Airline operators in Nigeria are contemplating raising ticket prices as the cost of aviation fuel surpasses N1,300 per litre, causing significant financial strain within the aviation sector. According to a statement released on Friday by Obiora Okonkwo, the spokesman for local airlines, urgent government intervention is needed to prevent the collapse of domestic carriers.
The sharp increase in aviation fuel prices, coupled with volatility in foreign exchange rates, has disrupted operational planning and stability within the aviation industry. Okonkwo, who also chairs United Nigeria Airlines, highlighted the unforeseen rise in fuel prices from N700 per litre and the exchange rate reaching 1,400/$ as factors leading to substantial losses for airlines.
The depreciation of the local currency, exacerbated by dwindling oil production, has resulted in dollar scarcity, making it challenging for local carriers to acquire foreign exchange for essential operations such as fleet maintenance abroad.
Passengers who purchased tickets in advance at previous rates are now facing increased costs, further impacting airlines’ revenue streams. Okonkwo emphasized the additional financial burden placed on airlines due to rising costs from handling companies, airports, and aircraft service providers.
The decline in essential passenger travel during peak and off-peak seasons, attributed to low returns in various businesses, has further strained airlines’ efforts to maintain adequate load factors. Social engagements such as weddings and burials, traditionally driving air travel demand, have seen reduced attendance as individuals opt for financial gifts instead of flight tickets.
Okonkwo lamented the erosion of passion and resources within the industry, warning that some airlines are on the brink of collapse. He highlighted the challenge of attracting aircraft owners due to perceived country risk, hindering fleet expansion and modernization efforts.
Aviation analysts have warned of the broader economic implications of rising fuel costs on consumer purchasing power and airline revenues. Olumide Ohunayo noted that fuel constitutes approximately 40% of airlines’ operational costs, indicating that ticket prices are likely to rise in response to fuel price surges.
As Nigeria approaches the Easter and summer travel seasons, increased demand coupled with higher ticket costs may dampen air travel demand, with individuals opting for cargo transportation over passenger flights.
The aviation industry’s performance remains closely tied to the country’s Gross Domestic Product, with experts cautioning that the ripple effects of fuel price increases could have far-reaching consequences on the economy.
Princess Etuk, with extensive experience in journalism covering entertainment and transport, provided insights into the challenges facing Nigeria’s aviation sector amidst rising fuel costs.