March 20, (THEWILL) – As negotiations between the Major Oil Marketers Association of Nigeria (MOMAN) and domestic airline operators continue, air travellers in the country are now paying more, following a hike in the price of Jet A1, otherwise known as aviation fuel.
Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, had earlier in the week said that airline operators might be granted licences to import aviation fuel and thereby put an end to the ongoing scarcity of the product in the country.
Kyari asked the oil marketers and the airline operators to meet and agree on a transparent basis of pricing. About a week after, both parties are yet to reach an agreement on a new pricing template.
Currently, the cost of aviation fuel has hit an all-time high at N500 or N600 per litre. Considering that Jet A1 accounts for about 40 percent of the operational costs of most airlines, the astronomic rise in the price of the product by more than 300 percent, within one year, has equally increased the operational costs astronomically.
Consequently, some airlines have been left with no option other than to start increasing fares gradually from N50,000 to N70,000 and above on one-way economy tickets for domestic flights.
A visit to the Murtala Muhammed Airport (MMA), Lagos on Thursday showed that airfares had gone up substantially. For instance, Dana Air, as at Thursday, was charging N50, 000 (Economy Discount) for a one-way ticket from Lagos to Port Harcourt; N54, 900 (Economy Saver); N58, 000 (Economy Flexible) and N86, 000 (Business Flexible). This is against the former fare, between N30,000 and N35, 000, charged earlier in the year.
Return tickets for the same route with Dana Air cost N54, 000 (Economy Saver); N58, 500 (Economy Flexible); N81, 000 (Business Saver) and N86, 400 (Business Flexible).
Similarly, Air Peace’s website as at Thursday evening indicated that outbound Lagos – Abuja one-way ticket cost between N50,000 and N60, 000, while inbound Abuja – Lagos went for N50,000.
At Arik Air, Lagos-Abuja return ticket was N100,500, while Ibom Air charged N80,000 for the outbound Lagos-Enugu route. Inbound Lagos-Enugu was, however, N50, 000. As in the case of Dana Air, this new fare regime varies significantly from the N30,000 to N35, 000 paid by travellers prior to the development.
Recounting her experience, Lagos-Abuja passenger, Constance Iyeke on Air Peace flight, lamented the increase in fare, saying that she expected to pay just N50, 000 only to discover that it was a little above that sum. She said, “I didn’t expect the fare to be more than N50, 000 for a one-way trip. You can see it is more than that now.”
Thompson Ukachukwu, who was travelling to Enugu with Ibom Air, also expressed shock that the fare had gone up. According to him, the N80, 000 he paid was far above his budget. He advised the government to do something about the fuel scarcity.
In his reaction, the President of the National Association of Aircraft Pilots and Engineers, (NAAPE), Comrade Abednego Galadima, warned that the scarcity of aviation fuel could cripple domestic operations and by extension, the Nigerian aviation industry.
According to him, the association is very worried about the issue as it has made travelling very difficult for passengers and caused much disruption in the operations of domestic airlines.
Noting that the industry has yet to fully recover from the negative impact of the COVID-19 pandemic and many airlines have not completely recovered, Galadima said, “If this issue of scarcity is not immediately addressed by the Federal Government, the airlines will be negatively impacted and the ripple effect will be felt in the aviation downstream sector which may lead to job losses.”
He urged the executive arm of government to, as a matter of urgency, address the issues causing the scarcity and price hike so that normalcy can return to the industry.
Also commenting on the plight of passengers, aviation expert, Mr Hubert Odika, blamed the current scarcity of Jet A1 on the government’s failure to fix the country’s refineries.
Odika, a former Director of Operations, Nigerian Aviation Handling Company NACHO, who traced the hike in air fares to the airlines’ running costs, explained that the aviation industry would not have witnessed the current economic predicament caused by shortage of aviation fuel if the refineries were working.
“We will refine here at cheaper labour cost, but there is no ocean freight to bring back the finished product. No charges in foreign currency for refining the PMS or AGO and bringing them back to the country. Nigeria at the moment is cheating itself,” he said.
Odika expressed the optimism that President Buhari, who had worked as a Minister of Petroleum in 1979 and chairman of Petroleum Trust Fund (PTF), would have considered it as top priority to see to it that the refineries are running.
On the fare hike, he said it was expected like every other business, but noted that the hike in Jet A1 from N200 to N625 per litre sounded unrealistic to him. According to him, if the increase in fare was justified, the airlines were at will to work out an appropriate strategy, instead of adopting a blanket increase across the industry.
“You don’t charge the same fare for a flight to Benin that is 35 minutes as a passenger going to Yola or Kano that is over one hour. That is not realistic”.
In the same vein, energy expert, Monica Maduekwe called on the Federal Government to put measures in place to insulate her citizens from external shocks emanating from the volatility in the international oil price market, bearing in mind that Nigeria’s performance on energy security is low despite being energy rich.
Maduekwe, who is the co-founder of PUTTRU, a digital platform that connects energy companies in Africa to global financiers, said this is necessary because the economic losses from high oil prices greatly outweigh the gains the country makes in terms of revenue.
She argued, “Without insulating her economy from the volatility of the international energy market, oil prices will continue to be both positive and negative for Nigeria. And, coupled with an upward inflationary trend, which reflects in the cost of aviation fuel, we cannot call this a good thing for the average Nigerian.
She recalled that as at March 10, OPEC reported an oil price of $117.23 per barrel, falling from $128.46 on 8th of March 2022. Moreover, at the 26th OPEC and non-OPEC Ministerial Meeting, held on March 2, 2022, the body reiterated the decision to limit production until April 30, 2022, when this position will be up for revision. While the increase in pump price has virtually affected the globe, she said the impact on countries has been different.
Meanwhile, Mr Clement Isong, Executive Secretary, MOMAN, has blamed the hike in the price of crude oil and its derivatives, such as aviation fuel, petrol, diesel and kerosene, on the ongoing hostilities between Russia and Ukraine.
He said: “We understand their pains, even the Federal Government that is paying a higher cost to subsidise petrol.
“The rise and fall of oil prices is cyclical. We have been here before and we are hoping that within a short period that international supply of crude will adjust to meet demand and prices will come down to more acceptable levels.”
According to him, the situation can also abate if marketers are able to get foreign exchange at lower rates instead of sourcing from the parallel market.
Isong, however, advised the domestic airlines to change the way they do business to enable them to get steady supply of aviation fuel to run their operations.
He urged the airline operators to clear their debts and adopt a pricing formula for procurement of aviation fuel in line with international best practices.
About the Author
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.
