Jet A1 crisis shrinking airlines’ daily operation
With the price of jet fuel at an all-time high, airlines are finding it difficult to get the product for their operations and this has introduced further delays in the system.
Some airlines have had to delay flights, while others cancel in a bid to combat the challenges they face.
As of today, Jet A1 also known as aviation fuel sells for N600 in Lagos, N680 in Abuja and N700 in Kano while other marketers have sold for N650 and N700, making the reach of the product near impossible and causing many airlines to go on panic mode in a bid to satisfy their passengers, some of whom have booked long before.
This staggering cost for certain airlines daily combined with the lull in passenger traffic and other factors is causing fears as airlines say they cannot break even under the current circumstances.
A typical one-hour Lagos to Abuja flight using the B737-Classic is about 4500 litres give or take for the one-leg flight and Nigerian airlines still use a lot of that aircraft type as it is yet to be completely phased out.
Recently, Secretary, Aviation Fuel Market Association of Nigeria (AFMAN), John Adewole Abegunde, argued on behalf of his association that jet fuel was fully deregulated and called on the government to hands-off from all commercial-related issues with regard to the product.
This may have sparked the statement credited to the Airline Operators of Nigeria (AON) at the just concluded FAAN National Aviation Conference (FNAC), who alleged three members of their ranks may soon go under, even then the price of Jet fuel sold for N607/litre.
They agreed that there was a global rise in the cost of the product, but that Nigeria’s case becomes peculiar due to the weaker naira against the dollar.
However, other oil marketers have expressed opinions too as Major Oil Marketers Association of Nigeria (MOMAN) Executive Secretary and Chief Executive Officer, Mr Clement Isong, said the challenge was two-pronged as forex to get the product is high and prices in the international market are high due to the Russian/Ukraine War.
He, however, surmised that apart from pricing, availability is also determined by business relationships between airlines and marketers, stressing that various airlines had different payment history and that while some pay on time, there are others with a history of indebtedness and that those who pay up on time on their credit are likely to receive favourable terms from their suppliers against airlines who owe.
Despite fuel pricing and availability, the fact that other fixed costs of these airlines from staff remuneration to schedule maintenance of equipment must be met have the airlines at sixes and sevens regard the issue of Jet A1.
The major question now is, as the cost of jet A1 continues to gallop and prices of tickets remain the same, how do the airlines cope, knowing full well that a further increase in the ticket price may affect the ticket?
Recall, sometime in February, domestic airlines in Nigeria hiked up airfares over an100 per cent as prices of economy class tickets now range from N50,000 and above all because of the same Jet A1 cost and availability, access to forex and other sundry reasons.
Tickets that hitherto sold from N27000 to N29000 above doubled even then when the price of aviation fuel used to cost N410 in Lagos, N422 in Abuja and Port Harcourt and N429 in Kano per litre and the dollar, which sold for N580 and was as usual, in short supply.
So, the burning issues remain, what will be the next move for airlines? And at a period like this when the government is planning on floating its own airline, would it be willing to let airlines go under and countless jobs be lost before it tries to arrest the situation? Or will said airline become operational under these circumstances?
As the days go by, it becomes harder to tell if the aviation industry in Nigeria will not buckle under all the pressure it is currently bearing.