The Federal Government has been advised to get itself involved in the Jet A1 crisis rocking the Nigerian aviation industry or risk the collapse of many indigenous airlines.
A former Rector of the Nigerian College of Aviation Technology (NCAT), Capt. Samuel Caulcrick made the call over the weekend during an interview with Nairametrics.
Caulcrick noted that the Federal Government had performed creditably well in the industry in 2022, but warned that the Jet A1 scarcity and its attendant high cost may negatively affect the country’s aviation industry.
The impacts of high cost: At the moment, Jet A1, otherwise known as aviation fuel in local parlance, is sold at N800 to N850 per litre, depending on the quantity and the airport an airline is buying from.
At the beginning of the year, the commodity sold for N250 to N300 per litre. But since the outbreak of the war in Ukraine, the prices have skyrocketed, thereby affecting the operating costs of airlines.
Nairametrics gathered that aviation fuel makes up over 60% of the total operating cost for airlines, a huge leap from 30% at the beginning of the year.
How the government can help: According to Caulcrick, the government could get involved in the supply chain, not as an importer, but through subsidy of the product to operators.
He opined that the government could purchase the product from the major oil marketers and sell to operators in the industry at a subsidised rate, arguing that the government would benefit more through taxes in the long run.
Besides, the former NCAT helmsman explained that the government through the Nigeria Air Force had some Jet A1 reserves, which it could tap into to feed the airlines in case of the scarcity and high cost of the product as it is presently happening in the sector. He said:
- “Also, when it comes to Jet A1, the government doesn’t want to get involved, but I think the government should get involved, but not as an importer. The government has a Jet A1 reserve for the Air Force because of security. So, the Air Force cannot rely on suppliers for Jet A1 to fly their jets.
- “Government should be able to look into that reserve at times to save the commercial sector especially when the scarcity of the product is alarming or if there is a price hike and the government wants to subsidise it.
- “The government can also call the fuel marketers and buy the product from them and sell at a subsidised rate for the airlines. This is necessary because the government is taking money back from every airline that flies. After all, the airlines are paying charges.
- “Definitely with this, the government would make its money back because if they don’t fly, the government cannot make money. For every hour the airlines fly, the government gets some money too, which would have been zero if they don’t fly. So, the government has to be very flexible.”
