Airlines In Dilemma Over Skyrocketing Airfares - NEW TELEGRAPH
NOVEMBER 29, 2022
The instability in the price of aviation fuel has put airlines in the country in a precarious situation while travelers may pay more during the Yuletide. The carriers, which are set to take advantage of high demand, especially during Christmas, are bracing for the expected high cost of air travel, especially to the eastern and the South-South of the country.
However, the carriers are wary that further pushing fares higher could benefit them because of the high volume of travel they might have as a result of many Nigerians overseas that are planning to celebrate the Yuletide in the country. They are equally concerned that many could take to road transportation despite the high security challenges.
Already, aviation fuel is said to be at an all-time high of over N750 per litre as 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 N725 in Lagos, N740 in Abuja, and N750 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 the panic mode in a bid to satisfy their passengers, some of whom have booked long before. This staggering cost daily for certain airlines 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 Boeing 737-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. Very recently, the Acting Secretary Aviation Fuel Market Association of Nigeria (AFMAN), John Adewole Abegunde argued on behalf of his association that Jet fuel is fully deregulated and called on the government to be hands-off from all commercial-related issues with regard the product.
They agreed that there is 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 is 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 airline and marketer stressing that various airlines have different payment histories and that while some pay on time, there are others with a history of indebtedness and 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 availabil- ity, the fact that other fixed costs of these airlines from staff remuneration to schedule maintenance of equipment must be met has the airlines at sixes and sevens regarding the issue of Jet A1. Recall, sometime in February, domestic airlines in Nigeria jacked up airfares over an100% as prices of economy class tickets now range from N70,000 and above all because of the same Jet A1 cost and availability, access to forex, and other sundry reasons.