In a recent development, airline operators have sounded the alarm, hinting at the possibility of revising fares upward as the cost of aviation fuel skyrocketed to over N1300 per litre.
This concerning revelation was disclosed by Obiora Okonkwo, the spokesperson of local airlines, in a statement released on Friday. Okonkwo emphasized the urgent need for government intervention to prevent the potential collapse of local airlines in the face of these unprecedented challenges.
The surge in aviation fuel prices, coupled with the volatility in foreign exchange rates, has severely disrupted operational planning and stability within the aviation sector, according to the airlines. The Central Bank of Nigeria’s move to unify the forex market in June 2023 has further exacerbated the situation, leading to a significant depreciation of the naira across both official and autonomous markets.
As the country grapples with lingering dollar scarcity, attributed to reduced oil production, local carriers are struggling to obtain sufficient foreign exchange for crucial activities such as aircraft maintenance overseas. Okonkwo, who also chairs United Nigeria Airlines, highlighted the drastic impact of the unforeseen increase in fuel prices and exchange rates, resulting in substantial losses for airlines.
Passengers who had previously purchased tickets at lower rates are now being affected by the higher costs, further compounding the financial strain on airlines. Okonkwo expressed concern over the dwindling passenger traffic, particularly during peak and off-peak seasons, attributing it to the overall economic downturn and reduced discretionary spending.
In addition to the escalating fuel prices, industry experts warn of potential consequences on consumer purchasing power and airline revenue. The ripple effect of rising operational costs could have broader implications on the country’s Gross Domestic Product (GDP), further exacerbating economic challenges.
Amidst these challenges, there are growing concerns about the viability of the airline industry, with aircraft owners becoming increasingly cautious due to perceived country risk. As fuel prices continue to soar, experts anticipate immediate effects on ticket prices, potentially dampening demand for air travel and prompting a shift towards alternative transportation options.
The situation underscores the urgent need for collaborative efforts between stakeholders to mitigate the impact on both airlines and passengers alike, ensuring the sustainability of the aviation sector amidst ongoing economic uncertainties.