… justify Airlines for their action
….Passengers reacts as FG appeals
By ZAINAB JUNAID
The threat by Nigeria Carriers under the aegis of Airline Operators of Nigeria, AON, to embark on Nation Wide strike effective Monday May 9, 2022, as a result of continuous increase in aviation fuel, Jet A1 Fuel, which has moved up from #190 to #700 per litre, experts said will have drastic effect on the sector as over $2 billion will be lost to this action daily.
Revenues expected to be generated by government agencies in the sector will be hindered, Airport users who engaged in one business or the other within airport environs will be jeopardized. Travelers who resolved to travel by air, their programs will be disrupted among other negative effects.
If the strike action which expert see as a justifiable step on the part of the airlines is successfully carried out on Monday, it will paralize the economy as aviation sector is one of the major sector that contribute positively to the country’s GDP. By calculation, once airspace is closed, there will be longer flights times, more fuel, more pilot hours, higher costs and consequently higher fares, which could further impact the demand recovery.
Airport users have been reacting to the proposed AON strike announcement citing the security situation of the country as an example, “Only air transportation gives travelers full confidence and safety on the issue of bandits and bombs attacks, and once the airlines go on strike, travelers will be forced to settle for alternative means of transportation and this is dangerous security wise,” they said.
Some alleged that the airlines want to run a new subsidy racket instead of dealing with market forces. But the Operators have been agitating to cease flight operations for a very long time as it is the only yard stick to get what they want from the government, but had on several occasions backed down on their threat to avert disruption in economic activities considering the key roles Aviation Sector play in the country. They had earlier considered scaling down flight frequencies to minimize their cost of operations, utilized every instruments to engage Stakeholders in the oil and gas sector to seek permanent solution to the price hike, but all these proof abortive as aviation fuel has continued to rise unabated to the extent of creating huge pressure on the sustainability of operations and financial viability of the airlines. #700 per liter of Aviation Fuel from #190 per litre—it works to a cost of 120,000 per seat for a one hour flight, and they can’t charge more than 50,000 per seat.. Thus the call for strike became necessary is for NNPC to continue to subsidized JETA1 fuel for them to maintain their stay in the business.
What also paralyzed the Nigerian Airlines operations is the fact that foreign carriers are given more preferences than the local carriers in the oil deals since the former operate in dollars as against its local counterparts. Preferences are more given to foreign carriers in the sale of the aviation fuel because the foreign airlines pay directly in dollars, unlike Nigerian Airlines that pay in Naira and Oil dealers will have to embark on money exchange to dollars. Taking into consideration the high cost of foreign exchange rate, the oil marketers resolved in satisfying the foreign airlines the more at the expense of the local carriers.
Smilarly, external factors has also contributed to the continuous increase in price of Jet A1 Fuel. The Russia – Ukraine war. We all know that the Aviation Sector was still recovering from the COVID-19 pandemic when it was hit by challenges related to the Ukraine – Russia War. The Russian invasion of Ukraine and the subsequent sanctions imposed on the country have brought negative impact not only to Nigerian Aviation Sector but to the global economy as a whole in the area of fuel.
Speaking on the emergence of the strike, Olumide Ohunayo, an aviation expert, maintained that airline operators are justified for their actions because the continuous hike in the Aviation price has been suffocating the local carriers to operate flights as they spend millions of naira to fill an aircraft with aviation fuel. The strike will help gain attention of the government who will rescue the operators from the impeccable mess they found themselves.
He said, “I’m not expecting a prolonged halt in operation, but one to two days warning will help bring all hands on deck for everyone to at least be on the same page in resolving the issue at hand,” he said. The threat to ground operations by Airline operators of Nigeria was second of its kind in the year and was meant to draw government attention to ensure it pegged Jet A1 Fuel at #500 per litre at least for now for the Airlines to break even in their businesses. They revolted the hike price of #700 per litre saying it has shut up their operating costs to about 95%, whereas aviation fuel worldwide is said to cost about 40% of an airline’s operating cost globally. Stakeholders in the industry await government positive response to the cries of these Nigerian Airline Operators.
Although the president had earlier signed an executive order that granted waivers on aircraft, it’s spares and other interventions, the operators claimed that the least that can be done is for the carriers to continue to engage the government through the strike until their multiple challenges are resolved.
The Director General of Nigeria Civil Aviation Authority, NCAA, Captain Musa Nuhu, in a telephone interview with Standard Times Nigeria Reporter said that government will hold talk with the airline operators on the prevailing issues to reach an agreed conclusion and maintained that nothing more can be said for now on the strike issue. In a related development, the Federal Government had Saturday Evening issued a statement appealing to the operators not to shut down operations as proposed.
The statement issued by the Special Assistant on Public Affairs to the Minister of Aviation, James Odaudu, on Saturday, stated that the minister had asked the airlines to consider the implications of the planned action, noting that it is concerned about the rising cost of aviation fuel. Odaudu said the aviation fuel price is not within the purview of his ministry, adding that the much it can do in the present situation is to engage with agencies, institutions and individuals in positions to provide succour to the airlines.
The statement reads, , “Unfortunately, the issue of fuel supply is not within the purview of the Ministry and so the much it can do in the present situation is to engage with agencies, institutions and individuals in positions to provide succour to the airlines. This is already being done by the relevant team led by the Honourable Minister. “We also assure Nigerians, especially stakeholders in the sector, that the Buhari administration remains stoic in its commitment to the creation and sustenance of an environment that promotes the growth of the aviation industry where major players like the airlines can operate in a profitable and competitive market.’’
The Federal Competition & Consumer Protection Commission (FCCPC) on their part has also advised Airlines Operators of Nigeria (AON) to suspend their planned shutdown, in a statement issued, shared and signed by its Executive Vice Chairman, Babatunde Irukera, via its Twitter handle on Saturday. The commission had encouraged and implored the airline operators to consider the implications of the planned shutdown.
