The Airline Operators of Nigeria (AON) on Friday raised the alarm over high cost of operation even as aviation fuel has hit over N1300.
The value of the naira has increased to over N1,400 to the dollar, making it more challenging for airlines to perform routine maintenance on their aircraft.
However, the operators claimed that the situation posed an existential threat to them, claiming that the lack of foreign exchange prevents them from being able to transport the aircraft overseas for maintenance, which has grounded the aircraft.
They claim that equipment is continuously being depleted without being replenished, and they issue a warning that if this keeps up, the nation might not have any operational aircraft for domestic services.
In a statement, Airline Operators of Nigeria (AON) spokesman Professor Obiora Okonkwo said that urgent government intervention is necessary for airlines, as many would fail and the government would then take over as their undertaker.
The airlines claimed that their capacity to plan has been undermined by the unstable foreign exchange market and the skyrocketing cost of aviation fuel, which is currently N1,300 per litre. This has led to uncertainty and precariousness in their operations.
Professor Okonkwo, who is also the Chairman of United Nigeria Airlines, explained that travellers who bought forward tickets in 2023 when aviation fuel was N700 per litre and exchange rate was N800/$1 would be airlifted at the current price of aviation, N1,300 per litre and exchange rate of N1400/$1; so, the airlines are recording huge losses on those tickets.
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“We are making losses on factors that are beyond our control. We are not only faced with the problem of scarcity of dollars; even the aviation ecosystem is feeling the heat. Handling companies have increased the cost of their services, airports have increased their charges and those that service the aircraft have also increased the cost of their services. The monies for these payments are coming from the passengers who are already exhausted financially,” he said.
Okonkwo said that many businesses in Nigeria are making poor returns so those entrepreneurs who are the crux of passengers that travel during the high and low season are no more travelling and those who travel on tourism and social engagement are not enough to provide airlines good load factor to sustain their operations at the current low season.
“Passenger traffic has shrunk because even those on social engagement like weddings, burials and other ceremonies may not be inclined to spend money on flight tickets; they would rather send credit alert to those hosting the events who would appreciate such gestures. So, they pay instead of appearing in person,” he said.
“Air travel is catalyst to economic development. There should have been government engagement with airlines at different levels. Airlines do not have special forex allocation; so, they buy at the same place traders who trade on Brazilian hair, textiles and others buy.
“Our passion to remain in this business is being eroded. We are at the point of oxygen supply. Some airlines are going into coma. Our equipment is diminishing. The minimal revenues we earn to keep the airlines flying, we convert to pay our lessors.
“It is impossible to bring in more aircraft. Aircraft owners have become sceptical because of country risk. A Nigerian airline may meet their terms, all the standard criteria but the aircraft owners consider country risk above other factors. Country risk supersedes everything and lessors have their own obligations. So, there is nothing personal. Some airlines deposited money with the Central Bank of Nigeria (CBN) but they cannot provide us the needed dollars.”
