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HomeBusinessMixed reactions over airlines’ 40% fuel surcharge bid, further fare hike

Mixed reactions over airlines’ 40% fuel surcharge bid, further fare hike

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Aviation stakeholders have reacted with boo and cheers at local airlines’ request to impose a new fuel tax of between 25 and 40 per cent on air travellers.

While a section of the industry agreed with operators that the surcharge is inevitable, others flayed the operating environment and urged them to look inwards for cost-saving measures instead of imposing additional burden on the travelling public.

Airlines, under the aegis of Airline Operators of Nigeria (AON), this week had urged the Nigerian Civil Aviation Authority (NCAA) to grant waiver on its current five per cent surcharge on aviation fuel and grant operators the right to impose a new fuel tax of between 25 to 45 per cent to cope with the rising commodity cost.

President of the Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the local sector, Dr. Gbenga Olowo, said the sector remains deregulated. Hence, operators should sell airfares in line with the prevailing market realities.

Olowo added that to do otherwise is to encourage “cutting corners to save cost”, which would be very dangerous for all.

He said: “Given these uncontrollable factors of production in the airline industry and operators selling what they buy, demand will definitely drop, but much better than cutting corners and planning an accident.

“If a trip fuel is 4000 litres for a one-hour Lagos-Abuja jet flight, for example at N800 per Iitre, which gives N3, 200, 000. At a load factor of 100 passengers, it means fuel cost per person is N32, 000. That is approximately 30 per cent of total cost. Therefore, it will translate to N107, 000 tariff for a one-way journey. Period.”

By comparison, Olowo noted that PHCN has introduced Premium Tariff on power and those who can afford it are settling for it. He added that the aviation sector would not be different.

He warned that: “This is not the time for frivolous and reckless competition nor uneconomic patriotism. Operators should intensify cooperation, collaboration, consolidation, prune schedules to minimise perishable seats and maximise load factor.

“The spirit of Spring Alliance must be strengthened. The sector must not negotiate an accident. The NCAA is encouraged to be more vigilant to watch cutting corners,” Olowo said.

Former Rector of the Nigerian College of Aviation Technology (NCAT), Zaria, Samuel Caulcrick, urged the airlines to consider alternatives to this “runaway situation.”

Caulcrick said: “Now is the time to shelve, maybe temporarily, the legacy airline model and embrace the Low-Cost Carrier model.

“Weight has an influencing component on operational costs of air travel. The airlines should lower the baggage limit to 5kg and charge any extra in consonant to fuel costs. Nigerians need to adjust their lifestyle of carrying their houses on an aeroplane while travelling. If it’s that important to move everything we have by air, we should pay for the Jet A1,” Caulcrick offered.

Aviation Security consultant, Group Capt John Ojikutu (rtd), recalled that the steady rise in fuel prices dated back to 12 or 15 years when the culture of importing Jet A1 started.

Unfortunately, “Prices have been irregularly increased almost monthly in spite of what the government called subsidies to the fuel marketers. Within a year, it has quadrupled from N200/litre to N800/litre. 1.3 million barrels per day is what we are being told that are exported out of a production of 2.3 million barrels produced per day; what happened to the balance of one million barrels? Those in NNPC, Federation Account Committee and the Central Bank of Nigeria (CBN) should explain. NNPC should explain why four refineries are not working?”

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