Galloping Jet A1 price impact on aviation

There is still no solution to the skyrocketing price of aviation fuel otherwise known as Jet A1. WOLE SHADARE x-rays some of the challenges that has seen to unabated rising costs of the commodity in Nigeria

Steady increase

Since January 2021, the price of Jet A1 was approximately has been skyrocketing to the chagrin of airline operators.

A litre of aviation fuel in the domestic scene goes as high as N305 and N315 per litre, depending on the airport an airline is buying from.

The inability of local refineries to refine the product locally, high investment in logistics and high cost of aviation fuel handling equipment like re-fuellers, hydrant dispenser/servicers and filtration systems are also contributed to the sordid situation in the local market.

Nigeria still suffers from fuel scarcities. Reasons for the short supply of refined petroleum products (particularly gasoline, diesel and aviation fuel) in Nigeria include poor capacity utilization of the nation’s refineries and disruption of crude oil supply to the refineries

 

Aircraft positioning for take-off

Reliance on others

The country now relies heavily on foreign nations for the supply of these fuels. The country spends substantial part of her foreign exchange on fuel importation.

The Federal Government now wishes to reverse this trend by initiating the automotive biofuel programme. The Nigerian automotive biofuel programme involved the construction of 9 plants comprising of 4 sugarcane and two cassava bioethanol projects and 3 biodiesel projects.

These projects would involve the investment of $1.27 billion into the Nigerian economy for the production of 445 million L of ethanol, 192 MW of green electricity and 120 million Litres of biodiesel annually.

How feasible can this be done within a short time frame is left to policy makers to stem the astronomical cost of the commodity which in turn has added to the high ticket costs for air travel in Nigeria. Although, other challenges faced by airlines including scarcity of foreign exchange have conspired to make air travel almost unaffordable in this clime.

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Nigeria is a petroleum producing and exporting country. But like Libya, She is dependent on foreign nations for her liquid transportation fuels (mostly gasoline and diesel) produced via petroleum refining. Nations all over the world depends largely on refined petroleum products to meet their transportation energy requirements. Gasoline, diesel and aviation kerosene are the most common fuels used in the transportation sector. The

increasing industrialisation, globalization and motorisation of the world has led to a steep increase for the demand for fossil fuels especially petroleum.

 

Nigerian airlines

Poor infrastructure

But the infrastructure for quick dispensation of fuel from the refineries or fuel depots are lacking; a situation that may have added to the cost of the product.

Except the Federal Government urgently repair the broken down pipelines linking the Atlas Cove to the airports, particularly the Murtala Muhammed Airport, Lagos, aviation fuel crisis would continue to persist. The pipelines ruptured in 1992 and since then, aviation fuel, otherwise known as Jet A1 is brought to the airports in tankers that in most cases have reduces the quality of the product

The hydrant pipes from Atlas Cove have not worked for 20 years. Can you imagine trucking Jet A1 to an airport like Johannesburg? The Federal Airports Authority of Nigeria (FAAN) needs to work on infrastructure at the airports.

Aviation security expert, Group Capt. John Ojikutu (rtd) has charged NCAA to draw up standards for Jet-A1 quality assurance, starting with the transportation vehicles type or profile; supply and trucking systems; storage and dispensing systems.

He stated that at the moment, vehicles supplying aviation fuel, otherwise known as Jet-A1 are not sufficiently distinct from those supplying other petroleum products.

Fear of contamination

Ojikutu disclosed that the consequence of all these development could result in fuel contamination as some of the Accident Investigation Bureau (AIB) Reports of some aircraft accidents have shown.

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His words, “Up till about 1992, Jet-A1 supply to Murtala Muhammed Airport, was through pipelines from Ejigbo or the Nigeria National Petroleum Corporation (NNPC) depot. The supply from the MMA depot to the hydrants on the apron where fuel is dispensed to aircraft, were done also through the pipelines. The method then was quality assurance in practice.”

Currently, the existing infrastructure is most robust and widespread for petroleum than any other fuels. Such infrastructure does not include a networks of flow-lines linking oil wells to flow stations, several pipelines linking the flow stations to refineries, oil terminals, gas plants, and fuel depots from where fuels are delivered to filling/pump stations for distribution to consumers.

All these bottlenecks have a serious effect on air travel including travel costs. The prices of the product could rise suddenly without opportunity for airlines to make projections.  Aviation fuel constitutes 30 to 40 per cent of the total cost of production. Fuel price is of great concern to airline operators.

The product constitutes 30-40 per cent of the cost of operation. With this increase it is expected that ticket rate will continue to rise as the carriers would have to recover the cost through tickets, cargo or courier.

Experts’ views

Chairman and CEO of United Nigeria Airlines, Obiora Okonkwo recently lamented the astronomical increase in the price of aviation fuel, noting, “Fuel price is of great concern to airline operators. When we started operations it was N160 per litre but now it is over N200 per litre. The product constitutes 30-40 per cent of the cost of operation. With this increase it is expected that ticket rate will also increase by 50 per cent. Airlines must have to recover the cost through tickets, cargo or courier”.

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“The rise was sudden and it is going to be severe for the industry. So the media should help to educate the public that for the aviation industry to be viable they must make adjustments to reflect the high prices of aviation fuel. For passenger to have relatively cheaper fares, they must book their flights early,” Okonkwo said.

General Manager, TotalEnergies Nigeria, Rabiu Abdulmutalib in his presentation at a conference in Lagos, recently said that unless the challenges of continuous importation of Jet A1, inability of airline operators to have easy access to foreign exchange and airport taxes among others are resolved, the skyrocketing price of the product in Nigeria would continue to rise in the country.

To address the current situation, Abdulmutalib canvassed proper coordination among relevant government agencies in monitoring and enforcement of all standards along the supply chain.

To avoid contamination of the product, Abdulmutalib opined that organisaitons should not compromise any of the established international and local regulations on handling JET A1 from refinery to aircraft, adherence to international specification checklist for aviation fuel recognised by major aviation fuel suppliers in the world and checking competencies and capacities of laboratories contracted for testing parameters of the product in the country.

He also appealed for government intervention for easy access to Forex especially aviation fuel importers and national sensitisation and awareness on monitor filtration phase out from all aviation handling systems in Nigeria before the deadline of July 2023.

Last line

Until most of these challenges are taken off, airlines would continue to see a steady rise in the price of the commodity, while travelers would see the cost passed onto them.

Wole Shadare