Nigeria’s aviation fuel price up 100% as Ghana reduces price by 20%

While the government of Ghana has promised to reduce the cost of aviation fuel by 20 percent, domestic airlines in Nigeria are grappling with aviation fuel scarcity, which has spiked over 100 percent in recent times.

The government of Ghana says that the move is part of efforts by government to make Ghana’s aviation sector attractive to investors.

Aviation fuel is central to the operations of an airline, as it constitutes between 35 – 40 percent of an airline’s cost.

According to President of Ghana John Mahama, “We have consulted with the national petroleum authority and the national petroleum authority has agreed to adjust the cost of aviation fuel and reduce it by 20 percent. I am sure this will improve the volumes that the airlines take and make Ghana a prepared destination for fuelling up.”

However, despite the current economic downturn and scarcity of foreign exchange, domestic airlines in Nigeria are grappling with aviation fuel scarcity and its price, which has increased from N120 per litre to N250 per litre.

Meanwhile, five major airlines operating in Nigeria – Arik Air, Medview, Dana, First Nation and Aero – were forced to hike fares by an average of 35 percent recently following the scarcity of Jet A1, also known as aviation fuel.

Analysts say airfares may jump yet again on the back of soaring inflation, which climbed to 16.5 percent in June (year-on-year), the highest since 2005.

BusinessDay checks show that only two marketers, Sahara Oil and Total Oil supplied Jet A1 to virtually all the carriers, thereby putting huge pressure on airlines and passengers, who struggled to get on-board flights to their different destinations.

The Nigerian Civil Aviation Authority (NCAA) few weeks back said it did not authorise airlines to increase fares, just as the aviation regulatory body said airfares, add-ons, charges, tariffs and terms and condition of service were fully liberalised.

According to Sam Adurogboye, spokesman for NCAA, airfares and sundry charges have been statutorily deregulated and subjected to market forces. “The scarcity of aviation fuel or increase in the price of aviation fuel will automatically cause airlines to increase airfares to cushion effect of the cost of operations,” Tayo Ojuri, industry expert and CEO of Aglo Limited, an aviation support service company, told BusinessDay.

Aviation is a function of disposable income and the people that travel in Nigeria are more of a travel driven by business, especially for domestic travel, Ojuri said.

“Looking at the routes, Lagos to Abuja, Lagos to Port Harcourt, Lagos to Kano, Abuja to Asaba, these routes are driven by business. The other option for airlines will be for them to increase their fares and increasing fares will mean increase on the cost of goods and services for people that travel by air,” he explained.

Spokesman for Dana Air, Kingsley Ezenwa, disclosed that his airline like many other airlines were facing serious challenges, adding that, “We have not cancelled flights and we don’t have the intention to do so but one thing is certain, we have witnessed delays and we will run all our schedules.”