Jet fuel in Nigeria, Africa 35% higher than rest of world-IATA

  • Jet A1 highest in Nigeria, other producing nations
 
Wole Shadare, Seoul 

 Nigerian and African airlines would find it extremely difficult to be profitable as long as taxes, charges and high cost of aviation fuel persist.

This was the verdict of the Regional Vice President, Africa and Middle East, International Air Transport Association (IATA)  Mohammed Ali Albakri at the on-going IATA 75th Annual General Meeting (AGM) and World Air Transport Summit (WATS) holding in Seoul, South Korea.

He noted that Africa is the region with the greatest aviation potential, but punitive taxes, and high infrastructure and fuel costs are curtailing air transport’s benefits on the continent, IATA has said.

The African aviation industry loses $1.50 for each passenger it carries, with many airlines struggling to break even.

Albakri put average fuel cost in the continent at 35 per cent higher than the rest of the world, adding that even in oil producing countries, aviation fuel, otherwise known as JET A1 are not only expensive but scarce in some cases.

His words, “High taxation is one of the root causes of the reason airlines airlines are dying; so government can help to save the airlines by reviewing downwards the taxation levied on them.”

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‘If they continue to heavily tax the airlines it will continue to impact on their finances and you see that some of them are dying. There is something definitely wrong somewhere”.

Aviation fuel costs more in Nigeria and other oil producing countries than their counterparts that do not produce oil.

For instance, 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 N200 per litre.

The skyrocketing price of JETA1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fuelling aircraft.

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.

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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.

‘Today, fuel prices globally average per 1.3 dollar. In Africa, it ranges between $2 and $3.77. In some places, more than twice what it is globally.

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Vice-President for Africa, International Air Transport Association (IATA), Raphael Kuuchi who spoke recently said on the average, they notice that fuel price is 21 per cent more expensive in Africa than the world average. “In addition to that, we brought these taxes together.

‘”Africa is not a rich continent and we ask, why must we be paying the most? If you look at the high fuel taxes in Africa, the victims are actually oil producers.”

He lamented that in most of the oil producing countries; aviation fuel is mostly expensive, adding that it is baffling.

Albakri equally stated that out of $646 million airlines’ trapped funds, Africa accounts for $413 million that are still trapped Zimbabwe, Sudan Algeria, Angola and Eritrea, stressing that airlines need the funds to sustain their operations which he said are capital expensive.

He reiterated that carriers need cash flow to continue to sustain their operations to the countries where their funds are trapped.

Wole Shadare