Chinedu Eze
Marketers of aviation fuel, known as Jet A1, have assured airline operators that the price of the product would come down to what it used to be before the Iran-US war started in February 2026.
The price of aviation fuel averaged N900 per litre until the war started and drove the prices rose to over N1, 700 and continued to rise till it reached N3, 300 per litre.
The spike in the cost of the product disrupted flight operations globally. It also disrupted airlines business plans because it multiplied the cost of operation. In Nigeria, it catapulted the cost of one hour flight from less than N2 million to N8 million.
The Managing Director/Chief Executive Officer of Ibom Air, Mr. George Uriesi who confirmed this said airlines were forced to run to the banks cap in hand for loans.
But the marketers assured that as the price of crude oil is coming down and refineries bring down their gantry prices, the price reduction will reflect in sale of their products.
THISDAY spoke to the Chairman of Ndano Energy, an aviation oil marketing company, Chris Ndulue, who assured that soon the price of aviation fuel would come down to where it was before the Iran war started, noting that Dangote Refinery has been reducing the cost of petroleum products, jet fuel inclusive.
Ndulue said the product may not go lower than the February price N900 because subsidy has been removed.
“Dangote has been bringing down the price of petroleum products. The drastic reduction of prices will not be over night. We are coming to where the prices were before February hostilities in the Middle East. It will get there because Dangote is reducing prices every week.
“The moment Dangote reduces price, marketers must do likewise because there is competition. But the marketers are not the main cause of the price increase but everybody is blaming them. Sometimes the blame is diversionary,” Ndulue said.
According to him, willy-nilly marketers will submit to market realities; “just as airlines succumbed to market realities when they increased airfares but were forced to bring it down because fewer passengers were turning up at the airports.”
“Market realities will force everyone to the right pricing. market realities did not allow airlines to increase their fares very high to cushion the high cost of aviation fuel. There is a level you can get and you will not increase fares again because you will experience significant passenger drop. So, price of aviation is going down and cost of ticket is also going down because I travelled the other day and found out that the price of ticket has also gone down. Cost of aviation fuel is still going down,” Ndulue further said.
He noted that the market had a way of correcting itself, insisting that the marketers are not responsible for the high prices because marketers sell according to the price that they bought the product.
“If the price goes down, we sell at lower price; if it goes up, we sell at higher price,” he stated.
Also, Ndulue said the marketers faced tough fiscal challenges like the airlines because as the price of the product was increasing, they had to go to the bank to borrow money; “|just as the airlines were doing.”
Recently, the Chief Commercial Officer, United Nigeria Airlines, Adedayo Olawuyi, said despite the reopening of the Strait of Hormuz, following a memorandum of understanding (MoU) between the United States and Iran, the price of aviation fuel was yet to come down.
Last week, Dangote Petroleum Refinery reduced its gantry price for aviation turbine kerosene (Jet A1) to N1, 450 per litre from N1, 550 per litre following trends in the international energy market. In reaction to price reduction, airlines now buy jet fuel at about N1, 700 per litre, which is relatively high, knowing that in February before the Middle East crisis, aviation fuel was N900 per litre.
Olawuyi, however, explained that local market conditions have detached from global crude drops, forcing domestic carriers to rely on revenue management strategies just to remain solvent.
He encapsulated the efforts domestic airlines are making to survive and sustain their operations despite the high cost of aviation fuel.
Olawuyi confirmed that the current fuel regime is unsustainable when measured against current domestic ticket prices.
While operational realities forced fuel prices to surge from N900 to N3,300 per litre earlier during the peak of global maritime disruptions, base airfares failed to hold due to consumer purchasing limits.
“The truth is, it’s not sustainable for us. Even when we paid up to N3,300 per litre, ticket prices did not grow by 300 percent, or even 100 percent in that case. We are still selling tickets for N120,000. Our prices went up, but they have been balanced out strictly by demand and sales dynamics. Everyone is trying to use advanced revenue management principles to extract the best yield possible, but market forces are aggressively in play,” Olawuyi said.
The market realities brought every airline down to sell a little above N100, 000 which means they incur huge losses, as they continue to buy fuel, even at the current rate of N1, 700 per litre.
But despite the high price of aviation fuel and some increase in airfares, Nigerians are still travelling by air, according to the airlines. Olawuyi acknowledged that some airlines were even experiencing seat constraint even at low season due to dwindling capacity, but some airlines however are increasing their fleet.
Olawuyi noted that while the broader domestic market appeared to be experiencing a seat capacity constriction, with fewer total seats in active deployment today than in previous years, United Nigeria Airlines has bucked the trend by consistently adding capacity.
It is also expected that by the time fuel price returns to about N900 per liter, airlines would regain their financing to acquire and add more aircraft to their fleet.
