exchange scarcity.

“We can’t sustain the industry the way it is going. It is a very serious issue. The government just has to sit down with the operators and stakeholders to address most of these matters. But, it’s as if we are joking with these issues,” he warned.

About NigerianFlightDeck

Nigerianflightdeck is an online news and magazine platform reporting business stories with a bias for aviation and travel. It is borne out of the intention to inform, educate as well as alter perceptions with balanced reportage.

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