Domestic airlines operating in Nigeria are facing mounting financial pressure following a sharp increase in the price of Jet-A1, also known as aviation fuel, the Airline Operators of Nigeria has said, warning that the situation may become unsustainable without government intervention .
The group disclosed that the price of aviation fuel, which sold for about N1,000 per litre two weeks ago, has surged to about N1,800 per litre in many parts of the country, representing roughly an 80 per cent increase within a short period . Reports indicate that aviation fuel now sells for between N1,803.19, N1,839.19, and N1,852.19 per litre at Lagos, Abuja, and Kano airports, respectively .
Industry stakeholders have linked the latest spike to the ongoing conflict in the Middle East, which has pushed up global energy prices. Aviation fuel remains the largest cost component in airline operations, accounting for about 30 to 35 per cent of total operating expenses, though some experts note this can rise to 40-50 per cent in Nigeria due to the country’s short airspace limiting fuel efficiency .
Speaking on Channels Television, the spokesperson for the AON and Chairman of United Nigeria Airlines, Prof. Obiora Okonkwo, said the surge had placed airlines under severe financial strain. According to him, most carriers have so far refrained from immediately transferring the additional cost burden to passengers, despite the pressure on their operations .
“Two weeks ago, we were getting Jet-A1 at about N1,000 per litre, which today is about N1,800, and even more in some stations. We have experienced an increase of about 80 per cent. That’s quite a spike,” Okonkwo said .
He explained that airlines were currently absorbing the losses to avoid worsening the economic burden on travellers.
“We are not in a business where you can easily adjust your ticket price. Right now what we are doing is that we are bleeding. We are taking the blow. We are selling tickets at very non-profitable prices. We are losing a lot of money,” he said .
Okonkwo warned that the situation might not be sustainable if fuel prices continue to rise without government intervention.
“Obviously, adjustments will be expected anytime soon. But again, we are very sensitive to the economic situation of Nigerians and our travellers. I am hoping that it will not last beyond this, but if it does, I can tell you that maybe many airlines may not be able to absorb the losses that are associated with the development,” he added .
He noted that developments in the global oil market, particularly the recent release of reserve crude oil, could influence fuel prices in the coming weeks .
Okonkwo urged the Federal Government to explore engagement with the Dangote Refinery as part of efforts to stabilise aviation fuel supply locally.
“We were more hopeless in a situation where there was no refinery in Nigeria in the last two years. Now that we have a refinery, we are hopeful that we can find a solution around it. I am hoping that it will not last beyond this, but if it does, many airlines may not be able to absorb the losses associated with the development,” he said .
According to him, the government could broker a deal with the Dangote Refinery to provide crude at a special rate, which would result in a dedicated, more affordable price for aviation fuel .
John Ojikutu, an aviation expert, explained that with fuel accounting for approximately 40 per cent of an airline’s total operational budget, the increase could shift that burden to represent up to 70 per cent of costs. He suggested that to avoid losing passengers entirely, airlines would likely adopt a tiered approach where premium travellers and last-minute flyers bear the brunt of any adjustments.
“There’s no way the increase in fuel price will not affect airfare. Fuel is about 40 percent of the operational cost. If an airline is buying fuel at an increased cost, you can be sure that operational cost is going to be increased by that amount,” Ojikutu noted .
Meanwhile, the AON spokesperson also reacted to the decision by the Federal Competition and Consumer Protection Commission to sanction about five airlines over alleged price fixing. Okonkwo said while the commission has regulatory powers, the aviation sector remains deregulated, making coordinated price fixing unlikely .
“There is no meeting of airlines where they agree to fix prices. Fixing prices would mean operating as a cartel, and that is not the case. Different aircraft attract different operational costs, and each airline determines its fares based on its own operational costs,” he said .
He urged regulators to take into account the fragile nature of the aviation industry when making policy decisions affecting airlines, noting that airlines must also demonstrate financial viability to regulators as part of the conditions for maintaining their operating licences .
Beyond immediate fuel relief, the AON is seeking a “special window” for intervention funds to ease financial pressures on airlines. “Not free money, not a grant, but a single-digit loan for us to have access to for our acquisitions and other operations. That would go a long way in reducing the financial pressure we are feeling,” Okonkwo said .
The aviation fuel crisis comes as Nigerian airlines already contend with high interest rates of approximately 30 per cent, over 40 different taxes and charges, and currency volatility where revenue is earned in Naira while most major costs must be settled in USD .
