Nigerian airlines spend over N120bn on aviation fuel


  • Operators meet over skyrocketing cost

There are indications that scheduled domestic airlines in the country may have spent over N120 billion on aviation fuel in the last five years. This is coming as airline operators are meeting to seek solution to escalating price of aviation fuel, otherwise known as Jet A1. Over 40 per cent of the cost could have been saved if Jet A1 is refined in the country and distributed directly without the attendant long chain of middle men.

The Managing Director of Medview Airlines, Alhaji Muneer Bankole, at an interactive section with the media at the weekend, disclosed that his carrier procured N22 billion worth of aviation fuel in the past five years, stressing that majority of its stock comes from Forte Oil. He stated that aviation now sells for N220 per litre, adding that it costs between N250 and N260 in Yola and Maiduguri, while air fares have remained static for many years. Arik and Air Peace, which domestic operations are more than double that of Medview, may have spent more on fuel because while Arik operated London, New York and regional operations, Air Peace became the biggest domestic airline after Arik was hit by problems leading to the suspension of its international services.

Medview still operates virtually all its regional and international flight services to Jeddah, London and Dubai. It plans to resume Dubai route that it suspended due to ferrying its airplane overseas for maintenance. Other schedule airline operators that have spent considerable sum of money on aviation fuel are Overland Airways, Dana, First Nation and Aero Contractors.

They are, however, worried over the rising fuel cost, which has hampered their operations. Bankole said: “We had our meeting today and one of the things we discussed was fuel situation in Nigeria. We cannot continue this way. This country is blessed. If you go to the market, you are the master of the market and the marketers sometimes say they don’t get foreign exchange. They import fuel. Three people are involved; the man who gets the licence to bring in the fuel by whichever means he brings it in; another owner who has a dump, who receives the fuel to keep for the man, he has his own value.

“Don’t forget the other chains, including the one on the sea and on the roads. When the fuel lands, they keep it somewhere before it finally goes to the people who need it, and because of security situation, they don’t go to Maiduguri. Fuel there goes for between N250 and N270.” Investigation by New Telegraph shows that aviation fuel costs more in Nigeria and other oil producing countries than their counterparts that do not produce oil. For instance, in Nigeria, despite the stability in the lifting of aviation fuel across the country and the deregulation of the commodity, JET A1 has hit an all-time high of N220 per litre.

The skyrocketing price of JETA1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fuelling aircraft. Another airline owner, who spoke on condition of anonymity, confirmed that in Lagos, aviation fuel sells for over N200 per litre, while it costs more in Abuja and Kano. Aviation fuel is central to the operations of an airline as it constitutes be tween 35-40 per cent of an airline’s cost.

The price of the commodity – laden with taxes – in the West African sub-region, is the highest in Africa. While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents per gallon in Cameroon, it is sold for close to $3.14 cents in Ghana, which also produces oil. In Luanda, Angola (also an oil producing country), it costs $3.75 per gallon; Libreville $2.05 per gallon; Khartoum, Sudan $2.44 per gallon.

It is only Equatorial Guinea that sells JET A1 for $0.46. Jet fuel prices in some African capitals are double the global average and experts say that is posing a threat to its aviation sector development. The high cost of jet fuel in Africa compared to other regions due to distribution inefficiencies and infrastructure constraints, has held back the development of airlines and fare reduction.

Apart from the issue of highly priced jet fuel, Africa’s jet fuel shortfall is expected to triple from 1.8 million mt in 2013 to around 5.2 million mt by 2025. As a result of the high fuel price, ticket prices are relatively high.  (New Telegraph)

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