Challenges arising from the increase in the price of aviation fuel, inadequate and obsolete infrastructure, and other supply chain hurdles affecting domestic airlines was at the centre-stage last week when players, regulators, operators and stakeholders gathered in Abuja to define new paths to trigger growth for the beleaguered sector.
These are interesting times for airlines, ground handling firms, aviation fuel suppliers and other players in the air transport industry.
It is a season of lamentation. Leading the pack are indigenous carriers, which have been caught in the web of increasing costs of putting their aircraft into the sky. Aviation fuel price, otherwise known as jet gas, hit N714 per litre last week.
The spike came on the heels of a collapsed deal by the Federal Government to rein in major fuel marketers to achieve stability in the price of the product.
In the last one year, the price of aviation fuel has moved from less than N200 per litre to N714.
The Airline Operators of Nigeria (AON) has warned that if the trend continues, at least three airlines would close shop.
In an interview at the National Aviation Conference organised by the Federal Airports Authority of Nigeria (FAAN) in Abuja, Vice President of AON and Chairman of Air Peace Mr. Allen Onyema said though the price increase was not limited to Nigeria, but fluctuations in foreign exchange (forex) made it worst for airlines.
Besides airlines, other players – fuel marketers, ground handling and aviation catering services firms – continue to bemoan the paucity of forex and the weakening value of the major against other major currencies as hurdles militating against the growth of their business.
According to AON, to address the challenge, the Federal Government had approved 10,000 metric tonnes of aviation fuel to the airlines, but said the carriers were yet to access it.
Onyema explained that the airlines hoped to start lifting the 10,000 metric tonnes of aviation fuel from this week.
He said: “That is why we ran to the government and the Federal Government has given us about 10,000 metric tonnes of fuel at N580 per litre in Lagos and about N607 per litre outside Lagos.
“This is not the only issue. Since the COVID-19 crisis, most airlines all over the world, including Nigeria have not recovered from COVID-19, except those whose countries have injected a lot of funds to assist them. This is nobody’s fault. It just happened. Government has tried its best by giving us this aviation fuel. This aviation fuel can take airlines out, not only in Nigeria but everywhere.
“Some airlines outside Nigeria have closed down because of the effects of rising aviation fuel. If these things are not addressed in Nigeria, it can affect the bottom line of all airlines in Nigeria.
“We have come to realise that there is little or nothing the committee set up can do because this is as a result of foreign exchange and the price of oil all over the world now. The fuel marketers will sell according to what they are paying. The cost of aviation fuel has increased, even in London and every other country. Our own is worse because of the increase in foreign exchange.”
However, the Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Olumide Adeosun, said the product is not as exorbitant as local airlines are putting it.
Adeosun explained that the verifiable prices in West Africa range from $1.25 per litre in Ghana to as high as $1.51 per litre in Liberia.
He said: “Due to the intervention of NNPC over the last several weeks, aviation fuel is landed into marine terminal tanks in Nigeria at between N480 and N500 per litre depending on the logistics efficiency of the operator. Due to the high costs of specific handling of Jet-A1 with – special transport and continuous filtration – the product sold a few weeks ago on the tarmac at Lagos Airport between N540 and N550 per litre and across other airports at between N570 and N580.
General Secretary, Aviation Fuel Market Association of Nigeria (AFMAN), John Adewole Abegunde has argued that Jet fuel is fully deregulated, calling on the government to hand it off from commercial-related issues on the product.
This is just as he has listed product availability, product price often not being competitive, logistics challenges, inequality in standard practices as some factors militating against availability and pricing of aviation fuel.
According to him, The Federal Airports Authority of Nigeria (FAAN), Nigeria Civil Aviation Authority (NCAA) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) should be more concerned about the stringency of the aviation fuelling requirement while calling on NCAA/NMDPRA to harmonise oversight responsibilities to ensure no quality compromise in this area of business.
He charged FAAN to watch out for portfolio and unlicensed suppliers to discourage racketeering and black-market business of aviation fuel and discouraged throughput while encouraging joint venture agreements.
He also advocated that FAAN reviews land leases and multiple charges as the volumes are not looking good for the initial business projection.
On the challenges, he said the biggest costs for airlines included labour, equipment, and fuel, stressing that labour and equipment costs were largely fixed in the short term, while fuel costs can swing wildly based on the price of oil.
Adewole stressed that organisation’s mandates which include supplying good quality dry aviation fuel that meets up global standard requirement, ensuring satisfaction in service delivery and stringent quality control mechanism as well as offering product and services at competitive price which guarantees product availability all year round may be hindered by the factors above.
He however mentioned some successes which include capacity to sustain the industry supply beyond market demand, representation in all airports of Nigeria to aid seamless operation of the airliners, Industry employment growth and opportunities and better synergy between Aviation Fuel Marketing Company and international airline.
Abegunde, however, said the marketers were faced with numerous challenges that include the availability of the product to supply to the airlines, uncompetitive price, logistic hiccups in transporting the product and inequality in standard practices – all of which rob-off on the pump price.
He added that the industry and its investors would be better off if regulators focused more on having a stringent aviation fuelling requirement and harmonised oversight responsibilities to ensure quality.
“FAAN too should watch out for portfolio and unlicensed suppliers to discourage racketeering and black-market business of aviation fuel.Throughput? No! Joint ventures, yes! All parties should encourage joint ventures and have JV agreements. We should be wary of portfolio investors who come in when there are opportunities in the sub-sector but move out with their briefcases immediately after there are challenges. FAAN needs to review land lease arrangement and multiple charges as the volumes are no longer looking good to the initial business projection,” he said.
Meanwhile, stakeholders have expressed divergent views on the quality of aviation fuel on sale. They said trucking of Jet A1 from the depots to the airports had been reported to have led to the contamination of the commodity; a situation they said erodes air safety.
The pipeline meant to transport aviation fuel to the Lagos local airport but which has been sitting idle for 30 years should be repaired to ease fuel supply to airlines, industry stakeholders have said.
While the former Commandant, Murtala Muhammed Airport, Group Capt. John Ojikutu (rtd), and some other stakeholders affirmed that there were various reports before the Nigerian Civil Aviation Authority (NCAA) indicating contamination of the product with many domestic carriers not having the equipment to undertake final screening before it is dispensed into aircraft, Chairman, Air Peace Airlines, Mr. Allen Onyema and Mr. John Abegunde, a top official of CITA Petroleum Nigeria Limited disagreed.
Ojikutu, who is also Secretary-General of the Aviation Safety Round Table Initiative, wondered why the pipeline designed to transport fuel from Ejigbo to the Lagos airport could not have been repaired by the Nigerian National Petroleum Company (NNPC) Limited since 1992 after it was ruptured.
According to Ojikutu, “It would have cost about $9.2million then to replace the ruptured pipes but sadly, nothing was done or had been seriously considered to be done. Rather, tankers have been bridging the supply from the NNPC depots, with the cost of transportation and demurrage added, and having to for days and sometimes weeks to discharge at the airport depots.”
“The best practice is the piping of Jet A1 to the airport. We spend a lot of money on fuel contamination. The remote cause of accidents is seen in engine problems through fuel contaminated aviation fuel. Reports show that most of the aviation fuel in Nigeria is contaminated.”
They said if the pipeline was functional; the trucking of aviation fuel to the airport would be avoided, thereby reducing the cost being incurred by airlines.
The CITA chief stated that the fuel supplied had been of high quality, hinting that trucking the commodity from the depots to the airports is safe same as piping it through to the airport.
He, however, stated that for efficiency, it would be better to supply Jet A1 to the airlines through a more decent and less cumbersome.
BRIEF
Experts seek solution to sunset airports challenges
Experts in the aviation sector will be addressing safety and economic implications of flights at sunset airports.
Sunset Airports are aerodromes with limited operating hours fixed between 7.00 am and 6.00 pm, due to absence of air field lighting.
The experts, who include Dr. Wale Babalakin, the Chairman of Bi-Courtney Aviation Services Limited (BASL), and Chairman Peace Airlines, Allen Onyema, would constitute a panel at the forthcoming 26th Annual Conference of the League of Airport and Aviation Correspondents (LAAC).
The conference scheduled for July 28, 2022 has received the approval of the Minister of Aviation, Hadi Sirika and ground handling firms.
A statement by the Secretary, Planning Committee of the association, Mr. Albinus Chiedu, listed the Director-General, Nigerian Civil Aviation Agency (NCAA), Capt. Musa Nuhu; the Acting Managing Director, Nigerian Airspace Management Agency (NAMA), ; Lawrence Pwajok, and Managing Director, Federal Airports Authority of Nigeria (FAAN) Capt. Rabiu Yadudu, sa among the panellists.
Others are the Commissioner, Accident Investigation Bureau – Nigeria (AIB-N), Akin Olateru, Akin Olateru, and Chief Executive Officer, Topbrass Aviation Limited, Capt. Roland Iyayi.
The conference is expected to attract over 250 professionals.
