The high cost of aviation fuel has been a major issue for airlines, constituting a substantial part of their operating costs. FUNMI FABUNMI writes about how exorbitant aviation fuel prices have made affordable airfares elusive
The rising cost of aviation fuel and the shortage of foreign exchange in the country have been attributed to the incessant surge in airfares.
Aviation fuel otherwise known as JET A1 currently sells for between N790 and N800 per litre. According to airline operators, CRJ and Embraer flights cost between N970,000 and N1.04 million.
The scarcity of forex in the country has made it difficult for airlines to purchase spare parts for the maintenance of their fleets. They have to rely on the black market for forex. A dollar was sold for $/N749 on Thursday, compared to the $/463.50 it exchanged at the Central Bank of Nigeria
This has kept airlines’ operating costs rising and forced them to raise their airfares accordingly.
The Chief Executive Officer of aviation consultancy firm, Belujane Konzult, Chris Aligbe, noted that a low-cost air ticket was achievable in the country, in the face of the challenges the airlines were struggling with.
According to him, there was no way airlines can be profitable by charging fees that can barely make them survive in the face of the skyrocketing price of aviation fuel otherwise and forex scarcity.
Aligbe, said, “Our airlines cannot offer low fares. They are not low-fare carriers; their business plans do not fit into low fares situations. Low-fare carriers are for different business strategies and plans. It includes even the type of airplanes used and a lot of other things. The business plans of existing carriers are not geared toward low fares. They cannot be low-fare carriers.
He argued that low airfares are not sustainable in the country.
“It will not be for them. Their initial business plan was not for low fares. With their present setup and equipment, they cannot run low fares. It is not sustainable. Business plans for low fare carriers are developed from scratch.
“Once you are entering into an airline business and you determine what kind of business you want to run, your plan starts from that point. The aircraft is different, the scheduling and target market must be taken into account in the business plan,” Aligbe further stated.
According to him, low-fare carriers do not have room for hand luggage. “If you carry anything else, you must pay for it and Nigerians are not used to this. The Nigerian market is not ready for this.
“People do not know what a low-fare carrier is. You must be able to continue what you started and people should know, from day one. The scheduling and type of airplane you buy must be keyed into your business plan,” he noted.
The Chief Operating Officer of United Nigeria Airlines, Osita Okonkwo, while speaking with the press on the occasion of the airline’s second anniversary, explained that after deducting the cost of fuel and charges to various aviation agencies like the Federal Airports Authority of Nigeria, the Nigerian Airspace Management and the Nigerian Civil Aviation Authority, what remained was too small to sustain their operations.
