Aviation fuel price jumps by 80%

Domestic airlines operating in the country are facing mounting financial pressure following a sharp increase in the price of Jet-A1, also known as aviation fuel, the Airline Operators of Nigeria has said.

The group disclosed that the price of aviation fuel, which sold for about N1,000 per litre two weeks ago, has surged to about N1,800 per litre in many parts of the country, representing roughly an 80 per cent increase within a short period.

Aviation fuel remains the largest cost component in airline operations, accounting for about 30 to 35 per cent of total operating expenses.

Industry stakeholders have linked the latest spike to the ongoing conflict in the Middle East, which has pushed up global energy prices.

Speaking on Channels Television on Friday, the spokesperson for the Airline Operators of Nigeria, Prof Obiora Okonkwo, said the surge had placed airlines under severe financial strain.

According to him, most carriers have so far refrained from immediately transferring the additional cost burden to passengers, despite the pressure on their operations.

“Two weeks ago, we were getting Jet-A1 at about N1,000 per litre, which today is about N1,800, and even more in some stations. We have experienced an increase of about 80 per cent. That’s quite a spike,” Okonkwo said.

He explained that airlines were currently absorbing the losses in order to avoid worsening the economic burden on the travellers.

“We are not in a business where you can easily adjust your ticket price. Right now what we are doing is that we are bleeding. We are taking the blow. We are selling tickets at very non-profitable prices. We are losing a lot of money,” he said.

Okonkwo warned that the situation might not be sustainable if fuel prices continue to rise without government intervention.

“Obviously, adjustments will be expected anytime soon. But again, we are very sensitive to the economic situation of Nigerians and our travellers,” he added.

He noted that developments in the global oil market, particularly the recent release of reserve crude oil, could influence fuel prices in the coming weeks.

Okonkwo also urged the Federal Government to explore engagement with the Dangote Refinery as part of efforts to stabilise aviation fuel supply locally.

“We were more hopeless in a situation where there was no refinery in Nigeria in the last two years. Now that we have a refinery, we are hopeful that we can find a solution around it,” he said.

According to him, if the spike persists, some airlines may struggle to continue absorbing the losses associated with the rising cost of aviation fuel.

Meanwhile, the AON spokesperson also reacted to the decision by the Federal Competition and Consumer Protection Commission to sanction about five airlines over alleged price fixing.

Okonkwo said while the commission has regulatory powers, the aviation sector remains deregulated, making coordinated price fixing unlikely.

“There is no meeting of airlines where they agree to fix prices. Fixing prices would mean operating as a cartel, and that is not the case,” he said.

He explained that airline ticket pricing varies widely because different aircraft types attract different operating costs.

“Each airline determines its fares based on its own operational costs,” he said.

Okonkwo added that airlines must also demonstrate financial viability to regulators as part of the conditions for maintaining their operating licences.

At every point in time, you must prove to the regulators that you are financially viable and capable of sustaining operations,” he said.

He urged regulators to take into account the fragile nature of the aviation industry when making policy decisions affecting airlines.