Saturday, 10 February 2024 04:46

Airlines warn of collapse of domestic operations as aviation fuel hits N1,300

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Airline Operators of Nigeria (AON) on Friday raised the alarm over high cost of operation even as aviation fuel has hit over N1300.

This is despite the rising dollar to Naira exchange rate of over N1,500 to a dollar which has made it difficult for airlines to carry out scheduled maintenance of their aircraft.

The operators said the situation poses existential threat to them, saying the aircraft that are due for maintenance have been grounded and cannot be ferried overseas because of the scarcity of forex.

According to them, there is continuous depletion of equipment without replenishment and warned that if this continues the country may not have operating aircraft for domestic services.

Spokesman of Airline Operators of Nigeria (AON), Obiora Okonkwo, in a statement stated that airlines need urgent government intervention without which many airlines would go under and government would be their undertaker.

The airlines said the lack of stability in foreign exchange and the soaring price of aviation fuel, which is now N1,300 per litre, have eroded their ability to plan; created uncertainty and precariousness in their operations.

Okonkwo, who is also the Chairman of United Nigeria Airlines, explained that travellers who bought forward tickets in 2023 when aviation fuel was N700 per litre and exchange rate was N800/$1 would be airlifted at the current price of aviation, N1,300 per litre and exchange rate of N1400/$1; so, the airlines are recording huge losses on those tickets.

“We are making losses on factors that are beyond our control. We are not only faced with the problem of scarcity of dollars; even the aviation ecosystem is feeling the heat. Handling companies have increased the cost of their services, airports have increased their charges and those that service the aircraft have also increased the cost of their services. The monies for these payments are coming from the passengers who are already exhausted financially,” he said.

Okonkwo said that many businesses in Nigeria are making poor returns so those entrepreneurs who are the crux of passengers that travel during the high and low season are no more travelling and those who travel on tourism and social engagement are not enough to provide airlines good load factor to sustain their operations at the current low season.

“Passenger traffic has shrunk because even those on social engagement like weddings, burials and other ceremonies may not be inclined to spend money on flight tickets; they would rather send credit alert to those hosting the events who would appreciate such gestures. So, they pay instead of appearing in person,” he said.

“Air travel is catalyst to economic development. There should have been government engagement with airlines at different levels. Airlines do not have special forex allocation; so, they buy at the same place traders who trade on Brazilian hair, textiles and others buy.

“Our passion to remain in this business is being eroded. We are at the point of oxygen supply. Some airlines are going into coma. Our equipment is diminishing. The minimal revenues we earn to keep the airlines flying, we convert to pay our lessors.

“It is impossible to bring in more aircraft. Aircraft owners have become sceptical because of country risk. A Nigerian airline may meet their terms, all the standard criteria but the aircraft owners consider country risk above other factors. Country risk supersedes everything and lessors have their own obligations. So, there is nothing personal. Some airlines deposited money with the Central Bank of Nigeria (CBN) but they cannot provide us the needed dollars.”

 

Daily Trust

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