How poor jet fuel supply, others raise fares

●Jet A1 price highest in Nigeria, other oil producing nations

Lack of constant supply of aviation fuel, otherwise known as Jet A1, has been identified as the major cause of cost of the commodity in Nigeria, where Jet A1 Nigeria is ranked amongst countries with the highest price cost.

In Nigeria, despite the stability in the lifting of aviation fuel across the country and the deregulation of the commodity, JET A1 has hit an all-time high of N220 per litre and up to N250 per litre in places such as Maiduguri and Sokoto.

The skyrocketing price of JET A1 in Nigeria has added to the pains of airlines, which use 30 per cent of their revenues for fuelling.

Just recently, the Managing Director of Medview Airlines, Alhaji Muneer Bankole, lamented the situation, disclosing that his carrier had spent N22 billion on aviation fuel in five years with cumulative cost by airlines said to be in the region of N80 billion within same period.

At a press conference recently, he said the high cost of aviation fuel in Nigeria was depleting airlines’ little profit, adding that the carriers were at the receiving end of all the bureaucracies the commodity go through before being sold to operators.

“We now buy a litre of aviation fuel at N220 in Lagos, but up in the North in places like Maiduguri, it is about N260. That is the unfortunate situation we have found ourselves,” he said.

Bankole noted that the prices of the product increase anytime it becomes scarce and due to the hiccups in the supply of aviation fuel to different parts of the country, there is no uniformity, adding that fuel marketers sell at arbitrary prices as the product is deregulated.

He said that the perennial shortage of aviation fuel, coupled with the gridlock faced in moving the product have become a clog in the wheel of domestic airlines as they find it difficult to operate smoothly like their counterparts in other parts of the world.

Bankole also said that the price of the product is critical to an airline and also considering the fact that fuel consumption amounts to about 30 per cent of the cost of operation for an airline, there is a need to quickly find more reliable ways to ensure the supply and distribution of the product.

A major aviation supply company in Nigeria, CITA noted that there are two major hindrances to aviation fuel supply to the airports in the country. One is the process of supply and the second is the price of the product.

Aviation fuel is central to the operations of an airline, as it constitutes between 35-40 per cent of an airline’s cost. The price of the commodity – laden with taxes – in the West African sub-region, is the highest in Africa.

While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents per gallon 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 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.

Apart from the issues of highly priced jet fuel, Africa’s jet fuel shortfall is expected to triple from 1.8 million mt in 2013 to around 5.2 million mt by 2025. As a result of the high fuel price, ticket prices are relatively high. If the fuel price comes down and costs of operations reduce, airlines are likely to bring down their fares.

Wole Shadare