In recent weeks, the aviation industry has been grappling with a fight for survival, confronted by multiple challenges, from soaring aviation fuel prices, which operators say have become unaffordable, to threats by ground handling firms to disrupt airline operations over N9bn in unpaid debts. OLASUNKANMI AKINLOTAN explores how the industry is currently swimming through the murky waters
Nigeria’s aviation industry is once again edging towards crisis, as the spiralling cost of JetA1 fuel threatens to ground domestic airlines and disrupt travel across the country. What began as a steady rise in operating costs has now snowballed into a full-blown emergency, with operators warning that flights may be suspended if urgent action is not taken.
There are strong indications that airlines may halt operations from Thursday, 30 April, after failed negotiations with both the Federal Government and fuel marketers. Industry insiders say the situation has reached a breaking point, with no clear resolution in sight despite Federal Government intervention.
At the heart of the crisis is the astronomical rise in aviation fuel prices. Since February, JetA1 has surged by over 300 per cent, pushing airlines into a corner where operating flights is increasingly becoming a loss-making venture. For many carriers, the economics no longer add up.
Passengers, caught in the middle of the unfolding standoff, now face uncertainty. Across major airports, frequent flyers and business travellers are already adjusting plans, wary of potential cancellations and reduced schedules.
Last week, Minister of Aviation and Aerospace Development, Festus Keyamo, convened a meeting between airline operators and fuel marketers, hoping to broker a compromise. But the talks ended in a deadlock, with both sides holding firm to their positions.
At the close of the meeting, the Federal Government announced a 30 per cent reduction in aviation-related taxes, alongside a similar concession on debts owed by airlines to aviation agencies. President Bola Tinubu approved the measure as part of efforts to cushion the financial strain on operators.
Keyamo described the move as a decisive intervention, saying, “President Tinubu has approved a 30 per cent discount on outstanding statutory fees owed by domestic airlines to aviation agencies. This is a decisive move aimed at alleviating operational pressures within Nigeria’s aviation sector.”
While the gesture has been acknowledged by operators, it has done little to calm nerves within the industry. Airline executives argue that tax relief, though helpful, does not address the core issue.
Vice President of the Airline Operators of Nigeria, Allen Onyema, was blunt in his assessment. He welcomed government support but insisted that fuel marketers must explain the sharp price increases.
“This government has helped the industry more than anyone since 1999, and the President is even willing to waive 30 per cent of debts airlines are owing. But the truth is that the marketers must be brought to book to explain how they came about the 300 per cent increase when even Dangote is surprised because what he is selling to us is still the cheapest.”
Onyema’s frustration reflects a wider sentiment among operators who believe the pricing of aviation fuel in Nigeria is proportionate to global realities. He pointed to international trends where increases have been far more moderate.
“Since the advent of the US-Iran war, there has been a spike in aviation fuel in Nigeria which we, the Airline Operators of Nigeria, feel is not proportionate to the hike internationally,” he noted, warning that patience within the industry is wearing thin.
He issued an ultimatum, making it clear that airlines may have no choice but to suspend operations if conditions do not improve in seven days from last Thursday.
He said, “We expect that in the next 48 hours something drastic should be done because no airline will fly in this country in the next seven days if nothing is done, not because they don’t want to fly but because fuel may not be available to us at sustainable pricing.”
Behind these warnings lies a sobering financial reality. Airlines that once bought fuel at about N900 per litre are now paying between N2,700 and N3,500, depending on the supplier. The sharp increase has effectively wiped-out profit margins.
“All the airlines in Nigeria have been flying to pay fuel marketers only, and you don’t want to compromise safety,” Onyema said.
Despite speculation that airlines may be defaulting on payments to government agencies, industry sources insist otherwise. Senior officials maintain that obligations to key institutions such as the Federal Airports Authority of Nigeria and the Nigerian Airspace Management Agency have largely been met.
What operators are demanding, however, goes beyond tax cuts. In a formal communication to the government, the Airline Operators of Nigeria outlined a series of measures they believe are necessary to keep the industry afloat.
These include a six-month suspension of aviation taxes, the introduction of a non-taxable fuel surcharge, and directives for oil marketers to issue credit notes to airlines affected by what they describe as arbitrary price hikes.
They also proposed the creation of a tax reform committee to review the multiple charges imposed on the sector, many of which operators argue are outdated and duplicative.
As these negotiations drag on, another crisis is quietly unfolding, with ground handling companies, frustrated by unpaid debts exceeding N9bn, issuing their own ultimatum to airlines.
Under the umbrella of the Aviation Ground Handlers Association of Nigeria, the firms have threatened to withdraw services if payments are not made within a seven-day ultimatum which was expected to elapse on Tuesday, 27 April. Meanwhile, The PUNCH learnt that this ultimatum has been extended by another three days.
Ground handlers provide essential services from baggage processing to aircraft marshalling, without which flights cannot operate. A withdrawal of services would effectively shut down airport operations.
In a letter to airlines, the association warned of the mounting strain on its members.
“This situation has continued to exert significant pressure on the operational capacity of our members, adversely affecting their ability to deliver sustainable, efficient and safe services,” it stated, adding that the financial burden is also taking a toll on workers.
The association noted that repeated efforts to recover the debts have failed, with payment commitments largely unmet. It warned that it may be forced to act if the situation does not improve, a move that would compound the already fragile state of the aviation sector.
Yet, amid the tension, there remains a slim hope that last-minute negotiations could avert a full-blown shutdown. Both government and industry stakeholders are under pressure to find common ground, as the cost of failure would be felt far beyond airport terminals.
