Middle East crisis: Airline industry in turmoil as aviation fuel hits N1,800 per litre

By AYOOLA OLAOLUWA 

The nation’s aviation industry has been hit hard by the ongoing war in the Middle East involving Israel, the United States of America and Gulf states of Kuwait, Qatar, UAE, Bahrain, Oman and Saudi Arabia on one side, and the Islamic Republic of Iran on the other.

The war, though raging several  thousands of kilometres away from the shores of Nigeria, is having tremendous impacts in Africa’s most populated nation.

Despite being produced in the country, prices of refined petroleum products, especially aviation fuel, have ballooned out of control as petroleum products are internationally priced commodities traded in U.S. dollars.

According to Business Hallmark checks, Jet A1, which remains the largest cost component in airline operations, accounting for about one-third of total operating expenses, currently goes for  N1,780 in Lagos, N1,815 in Port Harcourt, N1,820 in Abuja and N1,835 per litre in Kano.

Unfortunately, hard hit airlines struggling under the yoke of high operational costs have not been able to pass on the rising fuel costs to passengers.

The situation has forced aviation experts to warn that it will be extremely challenging for airlines to continue to stay in operation if energy prices fail to retreat.

“If airlines increase fares to keep up with fuel cost, it will negatively impact on the already stressed industry. As it is, only well off individuals and businesses going on essential journeys travel by air, while leisure travel is on the verge of collapsing.

“So, any attempt by airlines to raise fares to recoup rising fuel cost will kill off leisure travel which before now used be the top revenue earner for the hospitality and aviation industry

“Likewise, the aviation industry can not afford to continue to absolve the rising fuel cost. If the situation does not ease in the short term, local airlines will have no option than to increase fares.

“This will definitely affect local air travel. We may see significantly decline in passenger travel which will lead to large-scale flight disruptions and cancellations.

In their own reactions, airline operators under the banner of Airline Operators of Nigeria ((AON) lamented that domestic airlines are facing severe financial strain.

According to the group, the price of aviation fuel, which sold for about N1,000 per litre two up to the last week in February, has jumped to about N1,800 per litre in many parts of Nigeria.

AON’s spokesperson, Obiora Okonkwo, said the spike had placed airlines under severe financial pressure, as they have not been able to transfer the additional cost to passengers.

.“Two weeks ago, we were getting Jet-A1 at about N1,000 a 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.

“We are watching the situation in the Gulf region. Right now, what we are doing is that we are bleeding. We are taking the blow. We are selling tickets at a very non-profitable price. We are losing a lot of money”.

The AON boss warned that if the situation persists and there is no intervention, domestic airlines would be forced to review ticket prices.

“We just pray it will not be for long. But if it does, many airlines may not be able to absorb the losses associated with the development,. Obviously, adjustments should be expected anytime soon. But again, we are very sensitive to the economic situation of Nigerians and our travellers”, Okonkwo added.