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Local airlines lose N500m daily as fuel scarcity cripples sector

By Wole Oyebade 
20 July 2016   |   2:11 am
The airlines that have been struggling to remain in business due to economic crunch are now in dire straits losing an estimated N500 million on daily basis.

IATA

*Operators seek government intervention

Aside the inconveniences experienced by air passengers on account of delayed or canceled flights since the week began, airline operators are counting their loses as the fuel scarcity continue to bite harder grounding at least two in every three flight operations nationwide.

The airlines that have been struggling to remain in business due to economic crunch are now in dire straits losing an estimated N500 million on daily basis.

The figure, as confirmed by financial officers of two of the airlines, explained that the loses were due to several refunds that had to be made to passengers, cost of preparing for aborted operations and debts owed to banks.

The official, who spoke on condition of anonymity, said that the airlines have nothing to gain, but everything to lose by delaying or canceling a scheduled flight operation.

He said: “In as much as we sympathise with the customers that choose to fly with us, we must all try to understand the situation we are in. It is so terrible that even the airlines are threatened to close down.

“For everyday gone by without normal services is like N100 million lose to an average airline. That is a lot of money. But when there is no fuel or marketers do not supply as at when due, there is almost nothing anyone can do about it,” he said.

It would be recalled that the perennial fuel scarcity in the aviation sector resumed over the weekend as storage facilities of oil marketers dried up leaving the industry to gasp for breath.

On Sunday afternoon, almost all flights services were canceled at the General Aviation Terminal (GAT), Lagos, while rationed flight operations held at the Murtala Muhammed Airport II (MMA2) also in Lagos with spiraled effect to major airports nationwide.

Oil marketers that are responsible for the importation and supply of the aviation fuel, otherwise called Jet-A1, have blamed the high cost of purchasing dollar as the bane of the current scarcity.

Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawole, told The Guardian that the current rate of N320-plus to one dollar, which banks are offering oil marketers, discouraged importers in bringing in the essential commodity.

Olawole said: “We were all told to go to the market to look for the dollar, but at N285, you hardly can get it unless you go to over N320. If you get it at over N300, the implication is that you’ll land the product at a price too high to sell to operators.”

He added that the association had approached the minister and he (Sen. Hadi Sirika) was arranging to avail required dollar through the International Oil Companies (IOC), who will give dollars to bank, to sell to the importers at N285.

One of the airlines worst hit by the scarcity, Air Peace, has appealed to government to urgently intervene in the crisis.

Chief Operating Officer of the airline, Oluwatoyin Olajide, regretted that despite the airline’s efforts to source the commodity, some of its flight schedules were still affected by the scarcity.

Olajide, therefore, solicited the understanding and patience of passengers, saying the airline was concerned about the situation and has been working round the clock to ensure its flights were not adversely affected by the crisis.

She assured that despite the huge amount the firm currently spends on getting fuel get from alternative sources, it would not relent in giving its passengers “exceptional” services.

“For quite some time now, there has been a general scarcity of JET-A1 fuel in the country. Since the development, we have resorted to different alternative sources to secure the product to ensure that flight delays did not disrupt the programmes of our numerous loyal customers.

“Although this has proved very costly for us to manage, we have spared nothing in our bid to source aviation fuel for our operations. We, however, regret that despite our huge efforts, we have not been able to secure enough fuel to run our operations without some hitches.

“While we appeal to the Federal Government and aviation authorities to urgently intervene in the general scarcity of JET-A1 fuel and solicit the understanding and patience of our numerous loyal customers, we will to continue to do everything within our powers to overcome the challenge,” she added.

Spokesman for Arik Air, Banji Ola, informed that the airline gulps 500,000 litres of aviation fuel to power no fewer than 120 flights daily. The airline is biggest consumer of fuel in the sector, and therefore explains the reason Arik is badly affected by the scarcity.

Ola said that at the root of the fuel supply crisis is low stock, due to the inability of marketers to source for the foreign exchange to import more Jet A1 fuel into the country.

He said Arik Air had begun work on a long-term plan, which would be finalised in the coming months to mitigate the situation and to be in a better position to address such supply shortages and delays.

Ola said while the Federal Government and oil marketers are working hard to address the supply and distribution challenges, “we appeal to our guests to bear with us as they may experience flights delays and cancellations because of the prevailing scarcity of aviation fuel across the country.

“Marketers have assured that the situation would improve this week as they are expecting delivery of additional stock. Where flights are likely to be delayed or cancelled, Arik Air will notify passengers through SMS and do all possible to accommodate passengers on the first available alternate flight,” he said.