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Amid speculations that aviation fuel price in Nigeria could soon skyrocket to $1.68 (N700) per litre, stakeholders have been warned to brace themselves for an inevitable hike in airfares.
Business Insider Africa understands that aviation fuel price in Nigeria has risen from $0.46 (N190) in January this year to as high as $1.4 (N607) as of Tuesday March 8th, 2022. Local airlines have already responded to this by hiking their airfares by 100%.
What is causing the price of aviation fuel to rise?
The Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, blamed the dramatic increase in the price of aviation on the ongoing Russian-Ukranian crisis.
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Speaking to Punch Newspaper, Osatuyi warned that further hikes in airfares should be anticipated in the coming weeks, amid the skyrocketing jet fuel prices.
“So the hike goes in hand with the increase in the price of crude oil. By next week, don’t be surprised we are hitting N700. The exchange rate today is N585 while the official rate is N416; and the government does not give forex allocation for the purchase of kerosene, diesel and aviation fuel,” he said.
Recall that Nigeria has generally been grappling with a fuel scarcity problem since January. Initially, only motorists were affected. But recently, aviation fuel has also become scarce and this has further exacerbated the situation in the aviation sector, even as some airlines have been forced to either reschedule and cancel scheduled flights.
READ: Nigeria is racing to end the week-long fuel scarcity that is threatening to destabilise the economy
Is lack of subsidy for jet fuel to blame?
According to Alexander Nwuba, the the President of the Aircraft Owners and Pilots Association of Nigeria, the price of aviation fuel keeps skyrocketing because the product is not subsidised. He argued that marketers must recoup their costs.
“The prices has to go up because it is not subsidised by the government. So, whoever is importing has to recover the cost and make a tiny bit of profit. The subsidy doesn’t cover jet fuel. Nigerians don’t consume jet fuel, they pay for it through the airfares. Before the hike, airfares constitute about 40 to 50 per cent of airlines’ cost of operations which they pass on to the consumers. Now that the price of aviation fuel is almost doubled, it means that jet fuel now constitutes up to 60 to 70 per cent of the operating cost of the airlines. You still have other cost increases across the board. Handling charges have gone up at the airports, and a number of other things have gone up. Naturally, what happens is that airlines will adjust their prices to the operating cost in other to make a profit and they are still complaining that they are not making profits,” Nwuba said.
READ: African airlines lost a collective $8.6 billion in 2021 due to travel restrictions caused by COVID-19
Similarly, the CEO of Centurion Aviation Security and Safety Consult, John Ojukutu, argued that a litre of aviation fuel should not be sold for less than $1.2 (N500). His reason was that the product is imported, and that prices in other countries like the US could be as high as $4 per litre.
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Airfare hikes imminent in Nigeria as aviation fuel price skyrockets – Business Insider Africa
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