Nigerian airlines have borrowed more than N60bn from local banks to finance aviation fuel purchases as soaring Jet A1 prices continue to deepen financial pressure across the industry.
A member of the Board of Trustees of the Airline Operators of Nigeria, Roland Iyayi, disclosed this while speaking on the financial challenges confronting domestic carriers.
Iyayi said the high cost of aviation fuel had left some airlines heavily dependent on bank financing just to keep their aircraft operating.
He said efforts by industry stakeholders to secure government intervention had so far failed to produce significant relief for operators.
According to him, the AON had earlier threatened to suspend flight operations after aviation fuel prices surged in February. The planned shutdown was later suspended following an appeal by the Minister of Aviation and Aerospace Development, Festus Keyamo, who promised that the concerns of the operators would be addressed.
Meetings were subsequently held involving the AON, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, fuel marketers and other stakeholders. A committee was also established to recommend immediate measures for reducing the cost burden on airlines.
Iyayi said the recommendations submitted to the government had yet to result in meaningful action.
He added that the price of Jet A1 in Nigeria remained considerably higher than international levels, making it difficult for local carriers to operate profitably.
The financial strain has also affected airlines’ ability to meet some regulatory obligations. Iyayi said carriers were struggling to remit the five per cent ticket sales charge payable to the Nigeria Civil Aviation Authority because a large portion of their ticket revenue was being consumed by fuel expenses.
He explained that airlines were reluctant to raise fares significantly because higher ticket prices could discourage passengers, leaving operators caught between rising costs and limited revenue.
“Airlines are there, having to fly even though the operations are not profitable,” he said, stressing that many carriers had become more indebted while trying to maintain services.
The AON has also sought the removal of historical debts recorded against airlines by aviation agencies. Iyayi said many of the debts were linked to airlines that were no longer operating and argued that clearing such liabilities would provide a more accurate picture of the financial position of active carriers.
Meanwhile, United Nigeria Airlines’ Public Relations Officer, Chibuike Uloka, said aviation fuel remained one of the biggest expenses for airlines, accounting for roughly half of their revenue.
Uloka noted that even modest reductions in Jet A1 prices were insufficient to significantly improve the situation, as operators were still paying prices far above previous levels.
He said airlines also faced a combination of taxes, salaries, aircraft maintenance and other operating expenses, leaving little money after fuel purchases.
The latest development follows the sharp increase in Jet A1 prices triggered by the wider Middle East crisis. Aviation fuel reportedly rose from about N900 per litre at the end of February to as high as N3,300 per litre in April.
The surge prompted concerns that domestic airlines could be forced to suspend operations if the cost of fuel remained unchecked.
The Federal Government later announced a 30 per cent relief on airlines’ outstanding debts to aviation agencies and directed discussions between airlines, fuel suppliers and regulators on measures to achieve more sustainable Jet A1 pricing.
However, airline operators say the measures have not sufficiently eased the financial pressure on the sector, with high fuel prices and other operating costs continuing to threaten the viability of domestic air travel.
