Wednesday, December 14, 2016 was one of the worst days to travel by air in Nigeria. The perennial scarcity of aviation fuel which has crippled Nigeria’s aviation industry, reached its peak on that day. Arik Air which uses 500,000 litres of aviation fuel daily to operate its fleet of more than 20 aircraft, could only squeeze out 180,000 litres on that day.
The result was wanton delays and cancellation of flights that kept thousands of air travelers stranded at airports strewn across the country. The crisis in the nation’s aviation industry is mounting by the day. Kaduna Airport, located in a city that once served as the regional seat of power of Northern Nigeria, used to be one of the busiest airports in the country. Now it is practically dormant. On one frenzied day in November, the only airline that offered to fly that route from Lagos was forced to combine it with a flight to Jos. The air fare to Kaduna was N70,000.
On December 14, no airline flew that route from Lagos. Passengers who were travelling to Kaduna for the seminar organized by the Nigeria Deposit Insurance Corporation (NDIC) scrambled to book Abuja flights. Those who could not find space in the few flights to Abuja opted to travel by road. It turned out that those who travelled by air, landed the venue of the seminar on Isa Kaita Avenue, GRA, Kaduna some 15 minutes before those who were frustrated to go by road.
The morning flight booked by the seminar delegates was delayed, cancelled a couple of times and ended up leaving Lagos by 9 p.m. They landed Abuja by 10 pm. The journey by road from Nnamdi Azikiwe International Airport, Abuja to Kaduna is about three hours. The air travelers landed Isa Kaita Avenue, Kaduna by 12.45 am on Thursday, December 15. Those who left Lagos by road at 10.30 am landed the venue by 1.05 am on Thursday. The air travelers were faster by a scant 15 minutes. A youth corps member serving in Kano booked a flight for Lagos on Friday, December 16 after the mandatory one month orientation. He could not fly. The airline complained that it was battling a backlog of passengers stretching for two days. Until those on the waiting list were cleared, the corps member could not fly. The young man ran out of patience and entered the road.
The crisis in the aviation industry revolves around scarcity of aviation fuel. Aviation fuel known in industry parlance as Jet A-1 is one of the refined petroleum products deregulated in 2004 by the administration of former President Olusegun Obasanjo. On paper, the pump price of aviation fuel is determined by interplay of the market forces of demand and supply. But the situation in the aviation fuel market is very precarious. The cabal that controls the market has replaced market forces as the invisible hand on the price mechanism. In the second quarter of 2015 the recommended pump price of aviation fuel on the product price template of the Petroleum Products Pricing Regulatory Agency (PPPRA) was N101 per litre. Ironically, the open market price of the product was N130. No one could explain the wide margin between the open market and the recommended prices.
Now the fuel crisis in the industry has reached alarming proportions as the naira continues its precipitous journey down the abyss. Because of de-regulation, aviation fuel marketers do not enjoy the concessionary exchange rate of N305 to the dollar extended to marketers for the importation of petrol. At the best of times, aviation fuel marketers get dollars for the importation of the commodity at bureau de change rate which hovers around N380 to the dollar. When everything goes wrong, they source their dollars from the black market. On some frenzied days in the parallel market, the naira would trade at N480 to the dollar and that is what the marketers would used to import Jet A-1.
Last week the pump price of aviation fuel was N270 per litre. Under normal circumstances, aviation fuel should be cheaper than petrol. But the price of petrol at N145 per litre is currently subsidized through concessionary exchange rate of N305 to the dollar. If petrol marketers were to import the commodity at bureau de change rate of N380 to the dollar, the pump price of petrol would hover around N180.
The conclusion from the above analogy is that even at the BDC rate of N380 to the dollar, the current pump price of aviation fuel is the product of mindless profiteering by the cabal.
At the current pump price, fuel consumes a quarter of the fares collected by an airline in a fully loaded aircraft. Airlines flying the Boeing 737 aircraft spend N1.008 million on fuel for an hour flight. The aircraft consumes 3,846 litres of fuel during the flight from Lagos to Abuja.
The federal government intervened last week with 38 million litres of aviation fuel to ease flights during the end of year festivities. That is just a salutary measure. With the dollar crunch worsening, the fuel crisis in Nigeria’s aviation industry would return in less than one month when government largesse dries up.
The crisis in the aviation industry revolves around scarcity of aviation fuel. Aviation fuel known in industry parlance as Jet A-1 is one of the refined petroleum products deregulated in 2004 by the administration of former President Olusegun Obasanjo
