According to the Airline Operators of Nigeria, domestic airlines operating in the nation are under increasing financial strain due to a significant increase in the cost of Jet-A1, also known as aviation fuel. The group revealed that the cost of aviation fuel, which was around N1,000 per litre two weeks ago, has risen to roughly N1,800 per litre in several regions of the nation, an almost 80% increase in a brief amount of time.
Approximately 30 to 35 percent of all operational costs are attributed to aviation fuel, which remains the largest cost component in airline operations.
Stakeholders in the industry have connected the most recent increase to the ongoing turmoil in the Middle East, which has raised energy prices worldwide.
Prof. Obiora Okonkwo, a representative for the Airline Operators of Nigeria, stated on Channels Television on Friday that the spike has put airlines under extreme financial duress.
Despite the strain on their operations, he claims that the majority of carriers have not yet transferred the additional cost burden to passengers.
Jet-A1 used to cost roughly N1,000 per litre two weeks ago, but it now costs about N1,800, and in certain stations, even more. There has been an increase of almost 80%. "That's a significant increase," Okonkwo remarked.
He clarified that in order to prevent making travelers' financial situation worse, airlines were now covering the losses.
"You can't easily change the price of your ticket in our business. As of right now, we are bleeding. The blow is being taken by us. The pricing at which we sell tickets is extremely unprofitable. He remarked, "We are losing a lot of money."
Okonkwo cautioned that if fuel costs keep rising without government action, the situation might not be sustainable.
It goes without saying that changes will be anticipated in the near future. However, once more, we are quite aware of Nigerians' and our visitors' financial circumstances," he continued.
He pointed out that changes in the world oil market, especially the recent release of reserve crude oil, would have an impact on fuel prices in the upcoming weeks.
In an effort to stabilize the local supply of aviation fuel, Okonkwo also asked the Federal Government to look into working with the Dangote Refinery.
When there was no refinery in Nigeria for the previous two years, we felt even more helpless. We are optimistic that we can find a way around that now that we have a refinery," he stated.
He claims that if the increase continues, certain airlines would find it difficult to keep covering the losses brought on by the growing price of aviation fuel.
The Federal Competition and Consumer Protection Commission's decision to penalize around five airlines for alleged price manipulation was also addressed by the AON spokesperson.
Okonkwo stated that although the commission has regulatory authority, coordinated price fixing is improbable because the aviation industry is still deregulated.
"Airlines don't get together to decide on fares. He stated that fixing pricing would entail acting as a cartel, which is untrue.
He clarified that the price of plane tickets fluctuates greatly due to the fact that different aircraft models have varying operational costs.
According to him, "each airline sets its fares based on its own operational costs."
In order to keep their operating licenses, Okonkwo continued, airlines must also show regulators that they are financially viable.
"You have to show the regulators that you are able to maintain operations and are financially viable at all times," he stated.
When making policy decisions that impact airlines, he urged authorities to consider the vulnerability of the aviation sector.