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34.5% decline in aviation jet fuel daily sufficiency, a worry for airline companies

Decline in daily aviation fuel sufficiency worries airlines as air passengers are expected to increase in the festive season.

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The 34.5% decline in the daily sufficiency of aviation jet fuel may constitute a worry for airline companies in the country.

Considering that there is usually more people traveling due to the traditional Christmas and New Year festivities, resulting in increased flight patronage, the current total stock level appears to be low.

The observation is according to the daily petroleum products days sufficiency (total stock level data) compiled by the Petroleum Products Pricing Regulatory Agency (PPPRA).

In line with the data available on the PPPRA website,

  • The current total stock level of Aviation Turbine Kerosene (ATK), also known as aviation jet fuel or Jet-A1, stands at 89.04 million litres.
  • Eleven days earlier, the total stock level was 135.83 million litres – indicating a 34.5% decline.
  • Before now and since the start of the 2020, total stock level has been relatively unstable, with the recent highest total stock level of 187.40 million litres recorded on the 2nd of October 2020 – indicating about 60 days sufficiency; and the lowest 54.96 million litres was recorded on the 17th of July – about 18 days sufficiency.
  • As at the time the latest report was released, 27th November 2020, the total ATK stock was land-based stock.
  • Checks indicate there has been no receipt of ATK from the 19th of November, after the last receipt of 5.56 million litres on the 18th of November.

What they are saying

Speaking to Nairametrics regarding the decline, the MD/CEO of Jushad Oil and Gas Ltd, Mr. Bosun Paseda, submitted that the decline is due to the continuous increase in the exchange rate.

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He said, “The exchange rate is very high and unstable. You will discover that importers do not have access to the CBN rate and have to make recourse to the parallel market. The landing cost is currently higher than the rate we sell at the airport. That’s why marketers do not want to bring the product.

“Scarcity is likely to set in, but the reason there is no scarcity yet is because people are not really flying. If it stays the same, then scarcity may set in, when travel increases.”

Responding to the question on whether the decline in stock has affected the price of the product, Mr Paseda noted that it has not really affected the price of the product as consumption is currently low.

What you should know

Nairametrics recently reported that oil markets yearned for airlines to resume operations following several months of not operating due to the Covid-19 pandemic travel restrictions.

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  • Aside from the loss of revenues to airline companies, the call was necessary considering that Jet fuel demand averages about 8 million barrels per day worldwide – indicating that oil companies were also not recording enough revenues.
  • As a result of the pandemic, the International Energy Agency expects demand for Jet fuel and Kerosene to fall by 2.1 million bpd on average in 2020. This has, however, improved following lifting of travel restrictions in many countries.

Now that flights have resumed operations, it appears airline companies in the country may be in line to face another hurdle before the year runs out. The likelihood of facing this hurdle is highly contingent on receipt of ATK used in powering flights and increased travels. If things remain the same in terms of daily sufficiency of ATK needed to power their flights, scarcity may set in.

  • Remember that the lowest ATK of 54.96 million litres – about 18 days sufficiency, recorded on the 17th of July, was during travel restrictions. The decline in that period didn’t create concerns and it picked up days later.

What this means

  • With the national average daily consumption of ATK three million litres, this depicts that current total stock level of 89.04 million litres will only sustain for about 30 days, all things being equal.
  • Even though it appears this stock level is good, the steady decline in the stock level as illustrated in the graph above raises immediate concerns.
  • Also, one may conclude that receipt of ATK has stalled in recent days, having received only a total of 12.68 million litres in the last two weeks, since 12th November. This observation appears to denote that should the product receipt trend continue, scarcity may occur in the near future.

Adeyemi holds a PhD in Accounting Sciences. He has worked in the Educational Sector and as an Independent Consultant.

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Hospitality & Travel

Air Passengers to United States must test negative for Covid-19 before boarding flight

The United States Government wants all international passengers must provide a negative Covid-19 test before they board a flight into the country.

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The United States Government wants all international passengers to provide a negative Covid-19 test before they board a flight into the country. This is according to a report from the Wall Street Journal and confirmed by the Centers for Disease Control Prevention in the US.

The new rule will also affect United States citizens in the country.

According to the U.S. Centers for Disease Control Prevention (CDC) “Before departure to the United States, a required test, combined with the CDC recommendations to get tested again 3-5 days after arrival and stay home for 7 days post-travel, will help slow the spread of COVID-19 within US communities from travel-related infections. Pre-departure testing with results known and acted upon before travel begins will help identify infected travelers before they board airplanes.”

Based on this, all Air Passengers are required to conduct a test within 3 days before their flight to the US. departs.

“Air passengers are required to get a viral test (a test for current infection) within the 3 days before their flight to the U.S. departs, and provide written documentation of their laboratory test result (paper or electronic copy) to the airline or provide documentation of having recovered from COVID-19. Airlines must confirm the negative test result for all passengers or documentation of recovery before they board. If a passenger does not provide documentation of a negative test or recovery or chooses not to take a test, the airline must deny boarding to the passenger.”

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The order was signed by the CDC Director on January 12, 2021, and will become effective on January 26, 2021.

Last week the US imposed a testing requirement for travelers from the United Kingdom over cases of a new strain of the virus which has also been reported in the US.

What this means: New travel requirements for the negative Covid-19 test will negatively affect the global aviation sector which attracts over 340 million arrivals annually according to 2019 data seen by Nairametrics.

  • For third-world countries like Nigeria, travellers into the US will need to conduct the Covid-19 test before they depart from the United States piling pressure on testing centers across the country.
  • Though a requirement that most Nigerians are already familiar with, there will likely be pressure to avoid testing positive a few days before departure to the US.
  • Nigerians who travelled to Dubai during the Christmas holiday were also required to undertake covid-19 tests
  • Nigeria also requires visitors into the country to take the Covid-19 test before departing for Nigeria.

The global Covid-19 caseloads topped 90 million with the United States leading the pack with 22.7 million cases and over 379,000 deaths

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Just last week, the United Kingdom said that all passengers arriving in the country will be required to show negative Covid-19 test results taken within 72 hours of the commencement of their journey to prove they do not have the disease. Ireland also announced new travel rules which require visitors into the country to provide evidence of a negative Covid-19 test taken within 72 hours before arriving in the country.

Going further, the United Kingdom said on Thursday that it would extend a ban to international passengers from Southern African countries coming into the country, as part of the measures aimed at preventing the spread of a new strain of Covid-19 variant identified in South Africa.

Nigeria also requires travellers into the country to carry out a second Covid-19 test after arrival into the country or face consequences. Last week the Nigerian immigration service announced the suspension of 100 passports belonging to Nigerian passengers who refused to undergo second Covid-19 tests within 7 days of arrival into Nigeria from overseas travel.


This article was updated following new information.

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Nigerian Aviation: Exchange rate, 7.5% VAT suspension and other factors to determine survival – Experts

Stakeholders share their expectations and factors that must be addressed by the FG to aid the rebound of the sector in 2021.

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Aviation, Airline operators will pay $3,500 per passenger if they break protocols – PTF COVID-19, Global Air passenger slump to persists til 2023- Moody’s 2023- Moody’s

The aviation sector suffered setbacks due to the emergence of the COVID-19 pandemic in 2020, as the lockdown effected by many countries led to travel restrictions, reduced revenue and mass loss of jobs.

In the case of Nigeria, operators in the sector felt the impact of the pandemic more than their counterparts, as ‘old illness’ suffered by the airlines was exacerbated by the pandemic and left the operators writhing in pains.

READ: COVID-19: Over 70% of jobs lost in aviation, tourism industries in 2020 – AfDB

For the sector to survive in 2021 – in the heat of the second wave of the pandemic, stakeholders shared their expectations and factors that must be addressed by the federal government to aid the rebound of the sector.

They listed stable exchange rate, reduction of cost of operations, waivers on Customs tariffs for aircraft and spares and cost of aircraft insurance, a reversal of 25% remittance of earnings, amongst others.

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READ: Nigeria owes foreign airlines $53 million as proceeds from ticket sales – IATA

Unstable exchange rate

In an interview with Nairametrics, the Managing Director, Aero Mainstream Cargo Services, Ajibade Adewale, explained that the unstable exchange rate, especially for aviation stakeholders, has been a clog in the wheel of operations of the airlines, and most of them cannot afford to inflate their charges in line with the unstable rate.

READ: FG bars aides of VIPs from airport terminals, to grant loans to airlines, others at 5%

He said,

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“Operations of the airlines are largely dollar-denominated. Operations like aircraft purchase plus maintenance and training of staff amongst others can only be done in dollars. The only thing they do in local currency would be salaries. 

“Either airlines are allowed to access stable rates or the federal government creates an enabling environment for aircrafts maintenance or repairs here.

READ: Nigeria @ 60: The Aviation sector and its travails

“The rubber industry should be revived for investors to set up tyre manufacturing factories in Nigeria, in order to stop importing aircrafts tyres from other parts of the world. Most of the aircraft tyres are manufactured and imported from the United Kingdom (Dunlop), France (Michelin), United States of America (Goodyear), and Bridgestone (Japan).”

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He insisted that if enabling environment is created by the government, some of these companies will return to Nigeria and this will reduce cost of maintenance for the airlines.

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READ: COVID-19: Travel agencies beg FG for interest-free loans

Lack of skills to execute right policies

On creating an enabling environment, especially for maintenance factory, Capt. David Olubadewo, Managing Director, Starburst Aviation Limited and a Nigerian based in UK, explained that aviation in Nigeria is a very difficult business because the environment is unfriendly.

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He said,

“Aside from the role of the government, the industry has always been given a bad name in that light. It is not that we don’t have the people to fix it, but there are different aspects that have been compounded over the years. That is why we are where we are today.

READ: Nigeria generates N424.71 billion VAT in Q3 2020

“We have lots of very qualified people, there are lots of engineers in the United Kingdom and the United States who are Nigerians. We have people that are overqualified, but we lack the skills to execute the right policies to grow the sector.”

Cheaper loans

Olubadewo explained that most of the airlines and other industry stakeholders could not access cheaper loans because banks believe that the sector is too difficult to invest in.

“But that is wrong. It is not different from other sectors. We are all in it to make profit at the end of the day. I don’t obtain loans from Nigerian banks, because I will end up with -25% loss or more, but that is not happening in the UK where I pay far less interest rate.

READ: VAT collection edges higher but indicates weaker economy

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“If I take such loan in Nigeria, it means I am -28 per cent (interest rate) in red, and by the time you get to the top, you are owing millions. I cannot approach any of the banks to give me local money to do business in Nigeria. If I can go through that, you can imagine the experiences of the airlines.”

Suspension of 7.5% VAT

Recently, a member of the finance bill drafting committee and West Africa Tax Lead, PwC Nigeria, Taiwo Oyedele, disclosed via a tweet, that the federal government has again suspended the deduction of 7.5% Value Added Tax (VAT) on airfares and other air transport services.

READ: How businesses can leverage technology to survive uncertain times

According to him, the latest suspension order was scheduled to take effect on January 1, 2021, as it is contained in the 2020 finance act recently signed by President Muhammadu Buhari. Operators in the aviation sector are convinced that its implementation would ease the burden on them in 2021.

Media and Communications Manager, Dana Air, Kingsley Ezenwa, explained that his airline would be excited to plow back the proceeds of VAT removal to the business and ticket fares subsidy.

READ: COViD-19: Nigerian Railway Corporation to shut operations

He said,

“But that may not happen soon, the expected gains are subject to the actual implementation of the policy and the review of other multiple charges in the aviation industry.”

READ: COVID-19: The ‘New Normal’ for Nigerian aviation industry

What you should know

  • The FG in June 2018 issued an executive order on the suspension of VAT in air transport, but the Federal Inland Revenue Service (FIRS) claimed to be unaware of such a directive, hence it was never implemented.
  • Airline operators had complained that Nigeria is the only country that still charges VAT on air transport services. The VAT plus 36 other charges, according to the airlines, account for at least 40% of total revenue and N10 billion in taxes yearly, leaving the airlines heavily indebted and in financial distress or both in most cases.

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Hospitality & Travel

Human remains, plane wreckage of Indonesian Sriwijaya Air found at crash site

Wreckage of the missing Indonesian plane, Sriwijaya Air flight 182, a Boeing 737-500 has been found.

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Human remains, plane wreckage of Indonesian Sriwijaya Air found at crash site

Human body parts and parts of the wreckage have been found at the crash site of the Sriwijaya Air flight 182 which was reported missing yesterday, January 9, 2021.

The Sriwijaya Air Boeing 737 was carrying 62 people when it vanished from radar on its journey to Pontianak, crashing 10,000 feet into the ocean.

READ: America’s grounded Boeing 737 Max may return to the sky by December

Earlier, Indonesia’s National Search and Rescue Agency said it had found several pieces of debris believed to be from the missing plane but bad weather and poor visibility had hampered the search overnight.

Indonesian Navy divers on Sunday found wreckage from flight SJY 182 after locating a signal from the aircraft’s fuselage, CNN reports. The black boxes have also been recovered at the crash site.

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READ: Boeing partners with Kitty Hawk to develop a flying taxi

According to the coordinator of the rescue mission, Rasman MS, five body bags containing victims of the crash located by the National Search and Rescue Agency (Basarnas) have so far been handed over to the disaster victim investigation unit in Jakarta for identification.

The National Transportation Safety Committee (KNKT) teams have also begun an investigation into the cause of the crash.

READ: Air Peace addresses plane incident in Port Harcourt

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What you should know

  • The Sriwijaya Air passenger plane departed from Jakarta airport at 14:36 local time (07:36 GMT) on Saturday.
  • The Sriwijaya Air flight 182 – a Boeing 737-500 – was heading from Jakarta to the city of Pontianak,
  • At 14:40, the last contact with the plane was recorded, with the call sign SJY182, according to the transport ministry.
  • The plane, registered PK CLC, was a 26-year-old Boeing 737-500, according to Flightradar24.
  • Sriwijaya Air is one of Indonesia’s discount carriers, flying to dozens of domestic and international destinations.

READ: Nigerian airlines should patronise Aero MRO facility -AMCON

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