Home Business Aviation Aviation industry collapse imminent; domestic fare hits N150,000

Aviation industry collapse imminent; domestic fare hits N150,000

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Operators of the aviation sectors have expressed apprehension that the industry faces imminent collapse going by the increasing rise in the cost of aviation fuel and other operational components.

By Friday, Jet A1 fuel (otherwise known as aviation fuel) sold for N1,000 per litre as against N300, the going price in February. This has led to significant increase in the cost of flight tickets with a one-hour flight costing as high as N150,000.

Aviation Round Table, which is a body of professionals in the sector, said that, apart from the two domestic airlines that are grounded at the moment, more airlines might be forced to halt operations. On 18 July, Aero Contractors announced the suspension of its operations, citing the impact of the challenging operating environment on its daily operations, while the Nigerian Civil Aviation Authority suspended the operations of Dana Air two days later.

A former Managing Director of the Nigerian Airspace Management Agency, Capt. Roland Iyayi, told Sunday PUNCH that government must work towards reviving the refineries for the local production of Jet A1. Iyayi, who is now Chief Executive Officer, TopBrass Aviation Company Limited, added that government should consider supporting airlines in aviation fuel pricing in the short term.

He pointed out that many people were no longer travelling by air due to the hike in the price of tickets. This, he said, posed great danger to the survival of airlines and the aviation industry.

Also, the Assistant General Secretary of the Aviation Round Table, Mr Olumide Ohunayo noted that the sector had been severely hit by the fuel crisis due to its dependence on importation and the high foreign exchange rate.

Ohunayo further said: “The Russia-Ukraine war has increased the average cost of fuel and all forms of gas productions, and this is exacerbated for Nigeria because of the weakening naira to the dollar. That has increased the pain on the airline and even the supplier. What we have is that one airline is grounded voluntarily and the other involuntarily.

“If things do not return to normal, other airlines may also be grounded. That is where we are going. It is funny that the government is telling us now, through the senate committee, that some of the aviation fuel is being exported to neighbouring countries and sold there”.

One of the major consequences of the situation is the astronomical rise in air fare. An economy ticket for an hour flight on domestic routes has increased by about 400 per cent in less than five months. It rose from about N30,000 in February 2022 to about N150,000 as of Saturday. This has been tied to the high cost of aviation fuel.

In justifying the increase, airline operators blamed the hike in aviation fuel, which accounts for about 60 per cent of operational cost of an aircraft.

Also commenting on the situation, another major operator in the domestic air transport business berated the Central Bank of Nigeria for failing to stabilise the Naira against the US Dollar.

“If you were buying fuel at N200/litre and all of a sudden you start buying it at N900 to N1000/litre due to the crash in your local currency, will you be happy with your Central Bank?,” the operator, who spoke anonymously due to the sensitive nature of the matter, asked.

The airline operator added, “If the system gets better, then the cost of tickets would drop. But for now, that’s what you get if you must fly a safe aircraft. The CBN, the Federal Government and the Petroleum Resources Ministry must answer questions and tell us how they want to help address this concern”.

Source: Sunday PUNCH

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