Airline companies have warned that they may be have to evaluate their pricing upward since the price of aviation fuel increased to more than N1300
According to The Punch, the local airlines’ spokesperson, Obiora Okonkwo, revealed this in a statement on Friday and demanded prompt government action to stop the local airlines from going out of business.
The airlines claimed that operational planning and stability in the aviation industry had been affected by the fluctuating foreign exchange rates and the skyrocketing cost of aviation fuel, which is now N1,300 per liter.
On June 14, 2023, the Central Bank of Nigeria brought the several forex market sectors together, which resulted in a severe depreciation of the naira on both the official and autonomous markets.
The local currency dropped to more than 1,500/$ in the parallel market on Wednesday and on Thursday, it traded for 1474.62/$ at the official market.
Due to the fact that over 90% of the nation’s currencies come from oil output, the country has been grappling with persistent dollar scarcity. This has made it more challenging for local carriers to raise the necessary foreign exchange to do thorough maintenance and execute checks on their fleets abroad.
The unanticipated increase in aviation fuel prices from N700 per liter and the jump in the currency rate to 1,400/$, according to Okonkwo, who also serves as the chair of United Nigeria Airlines, had caused huge losses for airlines.
He clarified that airlifting passengers at the current higher costs was a result of their prior, well-informed ticket purchases, which further reduced the airlines’ loss of revenue.
“We are losing money due to circumstances outside of our control. Not only are we dealing with a shortage of money, but the aviation industry is also under pressure. Airport fees have gone up, handling businesses have raised their rates, and airlinr maintenance companies have raised their rates as well.”
According to Okonkwo, there is a decrease in the number of passengers who are necessary for travel throughout both peak and off-peak seasons because many businesses in Nigeria are facing low returns.
“Passenger traffic has decreased as a result of people preferring to give credit alerts to those hosting events, who would value such gestures, rather than spending money on airline tickets, even when they are attending social events like weddings, funerals, and other ceremonies. So, rather than showing up in person, they pay.
“Our desire to stay in this industry is waning. We have reached the oxygen supply point. A few airlines are passing out. The quality of our equipment is declining. He said, “We convert the minimal revenues we earn to keep the airlines operating to pay our lessors.”
According to an analyst in the aviation sector who wished to remain anonymous, consumers will be impacted by increased fuel prices.
Many Nigerians’ purchasing power will be impacted if we raise the cost of aviation fuel or airfare. He said, “Airlines may find it difficult to break even if passenger traffic declines. This will eventually affect their revenue.
According to another industry expert, Olumide Ohunayo, aviation accounts for roughly 40% of airline operating costs, and ticket prices automatically rise in response to increases in fuel prices.
“We anticipate direct effects on ticket prices as long as gasoline prices continue to climb. Demand is expected to rise as we approach the Easter and summer travel seasons, further driving up ticket prices.
“Most people are now employing cargo instead of travelling themselves due to the price spike. Therefore, due to the costs, it may actually reduce demand for air travel, he said.