Nigerian Airlines Issue Ultimatum Over Soaring Jet Fuel Costs
Nigerian airlines have issued a stark warning that they will suspend all flight operations from 20 April unless the "crippling" cost of jet fuel is significantly reduced. The Airline Operators of Nigeria (AON), an industry body representing around a dozen predominantly domestic carriers, formally wrote to the Major Energies Marketers Association of Nigeria on 14 April, highlighting an alarming 270 per cent surge in jet fuel prices since late February.
Accusations of Artificial Price Inflation
In the correspondence, seen by Reuters, AON described the price hike in Africa's most populous nation as "astronomical and artificial," asserting that it vastly outstripped global crude oil price movements. The letter stated: "Currently, airline revenues are insufficient to cover the cost of fuel alone." This crisis comes amid broader global aviation disruptions due to soaring jet fuel prices, a consequence of the Iran war, which have prompted fare increases and revised growth plans worldwide.
African Airlines Face Heightened Vulnerability
African airlines are particularly vulnerable to such fuel price spikes. According to the African Airlines Association, jet fuel typically constitutes between 30 and 40 per cent of their operating costs, significantly higher than the global average of 20 to 25 per cent. This makes them more susceptible to financial strain when fuel prices escalate rapidly.
Marketers Dispute Airlines' Claims
MEMAN disputed the airlines' figures in a response to the AON seen by Reuters, saying the quoted price was more than 40% above a survey-based market average. They added that jet fuel distribution involves specialised equipment and handling that make it more cost-intensive, suggesting operational complexities contribute to the higher prices.
Broader Economic and Security Implications
AON warned that raising ticket prices to reflect the fuel costs could reduce passenger numbers, while a shutdown of airline operations would have broader repercussions. Such a move would hurt banks, cost jobs, and potentially worsen insecurity in Nigeria, highlighting the interconnectedness of the aviation sector with the wider economy.
Fuel Consumption and Supply Chain Issues
Nigeria's aviation sector consumed about 2.1 million litres of jet fuel per day last month, according to data from the country's petroleum products regulator. However, the giant Dangote Petroleum Refinery - Nigeria's sole domestic jet fuel producer - made no deliveries to the domestic market in March, the data showed. This supply gap coincides with Nigeria's exports of clean petroleum products - including gasoline, diesel, kerosene, and jet fuel - more than doubling month-on-month in March, as per tanker-tracking firm Kpler.
Dangote did not immediately respond to a request for comment, leaving questions unanswered about the refinery's role in the domestic fuel market. The situation underscores a critical juncture for Nigeria's aviation industry, with airlines pushing for urgent intervention to avert a nationwide flight suspension that could have far-reaching consequences.
