Exclusive: FG expected to crash cost of aviation fuel – Onyema, Air Peace MD

The Federal Government has assured that it is working on reducing the cost of Jet A1 fuel, popularly known as Aviation fuel, to ease the burden on airline operators in Nigeria.

This was disclosed by the Chief Executive Officer, Air Peace Airline, Allen Onyema, in an exclusive interview with Nairametrics on Friday.

According to him, the House of Representatives, on behalf of the National Assembly, have engaged the Airline Operators of Nigeria (AON) and the Nigerian National Petroleum Corporation (NNPC) on Thursday to ensure the hike in the cost of aviation is curtailed to ease the cost of doing business in Nigeria.

What Air Peace CEO is saying about fuel hike

He said, “The Federal Government, led by President Muhammadu Buhari, has assured us that it will look into reducing the cost of aviation fuel in the country. If he had not intervened, we would have shut down operations in 72 hours because it is obvious that the recent hike is counter-productive.

“Already, the cost has gone down from about N600 per litre to a little above N400/litre. The truth is that we have told the government that anything above N300/litre is not sustainable for our businesses. I am not saying it is not profitable but sustainable because of other expenses we incurred in the course of running our businesses. The unit cost of each seat is over N120,000 but we only charge N50,000 for each of the seats and that means we are running at a loss already.

“During the meeting withe the NNPC and the lawmakers, we told the leadership of NNPC to reduce the cost of the fuel to N150/litre but he said that is not practicable but promised to reduce the cost further go ease our burden. The sudden hike from N190 to N670/litre within a year is killing our businesses.”

What you should know about Thursday’s hearing

• Onyema, while appearing before the House of Representatives Committee investigating the increase in the price of the fuel, said the operators now buy the fuel for N670 per litre from the N190 per litre they used to buy.
• He noted that despite the increment in air tickets by the airlines, they are still running at huge losses and owing debt, adding the NNPC limited should be asked to bring down the price of the fuel to N200 per litre so that the operators can continue to operate.
• Responding to the request, NNPC Limited CEO, Mele Kyari said the request will not be possible. Kyari stressed that the fuel is a deregulated product and the landing cost is N418 per litre.
• “The Chairman of Air Peace said they should bring it to N200 per litre. As of today, the landing cost of ATK is N418 per litre, we have no control over that, the only way is to subsidize it,” Kyari said.
• The CEO of Overland, Captain Edward Boyo, said the country risks putting planes at risk if action is not taken to regulate the price of Jet A1 fuel.
• In his ruling, the Deputy Speaker, Idris Wase said the Committee will meet again on Monday to hear from the fuel marketers. He directed the boss of the NNPC Limited to work with all relevant authorities to crash the price of jet fuel.

Back story

• Nairametrics had reported that Air Peace Airline, Arik Air, Ibom Air and others airlines are expected to delay or cancel some of their flights as the price of aviation fuel hits N599/litre.
• This was confirmed from a tweet issued by Air Peace and information from some sources in the industry.
• According to Air Peace, the development will affect its operations, as it is likely going to experience flight disruptions today.

What the airlines had said about fuel scarcity

• Air Peace stated that along with other airlines, it has been facing jet fuel scarcity for a while.
• It tweeted, “We have pushed so far to minimize the effect of the situation on our esteemed passengers’ travel plans till date. But unfortunately, the fuel scarcity is starting to seriously impact our operations as we are likely going to experience flight disruption today and in the coming days until the situation abates.
• “We appeal for the utmost understanding of the flying public and regret the possible inconvenience, while we work tirelessly to minimise the impact of the situation.”
• Ibom Air, one of the airlines affected by this situation issued an explanation and an apology.
• It stated, “We have encountered a situation today where aviation fuel is scarce and therefore unavailable at almost all our flight destinations. This has significantly impacted our flight schedule today and may do the same tomorrow.