United Nigeria Airlines (UNA), has ruled out an immediate increase in airfares despite the sharp rise in Jet A1 (aviation fuel) prices in the last one week.
The product now goes for between N1,803.19 per litre, N1,839.19 and N1,852.19 in Lagos, Abuja and Kano airports, respectively.
The prices of aviation fuel have surged by over 100 per cent in over one week, rising from N900 per litre as of February 28 when the crisis between Israel/U.S and Iran broke out, reports The Guardian.
As of Monday, a litre of the product was still sold for N1,500 and N1,600, depending on the airport and the major fuel marketer.
The Chief Operating Officer (COO), UNA, Mazi Osita Okonkwo in an interview with our correspondent, said that the sudden hike in the price of the product, the single largest cost component in airline operations, was placing significant pressure on operators’ finances.
Okonkwo, however, warned that increasing ticket prices at this time, could further reduce passenger traffic, which has remained at less than 16 million yearly despite all the projections for increased traffic.
Okonkwo said the airline was struggling to absorb the sudden increase in operating costs, but insisted that the management was yet to consider raising ticket prices.
According to him, the price of aviation fuel had doubled within a week, worsening the operating environment for local carriers.
He noted that while airlines technically had the ability to raise fares, doing so at this time could negatively impact passenger demand.
He said: “Within one week, the price has doubled by 100 per cent increase. If you increase fares, already passengers are not flying, the economy is down. So, increase in airfare is not an option. There must be an intervention from somewhere.
“Anybody can increase fares, but what does it do with your passenger loads? About two weeks ago, a litre of fuel was going for 900 per litre and now, it has crossed the N1,800 threshold.
“On increase in airfares, I don’t know. It depends on whoever the operator is. You can survive it if you have enough cash to burn. I can’t speak for any airline, but at United Nigeria, we are looking at all options.”
Okonkwo also challenged a section of the public who accused the airlines of indiscriminatory airfare increase to dissect the current situation.
He insisted that a call for airfare reductions does not reflect the harsh realities of operating in the current environment.
The COO further stressed the need for urgent intervention to prevent the situation from deteriorating further, noting that intervention could come from different quarters, including government policies or global developments affecting fuel supply and pricing.
“Intervention can come from anywhere. If they can stop the war, it’s an intervention. We are in a situation now that we don’t want to reach a point of no return,” he lamented.
Aviation fuel accounts for about 40 to 50 per cent of airline operating costs, while equipment maintenance closely follows.
