For the third time this year oil marketers have increased the price of aviation fuel, known as Jet A1, thereby prompting airlines to increase fares in order to absorb the extra operation cost, which is put at 25 per cent. By the beginning of this year, oil marketers were selling a litre of aviation fuel for N107, but the marketers who about two weeks ago increased the pump price of the product to N120 in Lagos, have now increased it to N129 per litre in Lagos, N133 in Abuja and N138 in Kano.
Overall, the marketers have increased the price of Jet A1 by over 20 per cent and because it has multiplier effect, the airlines would be losing more than 25 per cent as aviation fuel constitutes more than 75 per cent of their operational cost.
Some of the airlines that got the circular about the increase before the close of work Monday raised the alarm and said that the oil marketers were systematically stifling their operation.
Some airline officials that spoke to THISDAY Monday evening said that they would shift the increase to the passengers.
“And because we don’t know when they will increase again we are going to increase fares with a wide margin to take care of future increases. Nobody hold them in check and when you confront them (the marketers) they will tell you that the downstream oil sector is deregulated. The only thing that is deregulated is Jet A1, nothing more. Why is nobody talking to these oil marketers? What kind of greed is this?” an infuriated airline official told THISDAY.
Also Monday, Airline Operators of Nigeria (AON) held a press conference at the Murtala Muhammed Inter-national Airport, Lagos and condemned the arbitrary price increase of aviation fuel by the marketers.
Chairman of AON, Dr. Steve Mahonwu, said the oil marketers were gradually forcing the airlines out of business and wondered why government seemed indifferent to the activities of the markters.
He added that if the marketers continued to increase prices, the airlines might be forced to ground their operations.Former CEO of Nigeria’s major airline operator, Aero Contractors, Shaf Syed, had called on the Federal Government to look into the high prices of aviation fuel to see how it could be made affordable to the airlines as the cost of the product in Nigeria does not reflect its price in the international market.
He said airlines spend high percentage of their earnings on aviation fuel and it will cost about N500,000 to fuel a Boeing 737 aircraft for one hour return trip, like Lagos-Abuja-Lagos.
He, therefore, urged government to appraise the cost of aviation fuel and find ways to reconcile the selling price of the product in Nigeria to the international price of the product, as it is known that the cost of Jet A1in Nigeria is the highest in the continent and beyond.
“The Federal Government needs to take a good look at aviation by making the commodity (aviation fuel) much more competitive, for I believe the aviation fuel in Nigeria is the most expensive in this region,” he said.
The airline operators blame the marketers for the high cost of the products, saying they make huge profits at the expense of their customers, noting that they use the high price of Jet A1 to cushion the losses they make elsewhere in their product marketing.
But in a paper he delivered recently, Godwin Udeh, manager with Joint Users Hydrant (JUHI) at the Airport Summit organised by Output Communication in Lagos, said the marketers face serious challenges which militate against their efforts to ensure regular supply of aviation fuel to the airports.
He said the marketers face serious constraints and pay huge amount in demurrage at the jetty and canvassed the resuscitation of the Atlas cove, Mosimi, the Joint Users Hydrant through submarine pipelines, rail train storage and the intermediate storage at Apapa, Lagos and at the Lekki Free Trade zone.