SEATTLE (Oil Monster): Nigerian airlines will suspend all flight operations from April 20, they warned, unless crippling jet fuel prices, which they accused the country's fuel marketers of artificially inflating, are reduced.
The Airline Operators of Nigeria, an industry body composed of around a dozen mainly domestic carriers, wrote to the Major Energies Marketers Association of Nigeria on April 14, complaining that jet fuel prices had risen by about 270% since late February.
In the letter seen by Reuters, AON called the jet fuel increase in Africa's most populous nation "astronomical and artificial," saying it far outpaced global crude oil prices. "Currently, airline revenues are insufficient to cover the cost of fuel alone," the letter said.
Soaring jet fuel prices have upended the global aviation industry as a consequence of the Iran war, forcing airlines to raise fares, curb growth plans and rethink forecasts. But African airlines are particularly vulnerable, as jet fuel typically accounts for between 30% and 40% of their operating costs, compared with a global average of 20% to 25%, according to the African Airlines Association.
MEMAN disputed the airlines' figures in a response to the AON seen by Reuters, saying the quoted price was more than 40% above a survey-based market average, adding that jet fuel distribution involves specialised equipment and handling that make it more cost-intensive.
AON said that raising ticket prices to reflect the fuel costs airlines are facing in Nigeria could reduce passenger numbers, while a shutdown of airline operations would have broader repercussions, hurting banks, costing jobs and worsening insecurity.
Nigeria’s aviation sector consumed about 2.1 million litres of jet fuel per day last month, data from the country's petroleum products regulator showed.
However, the giant Dangote Petroleum Refinery - Nigeria's sole domestic jet fuel producer - made no deliveries to the domestic market in March, the data showed.
At the same time, data from tanker-tracking firm Kpler showed Nigeria's exports of clean petroleum products - gasoline, diesel, kerosene and jet fuel - more than doubled month-on-month in March.
Dangote did not immediately respond to a request for comment.
Courtesy: www.reuters.com
