Aviation Fuel: Airlines to Cut Down Flight Operations to Servicing Profitable Routes

Chinedu Eze

Nigerian airlines may cut down on their flight operations, servicing only profitable routes as the price of aviation fuel in Nigeria, known as Jet A1, has consistently remained high since February this year.

Aside high cost of aviation fuel, the operators are also complaining about the failure of oil marketing companies to get the product to many airports, including the major airports, hence its scarcity at these airports.

As a way out, some airlines leave the luggage of passengers behind in other to carry more fuel to some airports where they cannot refuel.

So, they are mandated to carry fuel for return flight in addition to endurance fuel in case of emergency.

Some airlines that spoke to THISDAY said they were incurring losses adding that the inadequate supply of the product is contributing to flight delays.

At the peak of Middle East crisis, the price of aviation fuel peaked at N3, 500, from N900 per litre sold before the US-Israel attacks on Iran at the end of February, but it came down to N2, 500, according to the Airline Operators of Nigeria (AON) and has remained around that price ever since.

The airlines have said variously that fuel now accounts for 45 per cent to 50 per cent of total operating expenses for local carriers. Airline Chief executives, including Air Peace founder, Dr. Allen Onyema, disclosed that a single flight that previously required N3 million worth of fuel now demands between N12 million and N13 million.

The high cost has forced airlines into a tight cash-flow position. Some have accumulated substantial debts with fuel vendors. Consequently, marketers are increasingly refusing to extend fuel on credit, triggering sudden groundings.

The airlines said to keep planes in the air, they are borrowing billions of naira at steep commercial bank interest rates ranging from 29 per cent to 33 per cent, further destroying profitability.

Despite the fact that Dangote Refinery is refining and supplying Jet A1, which has successfully eradicated physical product scarcity, the pricing remains unsustainably high. Airlines have voiced frustration over pricing transparency, alleging that middle-tier marketers sell the product at significant markups compared to primary refinery rates, but the marketers claim that they are still competing among themselves. So, anyone that over prices his product will lose the market.

Spokesman of Air Peace, Efeoghene Osifo-Whiskey, told THISDAY that the prevailing Jet A1 aviation fuel supply challenge had become a significant operational pressure point for Air Peace, disrupting the delicate sequencing on which an extensive domestic, regional and international network depends.

“Fuel unavailability at a departure station does not simply delay an isolated flight; it can unsettle aircraft rotations, crew schedules and subsequent services across several destinations, progressively weakening on-time performance and creating passenger build-up at terminals. The impact becomes particularly acute on routes serving sunset airports, where a fuel-induced delay earlier in the day can erode the limited operating window available at the destination.

“A flight that is operationally ready to depart may consequently become untenable once daylight or prevailing airport operating restrictions intervene, leaving cancellation as the only responsible course of action. Recent disruptions in Abuja illustrated this compounding effect, with fuel constraints delaying operations and the resulting loss of the available operating window subsequently affecting the Maiduguri service,” he said.

The Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, confirmed that airlines may stop operating to some routes that are not profitable or cannot even offset the cost of operation.

“Airlines can cut down operations to certain destinations that are not viable. It is a global practice. When the price of Jet A1 went up some international airlines automatically stopped operating to some destinations. They cannot go to non-profitable routes or where they will spend more money,” he said.

Sanusi said that the major problem with aviation fuel was the high price and that could be attributed to the war in the Middle East, adding that the product is not scarce because Dangote Refinery is refining the product.

He added that Aero Contractors had maintained stable operation because it has sustained buy and pay procedure with oil marketers, noting, however, it does not operate to many destinations, but has upheld its schedule despite operating challenges being encountered by airlines.

He noted that what could explain the scarcity of the product at some airports was because of the challenges moving the product, noting that there are security and bad road challenges, especially during the rains.

The Chairman of Ndano Energy, an aviation oil marketing company, Chris Ndulue, told THISDAY that Jet A1 was not scarce in Nigeria but the prices remained high.

“I am not aware that the product is scarce. But it is very expensive; so, it could substantially be equated to scarcity. But in practical terms the product is not scarce. 90 per cent of the product comes from Dangote Refinery. They are producing and I don’t think there is scarcity. But because of the high price, it becomes scarce in a way,” Ndulue said.

He dismissed the allegation that the product price is high because of monopoly, saying that there is benchmark to its pricing because it cannot rise beyond international pricing of the product.

Ndulue noted that even if there is any monopoly, it could be addressed by having more refineries instead of importation.

“If there are more refineries there will be fair competition, which will address the issue of pricing; there will also be better service. There are a lot of benefits refining the product locally. The closure of Straight of Homuz will not affect the supply or the price of the product; no shipping delays, no demurrage and labour is also cheaper,” he said.

Ndulue, however, expressed the hope that in the coming weeks the price of the product would come down in Nigeria; although currently there is similarity in the pricing of the product in Nigeria with that of the international market.

He also acknowledged that some marketers may not be supplying airlines protractedly indebted to them with the product because they cannot allow the debts to continue to pile up.