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5 Nov 2017

Fuel: Nigerian airlines spend 11% more than global average

Nigerian airlines spend more on aviation fuel than their counterparts in other parts of the world, experts in the industry have said.
On the average, Nigerian carriers are said to spend about 40 per cent of their expenditure on fuel, whereas their counterparts globally spend about 29 per cent, showing a difference of 11 per cent.

The Chief Executive Officer of Kitari Consult Limited, an aviation consulting firm, Mr. Ali Magashi, gave the indication along with other aviation experts in Lagos.

Magashi said in Africa, aviation fuel was about 20 per cent more expensive than on other continents, adding that the cost was even higher in Nigeria.

Magashi, who is also Chairman of Aso Savings and Loans Plc, said, “The aviation industry in Nigeria is constrained by numerous challenges, which have resulted in value loss, increased debt and airline failures.

“Nigerian airlines spend on average 40 per cent of their expenditure on fuel, whereas their global counterparts spend about 29 per cent on average. In Africa, aviation fuel is about 20 per cent more expensive, when compared with other continents. This is a major reason why airlines are not able to break even.”

According to some operators, apart from the cost of aviation fuel, which rose to N265 per litre early this year, they are sometimes made to pay in advance in case of scarcity.

The Chairman, Airline Operators of Nigeria, Capt. Noggie Meggison, said after spending almost half of their total funds on aviation fuel, airlines were often left with about 60 per cent of the total income to cover other costs such as insurance, maintenance, payment of salaries, levies and taxes.

Meggisson said this was the reason why many airlines in the country were struggling to remain in business; while some others had to shut down few years after starting operations.

The Chief Executive Officer of Med-View Airline, Mr. Muneer Bankole, also told our correspondent that the major problem of airlines was the high cost of aviation fuel in the country.

“Since the marketers are benefitting, they should bring down the price. The government needs to talk to them or give airlines through the Airline Operators of Nigeria the window to work directly with any marketer of our choice among the major ones,” he said.

The Chairman and Managing Director of Air Peace, Mr. Allen Onyema, although listed many challenges including multiple taxation, he stressed that the high cost of aviation fuel was a huge problem for the operators.

A marketer, who spoke with our correspondent on condition of anonymity, said marketers fixed their prices because the sector was deregulated.

Magashi said apart from the fuel situation, airport infrastructure was also a major hindrance to the growth of airline industry.

He said, “Many airports in the country were in a state of disrepair while basic infrastructure such as adequate runway capacity and terminal facilities were often lacking at major airports, some of which were notably underutilised.

“Reforming the Nigerian aviation sector would depend on the implementation of various critical factors by all relevant stakeholders particularly the government.

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