Fuel price increased over 100% in one year from N190/litre• Nigeria’s domestic airline business may go into extinction, says Okonkwo• African airlines lost $8.6b in 2021 to COVID-19 travel restrictions
Aviation fuel, also known as Jet A1 accounts for between 30 to 40 per cent of operational costs in aviation. Being a deregulated product that is exclusively controlled by suppliers, the price has consistently been fluctuating along with Naira to Dollar exchange rate. Okonkwo said it was difficult to find any aviation operator survive on such instability, a reason all operators are worried.
“However, despite the fall in naira, the base fare for a ticket is still between N21,000 and N23,000. Aviation fuel could easily become about 30 to 40 per cent of your cost of operations. 99 per cent of aviation components are done in foreign exchange denominations. A ticket was about N2,000 in the year 2000, which was about $100 then, but look at the situation today.”
“Airline business is the livewire of the entire aviation value chain. If airlines don’t fly or the airlines are in comatose, NAMA, NCAA and FAAN will not get the required revenue to run their operations.” He explained that the product, like others, comes into the country through the Lagos ports. Intractable congestion at Apapa causes a delay in cargo clearance of between four and seven days, or more.
Betiku said all of the cost elements, majority of which are avoidable in a functional system, are passed on to consumers as the product price. “The contract is for a period of 12 months and it will include seven and half per cent value added tax. This contract is not only for supplying, but it’s also for installation and maintenance, including spare parts.
While the figure is less than the $10.21 billion revenue loss recorded by the sector in 2020, it did mark a 49.8 per cent decline when compared to the revenue recorded by the sector prior to the pandemic in 2019.