Forex scarcity: Jet fuel, airline fares increase, says aviation consultant

Oluwanifemi Ojo
Oluwanifemi Ojo
Minister of Aviation, Hadi Sirika

The continuous increase in airfares has been attributed to the rising cost of aviation fuel and the scarcity of foreign exchange in the country.

According to The Punch  the current price of aviation fuel, also known as JET A1, ranges between N790 and N800 per litre. Airline operators have indicated that CRJ and Embraer flights cost between N970,000 and N1.04 million.

Due to the shortage of foreign exchange in the country, airlines have struggled to acquire spare parts to maintain their fleets, resorting to the black market for forex.

According to the report, dollars were sold for $/N749, compared to $/463.50 at the Central Bank of Nigeria. This has led to a constant increase in airlines’ operating costs, which has forced them to raise airfares.

The Chief Executive Officer of aviation consultancy firm, Belujane Konzult, Chris Aligbe noted that despite the challenges faced by airlines, it was still possible to offer low-cost airfares in the country.

He stated that airlines could not make a profit by charging fees that barely allow them to survive in the face of skyrocketing aviation fuel prices and forex scarcity.

In his conversation with The Punch, Aligbe, said, “Our airlines cannot offer low fares. They are not low-fare carriers; their business plans do not fit into low fares situations. Low-fare carriers are for different business strategies and plans. It even includes the type of airplanes used and a lot of other things. The business plans of existing carriers are not geared toward low fares. They cannot be low-fare carriers.”

In his words, “It will not be for them. Their initial business plan was not for low fares. With their present setup and equipment, they cannot run low fares. It is not sustainable. Business plans for low fare carriers are developed from scratch.

“Once you are entering into an airline business and you determine what kind of business you want to run, your plan starts from that point. The aircraft is different, the scheduling and target market must be taken into account in the business plan.”

The aviation consultancy firm CEO further stated, “If you carry anything else, you must pay for it and Nigerians are not used to this. The Nigerian market is not ready for this.

“People do not know what a low-fare carrier is. You must be able to continue what you started and people should know, from day one. The scheduling and type of airplane you buy must be keyed into your business plan.”

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