IATA: Logistics, others cause of high aviation fuel

The high cost of aviation fuel, otherwise known as Jet A1, has been attributed to distribution logistics, according to the Director General of International Air Transport Association (IATA), Alexandre de Juniac.
The IATA chief told Woleshadarenews that expensive fuel price constitutes 30 per cent of cost of operations to airlines.

He urged countries to reduce by all means what makes fuel extremely expensive by removing physical restrictions of fuel supply.
Juniac reiterated that in India and particularly Brazil, which is a big oil producing country costs are high, stressing that the issue is a big concern for the airlines, which IATA represent.

His words: “Taxes, supply chain and others have made fuel price to go up. Africa is not the only place where the cost of fuel is high. India is same. Brazil, which is a big oil producing country, the costs are high. We lobby everywhere. It is such an important cost factor for us.

“What makes the fuel price expensive are physical and fuel contribute about 30 per cent of cost to airlines. We urge states to reduce by all means what makes fuel price expensive by removing physical restrictions on fuel supply,” he added.

Aviation fuel is the major and most important cost element for airlines. A change in the pricing determination of aviation kerosene would help in the development of air transport in Brazil, directly contributing to the economic development and growth of the country.

The price of aviation fuel in Brazil is one of the highest on the planet! Developing a prices allocation linked to a transparent formula to reduce costs is of fundamental importance for the sustainable growth of air transport throughout the country.

The aviation kerosene, responsible for almost a third of the price of air tickets, reached in the week of August 20, its highest historical value paid by airlines in Brazil: around $3.30 including taxes.
One of the many concerns in Nigerian airlines is the disruption and unreliable supply of aviation fuel, which most often hamper airline operations.

Many of the flight cancelations on domestic operations are due to delay in fuel supply. Besides the high cost of the product, which increases at the airports located up north, the supply of the product is fraught with hitches.
Airline operators are of the view that as long as the product is being imported and transported through Apapa in Lagos, the price of aviation fuel would always be high, and the supply would always be inefficient.

The lowest price of the product is between N235 to N250 in Lagos and in the other parts of the country; it could be as high as N280 per litre. So overall, an aircraft loads about N2.5 million litres of fuel for one-hour flight.

Now, the challenge is how to get fuel regularly and for the product to be sold at cheaper rate.
Chief Executive Officer of Aero Contractors, Captain Ado Sanusi, lamented that one of the challenges of aviation fuel is that in as much as it was deregulated officially, marketers still operate as a cartel. They do not open and compete on the prices.

The marketers he noted, manage the product in a way that demand is always higher than supply, so the price is always high. This is exacerbated by the fact that it is imported.
The marketers pay a lot of charges, which keep the price of the product high and higher than what an airline can get in the West Coast.

Sanusi had called for the review of the product pricing because the prevalent situation is that “you wake up you learn that they have increased the prices of Jet A1 by 30 percent.
“And you cannot quickly adjust your ticket prices to reflect that, but you have to buy that Jet A1 at the new prices in order to operate your flights that day; but the passengers have bought their tickets for that day’s flight at the old fares.”