98% aviation spend depends on forex –Experts

Factors ranging from increase in Jet A1 (aviation fuel) to its non-availability, down to access to foreign exchange to do business in aviation in Nigeria, is said to be 98 per cent dependent on foreign exchange.

This, coupled with multiple charges that airlines have to bear, has made aviation business in Nigerian cumbersome and not looking good for the sub-sector.

Experts in the aviation sector who spoke to Woleshadare.net noted that the new reality has set in, whereby airlines have to struggle to get forex to do their business in a world where every transaction made is not in local currency.

A former Assistant Secretary General of Airline Operators of Nigeria (AON), Mohammed Tukur, said despite the concession given to airlines to access foreign exchange at good rate, the process has been very slow, thereby putting so much pressure on the carriers to buy or lease aircraft off shores and import aircraft spare-parts from overseas, but their charges are done in naira, a currency currently spiraling against all other global exchange tenders.

He stated that these are some of the factors that made airlines, under the aegis of Airline Operators of Nigeria (AON), to meet the Federal Government to find a lasting solution for airlines so that they do not all close shop.

AON Chairman, Captain Noggie Meggison, said recently: “It is no longer news that airlines in Nigeria charge very competitive fares in local currency, but have to carry out numerous operational activities, including maintenance and purchase of spare parts in foreign currency (dollars) thereby adding to the already unbearable burden the airlines have to carry on a regular basis.

“And the current forex constraint being faced by airlines has further exacerbated the situation and threatening to cripple airline operations in the country.”

Aviation fuel is supposed to be no more than 15 or 20 per cent of the total operation cost of a one hour flight and even then for airlines to make profit would be on a full load factor but right now, the fuel percentage of the total operation in Nigeria has hit 30-40 per cent and the impact is far-reaching.

The skyrocketing price of JET A1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fuelling aircraft. While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents in Cameroon, it is sold for close to $3.14 cents in Ghana, which also produces oil.

In Luanda, Angola (also an oil producing country), it costs $3.75 per gallon; Libreville $2.05 per gallon; Khartoum, Sudan $2.44 per gallon. It is only Equatorial Guinea that sells JET A1 for $0.46. Jet fuel prices in some African capitals are double the global average and it is posing a threat to its aviation sector’s development.

The high cost of jet fuel in Africa compared to other regions due to distribution inefficiencies and infrastructure constraints, has held back the development of airlines and fare reduction.

The Federal Government recently assured that the problem associated with scarcity of aviation fuel would soon be a thing of the past when government finalises work on Kaduna and Port-Harcourt refineries that would be dedicated solely to refining aviation fuel.

Regional Manager, North, West and Central Africa for South African Airways, Ohis Ehimiaghe, lamented that for long, airlines had been battling scarcity of Jet A1, noting that unavailability of the commodity for several months has done incalculable damage to their operations.

His words: “There is no Jet A1 in Nigeria. The priority is not on aviation fuel, but on premium motor spirit (PMS).

We get it at a premium here, but unfortunately, Ghana is running dry of the commodity. The high cost of fuel adds to cost of doing business.” “We are fortunate that South Africa Airways have huge operations in Ghana. Most times, we fly to Libreville to get fuel,” he added.

Wole Shadare