Industry analysts and domestic airline operators have called on the Nigerian government to address the root cause of the aviation fuel price hike to bring relief to operators who have continued to absorb the soaring costs.
They argued that while the approval of a 30 per cent discount on outstanding debts owed by domestic airlines to key aviation agencies aims to provide immediate liquidity to ease mounting financial pressure in the sector, it merely treats the symptom rather than the disease, which is the astronomical hike in Jet A1 prices.
Pinnacle Daily reports that President Bola Tinubu, on Thursday, approved a 30 per cent discount on outstanding statutory fees owed by domestic airlines to major aviation agencies.
The Minister of Aviation and Aerospace Development, Festus Keyamo, who disclosed this on Thursday during a meeting with airline operators, said it was formally conveyed through the Chief of Staff to the President, Rt. Hon. Femi Gbajabiamila.
The minister said the relief applies to debts owed by airlines to key aviation agencies, including the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA), and the Nigerian Airspace Management Agency (NAMA).
The discount applies to accumulated debts such as parking and landing charges (payable to FAAN), navigational charges (owed to NAMA), and other regulatory obligations.
Keyamo explained that the move aims to help airlines in meeting outstanding obligations such as parking fees, navigational charges, and other operational expenditures.
The intervention is a direct response to the ongoing Jet A1 fuel crisis, which has significantly increased operating costs for domestic carriers.
Airlines had threatened to shut down operations on April 20 if nothing was done about the soaring cost of aviation fuel. The Airline Operators of Nigeria (AON) said the price of Jet A1 fuel has gone up by about 300 per cent from ₦900 to over ₦3,000 per litre in just two months.
Operators Demand Deeper Reforms and Direct Dialogue
While welcoming the debt relief, airline operators like Air Peace Chairman/CEO, Allen Onyema, called for a total waiver of debts and highlighted challenges of domestic airlines, such as high borrowing costs.
Analysts point out that while the debt relief is a welcome gesture, it is dwarfed by the 300 per cent surge in aviation fuel prices.
An aviation analyst, Wole Shadare, said the offer of a discount on the debt owed by airlines is good, but there are underlying issues that need to be addressed.
Onyema, who is the Vice President of AON, called for a one-on-one meeting between President Tinubu and airline operators to enable them to have a robust discussion with the President on key issues affecting them and come up with a resolution that would benefit the industry.
The Air Peace CEO called on the regulatory authorities and fuel marketers to address the issue of the pricing of aviation fuel in Nigeria.
According to him, global crude prices have only risen by about 30 percent due to Middle East tensions (the U.S.-Iran war), making the 300 per cent domestic price hike look disproportionate and potentially driven by market exploitation.
“Since the advent of the U.S.-Iran war, there has been a spike in the price of aviation fuel in Nigeria, which we in Airline Operators of Nigeria (AON), feel is not proportionate to the rise of crude oil internationally,” Onyema stated.
“Normally, the standard is that if there is a percentage increase, there should be a proportionate increase in the price of the by-products and one of those by-products is aviation fuel. We discovered that it is only in Nigeria that we have about 270 or 250 per cent increase, while in other parts of the world, including African countries, it is about 70 per cent,” Onyema further stated.
He urged the authorities to take urgent measures to address the challenges, warning that no airline in Nigeria will be able to continue flying in the next seven days.
He said two airlines have informed that they are shutting down, while more are going to do so due to the high cost of operations.
Rector and CEO of the Nigeria College of Aviation Technology, Zaria, Dr Danjuma Adamu Ismaila, said aviation fuel constitutes about 40 per cent of the operation costs of airlines and noted that the 300 per cent increase in price has put enormous financial pressure on airlines.
Speaking in an interview with TVC News, Dr Ismaila stressed the need for the authorities to ensure stability of fuel price and supply.
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Speaking on the cause of the fuel price hike, he said the country is still relying on imported Jet fuel, which is supplementing what is produced locally, making the country vulnerable to global price volatility.
Call for Transparency in Fuel Pricing
Wole Shadare condemned what he described as exploitative, the rate of increase of aviation fuel in Nigeria, and called on the authorities to investigate the pricing and address it.
The NCAT Rector/CEO called for transparency in pricing of aviation fuel by publishing price templates, including crude oil benchmark price, process costs, logistics costs and profit margin.
“Right now, there is a lack of transparency in the transactions. This is the reason we have prices higher than the international market price,” Ismaila stated.
Potential Airfare increase
Shadare said that with the increase in aviation fuel price, it is almost impossible for airlines not to increase airfares.
He, however, stressed that increasing airfare is not the solution, but addressing the cause of the fuel price hike.
“They are going to increase airfares, but adjusting airfare is not the solution. Rather than focusing on increasing airfare, they should look at the things that made jet fuel expensive,” he stated.
The analyst said airlines should not increase airfares beyond what Nigerian flying public can afford, especially now that there is low passenger traffic.
“If you increase airfare astronomically, you are pushing passengers away. So they really need to understand it is not just increasing airfares but to do it reasonably, because already, the traffic is down in recent times because of the economy and other issues.”
He warned that increasing airfares beyond what Nigerians can afford could lead to a significant decline in passenger traffic and airlines would take the greatest hit of it.
He observed that the current challenge of the aviation sector is not peculiar to Nigeria, stating that some foreign airlines have cancelled many scheduled flights in recent weeks, while spending extra billions of dollars on Jet fuel because of the current supply disruptions caused by the Middle East conflict.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X