Air fares spike as aviation fuel nears N300/litre at airports

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(Last Updated On: 2021-06-24)

• Logistics challenges, weak Naira push Jet A-1 to N215 in South, over N300/per litre up North
• Apapa ports’ congestion costs importers extra $10,000 to $25,000 daily
• It’s a shame no refinery produces Jet A-1 locally, says Joji

Despite an upswing in the global price of crude oil and attendant blessings for oil-producing countries, the price of aviation fuel has spiked nationwide and much to the pains of airlines and travellers in Nigeria.

A fact-check by The Guardian showed that aviation fuel, also called Jet A-1, has lately sold for between N215 at airports in the South and N300/per litre in low traffic aerodromes in the Northern region of the country. The price had risen in April 2021 to between N250 and N275 per litre, which was about a 200 per cent increase from 2016, when it was sold at N110. It rose to N200 in 2018, hovering around N160 and N170 in 2019.

An average 50 per cent surge in fuel cost, a critical component of airlines’ operation, has also forced airlines to increase airfares with an average Economy Class ticket on less than an hour flight selling for over N65,000.
There are fears of fuel contamination in some quarters, which experts say, could threaten flight safety. Engr. Femi Adeniji of Tropical Arctic Logistics, a helicopter operator, said any jet fuel cheaper than N270 could have been contaminated.

Chairman and CEO of United Nigeria Airlines, Dr. Obiora Okonkwo, decried the development, which he said, has added to the cost of operation.

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Okonkwo, whose airline debuted about four months ago, said: “We started operations at N160 per litre barely four months ago and when you move from that price to over N270 within two months, you should expect whatever we are experiencing now. Aviation fuel alone takes between 30 to 40 per cent of airlines’ costs. This is cause for grave concern to everyone.”

The Guardian learnt that the extra burden on end-user airlines and travellers alike is not unconnected with the naira-to-dollar exchange rate, logistics hiccups of importing the product through chaotic Apapa ports, and more expensive distribution to nationwide airports by road.

Aside from the multiple taxes and charges on the product, the monopoly of marketers at less viable airports has also raised the price by some notches – making the product one of the most expensive in the West African region.

Indeed, aviation fuel is the oxygen of the airline business. Though an oil-producing nation and the sixth largest producer in the world, Nigeria’s perennial inability to refine the product locally has made jet fuel susceptible to dictates of the exchange rate, and therefore expensive, accounting for between 30 to 40 per cent of airlines’ operating cost.

Of dire consequence is the recent appreciation of crude oil price to $73.5 per barrel in the world market, and Naira’s free-fall to N500/$1 at home. At these rates, the landing cost of all imported products, including aviation fuel, could only reach for the rooftop.

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