Airline passengers on less viable routes such as Sokoto, Katsina, Bayelsa, Kebbi, Gombe, Yola, Maiduguri, Bauchi, Ilorin, Jos, Ibadan, Calabar and Akure, may find it difficult connecting their destinations by air as operators are pulling their aircraft away due to the hike in price of aviation fuel, also known as, Jet A1.
This is as airline operators, under the aegis of Airline Operators of Nigeria (AON), have kicked against the closure of the Lagos airport 18/Left by the Federal Airports Authority of Nigeria (FAAN), for the commencement of the installation of airfield lighting.
As at the time of filing this report, it was gathered that Jet A1, has hit all time high as it currently sells for N822 per litre in Lagos, N859 in Abuja, N852 per litre in Port Harcourt while it sells for N890 and N892 in Yola and Maiduguri respectively.
This increment, according to airline operators, has eaten up their profit, thereby, making profitability very slim for operators.
However, the viable routes they are presently pulling aircraft to are Abuja, Port Harcourt, Lagos, Kano, Warri, Akwa-Ibom, crisis ridden states, such as, Kaduna,Owerri, Anambra and Enugu.
LEADERSHIP investigation, however, showed that the increase in the price of Jet A1 has made fuel constitute 70 per cent of airlines operating cost as against 40 per cent it was before the global energy crisis.
Also, the aviation fuel recorded a price hike of 268 per cent between January 2022 and April 2022, moving from N190 to over N800 in five months and this has made domestic airline carriers in Nigeria threaten to shutdown their operations, citing rising jet fuel costs and the increasing cost of operation.
Speaking exclusively to LEADERSHIP, one of the operators who craved anonymity, said all airlines are suffering from high cost of operation, saying it’s also difficult to increase price of airfare.
The source said, “We are all suffering under high cost of operations. We are now introducing more flights on the destinations we have more passengers and removing flights from where it’s not profitable because we have to be efficient with our operations to keep the airline running. We can’t push the impact to the customers as this will reduce their buying power.”
However, another source said airlines are anticipating delays and maybe cancellations given this new increase which will jack up their cost of operations.
The manager in one of the leading airlines described the situation as extremely serious and has further reduced the profit margin that was hitherto seemingly non-existent.
He said, ”Aero just suspended operations, you do know that the non-stop hike in the price of Jet A1 is partly a contributory factor to that? We used to complain when jet A1 40% our operating cost but now that has seemingly doubled and there is no respite in sight.”
“This will indeed affect operations because what was planned for has gone straight out of the window and this may lead to increment because the airlines cannot handle this cost on their own and this is just fuel, we’ve not talked of salaries and maintenance of the aircraft. If we get the product tomorrow, we will operate as scheduled but it is not that easy as someone has to pay for it and they may be delays, truly airlines are crying.”
In an exclusive chat with LEADERSHIP, the President, Aviation Round Table Initiative (ARTI), Dr Gabriel Olowo, said the aviation sector may be heading for disaster.
According to him, unless the government, operator do something critical, the sector may be heading for shutdown as no route is currently viable in the country
He said, “The problem has been on for so long and I pity the airline operators, as well as, the government because it is becoming uncontrollable. The fuel issues has remained with us forever as far back as 20 to 30 years. The government couldn’t resolve the problem on the road talkless of the air, I hope we are not heading for disaster in the industry because there is no route that is viable at this period, with the recent price of Jet A1.
“Hardly will any airline break even on any route at all because if we look at the volume of fuel consumed on a one hour flight then how much will you charge a passenger taking the purchasing power of the Nigerian people into consideration.
“I hope it doesn’t get to a level that we won’t be able to travel by air and then we are totally left with the risk of battling with all the dangers on our roads or we back to the land and we start riding horse because the government could not help it.
The ARTI boss, however, states that the government couldn’t subsidize aviation fuel when it was still battling with PMS subsidy.
He, however, advised round table discussion between operators, government and policy makers to find lasting solutions to the crisis that is afteccting the growth of the sector
Government cannot subsidize Jet A1 when PMS and Diesel have not been subsidized. This is a naughty issue, I don’t have a solution because it’s a surgery we need to do as a government and as a people. The airline operators have been complaining since the start of this administration and even during former president Olusegun Obasanjo’s administration. The former president said he hasn’t handled PMS, Diesel and Aviator are coming, I can’t even talk about you. That’s what led to the exit of some airlines at that time, for instance, an airline approaching landing exhausted it fuel, those are the dangers we are faced with, so I hope we don’t get to the level of shutting down the sector.
There is need for surgical operation of the sector, the aviation Minister, the operators , government need to sit and talk realistically. if it’s one airline, so be it, let’s everyone put all passengers in one flight, and they operate one in the morning and evening, if that’s that solution, so be it,” he stated.
Also speaking, the President, Aircraft Owners and Pilots Association of Nigeria (AOPAN), Alexander Nwuba, said the airline operators should increase their fare to meet current market realities.
According to him, those who can afford the ticket price will fly while others who can’t, will make use of the alternative mode of transportation to get to their desired destinations and when the price of aviation fuel goes down, the price will return to the normal price.
Nwuba, a former Chief Executive Officer, Associated Airlines, further stated that aviation is the life wire of the nation’s economy, hence, short term solutions shouldn’t be found to challenges facing it.
He said, “We need to find a solution to the crisis and not throwing the towel in as they have done. Is that the beat solution to the crisis? Certainly not. Is it not possible we raise fare and others that cannot afford to fly goes by other means of transportation, but now, everyone will suffer because they don’t want to raise fare to recover their cost.
“Shutting down operation is not the best decision rather, it does more harms than good but, fortunately, some airline will still be flying and aviation is about moving the economy. We shouldn’t dins short term to these crisis but, long term,’ he said.
“FG should allow Airlines to charge economic rates for air travel in Nigeria. Anyone that can afford to pay the economic rate should do so. Those who cannot afford the new rates should travel by road. Nigeria must not be turned to a Socialist Republic. We cannot afford to deploy tax payers funds for the travel of the rich. It will amount to a grave injustice to do so.”
Airlines have seen economic reality, they understand consumer inelasticity, if fares move beyond certain numbers, passengers will disappear to other modes, so they lose, insecurity in other modes have always supported the industry, but, there’s a limit.
According to Nwuba, airlines operators know government won’t subsidise Jet-A1, as well, cannot import fuel cheaper than marketers and globally, fuel prices have gone up, hence, the industry is in trouble
His words, “Airlines need a reality pill, the market has changed on the basis of economic reality, Air travel is now a super premium product and oversupply will kill the industry, the solution is not a strike, it will achieve nothing, or rather it will only create a face saving opportunity; we have to feel sorry for the industry, these are tough times and the capital to ride it out is not available, but, the industry must reset.”
Meanwhile, members AON namely, Ibom Air; Arik Air; Air Peace; Aero Contractors; Dana Air; United Nigeria; Azman and Max Air, lamented that the runway which had been closed for more than a week was painful because there is no evidence of any work done, a situation they stated has made airlines to be burdened with huge but unnecessary additional costs, flight delays and cancellation of flights to the airports.
The operators, in a letter to the Managing Director of FAAN, Capt. Rabiu Yadudu, entitled, “Closure of Runway 18L at the Murtala Muhammed Airport”, dated July 15, 2022, and signed by AON President, Dr. Abdulmunaf Yunusa Sarina, they said the association received with surprise, the Notice to Airmen (NOTAM) on July 5, 2022, informing the industry that FAAN would be closing the domestic runway 18L Murtala Muhammed Airport from July 8, 2022, for a period of 90 days.
They decried the short notice given to them by FAAN, noting that FAAN still went ahead to close the runway, causing unsustainable additional operating costs and severely inconveniencing the airlines and passengers.
While welcoming the efforts by FAAN to install runway lighting on runway 18L that had taken more than 16 years to fix, they noted that international best practice for such critical airfield infrastructure projects is for the airport operator to enter into discussions with all affected parties, to arrive at an optimal arrangement that allows the work to be done, while limiting the inconvenience, economic impact and safety implications on all concerned.
They knocked the FAAN for failing to carry the operators along before the closure of the runway.
“FAAN is aware of the current existential threat of aviation fuel prices to the domestic airlines. The closure of the main domestic runway of the Lagos airport automatically adds an additional 10-15 percent more fuel costs per sector into and out of MMA based on the additional costs within the first week of the closure of the runway. This unnecessary burden is unsustainable for a three-month period on the airlines”.
“The closure of the runway has led to a chain of direct flight delays on a delayed basis, impacting the entire system of scheduled domestic flights in the country. FAAN is aware that most domestic flights originate from or pass through MMA at some point every day. This is an unnecessary additional negative outcome for the industry,” they stated.
The operators contended that in line with the international best practice, runways of airports are only closed when there is no other option, stressing that for infrastructure projects such as the one on 18L to limit the impact on flight operations, FAAN ought to have ensured that the contractor does the work at night when the runway is not in use.
The carriers stated further, “For the major airport in Nigeria, AON notes with disappointment that runway 18L has been closed for a week now, with no evidence of any work going on. Yet airlines have been burdened with huge but unnecessary additional costs and flight delays. Surely, this situation is not in the best interests of the industry.”
“Moreover, the additional taxi time due to closure of runway 18L impacts negatively on airlines schedule to sunset airports around the country leading to delays and cancellations of flights to these airports”.
They, however, requested FAAN to convene an urgent stakeholders’ consultation meeting, to achieve their demand