Foreign Airlines Boycott Nigeria Over Aviation Fuel Price, Scarcity
Foreign airlines flying into Nigeria has began boycotting the country to refuel, a report by Reuters said.
The boycott according to the report is occasioned by the scarcity of the fuel due to dollar shortage which has made the price of the Jet-A1 fuel to rise by 81 per cent from N220 per litre to N400.
This came barely two months after the price of the commodity, which contributes 30 per cent of airlines’ cost of operations, increased from N120 t0 N220 per litre.
The crash in the naira since a devaluation in June has led firms who market jet fuel locally, such as Total, Sahara and ConocoPhillips, to double the price to N220 a litre in August, and to as much as N400 presently, an airline executive told Reuters.
A Deputy Director at the Ministry of Aviation, James Daudu, said Jet-A1 prices were deregulated, and therefore outside government control, but stated that the Minister of State for Aviation, Mr. Hadi Sirika, was working with the Ministry of Petroleum Resources to see if “interventions” in the sector were possible.
“It would be a whole sphere of intervention, if possible, from the Central Bank of Nigeria to the Ministry of Petroleum Resources,” he said.
Even at the higher costs, marketers’ lack of dollars has made fuel scarce. Some carriers have had aircraft stuck, or were forced to cancel planned journeys, after frantic last-minute calls from ground staff warned that there was no fuel available.
“The economy is crying out for investment, and now it is going to be even harder for anyone to visit,” an economist with Capital Economics, John Ashbourne, said.
“Who is going to want to park a billion dollars in a country that you can’t even easily fly to? It sends the worst possible signal,” he added.
A spokesman for the Nigerian National Petroleum Corporation did not answer calls for comment.
The central bank hoped floating the naira would attract dollar inflows, but the naira has sunk by 50 per cent, forcing oil firms to charge airlines, stuck with piles of naira, in dollars for jet fuel.
“It’s an impossible situation. The oil marketers don’t want to sign long-term agreements anymore so we have to accept whatever prices they demand,” one airline executive said, adding, “We sell tickets in naira and now they want us to come with dollars.”
Spain’s Iberia and United Airlines cancelled their Nigeria services earlier this year, and two local carriers also halted operations. Other international airlines responded by boosting ticket prices within Nigeria, charging their globe-trotting elite as much as $2,000 for an economy class ticket to Europe to cut losses – more than double the cost of a Lagos ticket bought abroad.
Dubai-based Emirates has started a detour to Accra, Ghana, to refuel its daily Abuja-bound flight, a spokesman said. The airline already cut its twice-daily flights to Lagos and Abuja to just one.
The move was aided by a substantial drop in Ghana’s jet prices amid tax reform last month, according to the Ghana Chamber of Bulk Oil Distributors.
Air France-KLM said it was refuelling abroad in “very exceptional cases” by juggling suppliers and stomaching extra costs.
Germany’s Lufthansa is loading more fuel in Frankfurt for its Lagos flight, where the ground staff doubt their ability to refuel for the final destination of Malabo, the capital of Equatorial Guinea, an executive said. The airline did not respond to official requests for comment.
The scarcity has even pitted airlines against local consumers; a surge in demand for cooking and heating kerosene during the rainy season, when households cannot easily burn wood or charcoal, means if the airlines do not pay up, marketers will sell to locals.
Airlines met with Transport ministry officials last week in Abuja to press for lower fuel prices, industry sources said.
Nigeria used to be one of the most profitable markets for foreign airlines, landing planes with plenty of first and business class passengers to cater to executives and officials jetting around under former President Goodluck Jonathan administration.
British Airways, a popular choice for well-heeled Nigerians, said it was using smaller aircraft on its Lagos-London route, as did Air France-KLM.
Turkish Airlines’ use of smaller planes has added another inconvenience: passengers complained there is not always space for luggage on the smaller aircraft, delaying it for days. The airline did not respond to requests for comment.