Going Sky High

Indeed, due to the unproductive state of the local refineries, all jet fuel needs are imported. Records at the Department of Petroleum Resources revealed that the Nigerian aviation industry consumes about 50 million litres of Jet A1 fuel monthly while the import reception facility in Lagos boasts of a mere 10 litre capacity every month. According to a senior official at the Apapa jetty, the main entry of all imported petroleum products, the statistics unveiled the gross inadequacy. Consequently, this shortcoming has translated to severe delays in distribution of Jet A1 fuel to competing airlines.

While the increase in price is generally not below N100, the price from the various sources of delivery from each airport appears to vary. Chanchangi Airline’s Media Relations Officer, Ibrahim Adamu, revealed to TheNEWS that while aviation fuel is obtained in Lagos at N105 per litre, the product is being supplied in Kaduna to the airline at N110 per litre. At Enugu, it is sold for N105.

The airlines’ harrowing experience of 6 January is compelling

• Harold Demuren, NCAA Boss.

some of the airlines to tinker with alternative sources of aviation fuel. Some operators are toying with the idea of shopping for Jet A1 from neighbouring countries like Ghana and Togo. The resort, if followed through, will further spiral operational costs.

The hike in aviation fuel prices does not, however, seem restricted to Nigeria. Foreign airlines operating in Nigerian skies have also raised their fares to reflect higher fuel surcharge. In the summer of 2007, British Airways was fined almost 270 million pounds for illegal collusion with Virgin Atlantic regarding long-haul fuel surcharges. Experts posit that with fuel prices worldwide at a current high, evidence points to fuel surcharges as the only short-term measure of coping with the volatility of fuel prices. Now, airlines the world over are passing on the extra cost to passengers as a means of offsetting skyrocketing fuel prices. Asian and European carriers have been particularly successful at applying surcharges, regardless of their business models, and both network and low-cost carriers have adopted the idea.

In Nigeria, for the more patronised airlines like Chanchangi, Virgin Nigeria, Aero Contractors and Arik, an average of between 250,000 litres and 370,000 litres of aviation Jet A1 fuel is required weekly for operations on the domestic routes alone. With each 15 minutes taxiing of a Boeing 727 aircraft within the Murtala Mohammed Airport, for example, about N80,000 worth of fuel is burnt. For larger configurations like the 747, the amount is double.

Chanchangi’s spokesperson, Ibrahim Adamu, commented that without appropriate government intervention in Jet A1 pricing, chances are that air fare may be further reviewed upwards in the next few months. Joji added that the hike was inevitable if the airlines were to remain in business. He hinted, however, that the Jet A1 price hike is already scorching the operations of local operators and prompting the airlines towards reaching a position on it.

Oil companies on contractual terms with airlines will also bear the brunt by being compelled to pay higher rates.

Before last week’s hike, airlines had been grappling with increasing charges by regulatory authorities like the Federal Airports Authority of Nigeria, the Nigerian Civil Aviation Authority and the Nigerian Airspace Management Agency (the latter has recently introduced additional navigational charges) These other operational costs have made increase in air fares inevitable, according to Joji.

At the new rates, Chanchangi Airways and IRS charge N16,000 on economy class flights from Lagos – Abuja, Port Harcourt, Kaduna and Owerri. Aero and Arik, however, which attract more patronage, charge N17,000 on the Lagos-Abuja and Port Harcourt routes. The airlines have also increased fares on most VIP routes by N4000.