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“The cheapest ticket from airlines will be N120,000 for Economy” –  Chaotic scenes at airports over Aviation fuel

Chaotic scenes at airports, as fuel scarcity bit, harder disrupting scheduled flight services for several hours in Nigeria, but before we bring you events happening across airports and flight cancellations, let’s recap what is going on at the parliament.

At the ongoing investigative hearing by the House in Abuja on Monday, domestic airlines under the Airline Operators of Nigeria again threatened to shut down operations this week over skyrocketing aviation fuel price and demanded licences from the government to begin ATK importation.

The threat forced the Deputy Speaker of the House, Ahmed Wase; Group Managing Director, Nigerian National Petroleum Company Limited, Mele Kyari; Chairman of Air Peace and Vice-President of the AON, Allen Onyeama; Chairman, Major Oil Marketers Association of Nigeria, Olumide Adeosun; and Chairman, Depot and Petroleum Marketers Association of Nigeria, among others, to hold an emergency meeting-within-meeting discussion.

Emerging from the meeting, Wase asked the NNPC boss to read out the resolution reached by the stakeholders.

Kyari said, “We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight tickets will certainly increase and this can surely cause pains for Nigerians. That is why we are working with you to ensure that those pains are minimised to the barest minimum. And one of the elements is the pricing of aviation fuel.

“So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days’ time, their representatives will sit down and agree on a transparent base for pricing. That means that they ought to have a referenced benchmark that is quoted transparently in the market.

“They will have a referenced exchange rate for the naira so that everyone can compete. They will also agree on a premium, which currently differs from customer to customer, depending on the volume you buy and the credit level.

“These are the things they can negotiate in three days and close, so that going forward, there is a transparent decision on pricing. This will no doubt throw up the actual value of the product in the market. You will no longer see these discrepancies we have seen where some people are selling at N445 and some are selling at N630. This will completely close, such that you will not see these differences.”

The GMD of the NNPC also disclosed that the meeting agreed that in the interim, “between now and the three days that they have to close negotiations, they will sell at N500 in the next three days and after that, they will switch to the new price that everyone can access.”

Kyari noted that the lowest price seen as of Monday morning was N445 while some marketers sold the commodity for as high as N630 “and we don’t think this is normal and so, we discounted it.”

He added, “Lastly, as requested by the Airline Operators of Nigeria, they will be granted a licence by the authority to import petroleum products, particularly ATK, so that they can have a way of benchmarking the sales of other customers and can also bring in cheaper products whenever it is possible.”

Adopting the resolutions on behalf of the AON, Onyeama noted that at N500/litre, “our unit cost per seat will now be about N85,000, barely insurance and other things; that is our pain.”

He said, “I wish we could buy this fuel at N200 so that Nigerians can afford to buy it. That is our predicament. And so, the public should understand if there is a shift in what they are paying now and what they are going to pay later.

“Anybody can calculate it just as it has been done here, to buy 8,000 litres of fuel at N500/litre. How much will that give you for just a one-hour flight?”

In the meantime, the AON, through Onyeama, condemned the marketers for refusing to disclose the actual amount they buy aviation fuel.

Onyeama said, “I have the mandate of every airline in this country to announce to you that if they cannot come down from their rooftop, we have only three more days to be able to fly. We are not threatening this country. We have been subsidising what we are doing.

“I will give you the rate as of today, at N630, N640, N650/litre, we have an aircraft going to Kano that has about 7,000 litres of fuel on it. Multiply it by N630. The unit cost per seat already is about N70,000 per seat. You have not talked about the insurance that is very static and Nigerians pay a lot of insurance premiums because this country is stigmatised.”

He added, “You have to insure in London and other places abroad. It is a loss. All the insurance companies in Nigeria put together cannot even insure one aircraft. So, you have to go abroad to insure and they slam us with heavy premiums. What we use in insuring one plane is what the legacy airlines of this world use in insuring about three planes. So, the Nigerian airline is dead on arrival.

“Yet, the fuel cost which was supposed to be about 30 to 40 per cent (of operational costs) in every other clime in the world, in Nigeria it is about 70 per cent even before this time (of scarcity). So, you can now see the mortality rate of airlines in this country and the causes.”

The Air Peace boss challenged the marketers to disclose the actual price of aviation fuel, saying, “They have refused to answer your simple question. Whether you got money from the CBN or from the black market, how much is the unit cost of your acquisition so that we know if the airlines are cheating you or you are cheating the airlines, or if you have formed a cartel to increase your prices overnight.”

Onyeama stated, “From what is happening if we continue this way, the cheapest ticket you will expect from airlines will be about N120,000 for Economy (Class). And we don’t want to do that because it will not help the ordinary man.

“I have the mandate of airlines to inform the House that we are now demanding that we should be given a licence to import this fuel. If we can buy jets that cost about $80m, we can afford to import this fuel. Let the NNPC give us the right to import fuel and we will not complain to you.”

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