Aviation fuel: Domestic airlines set to cut airfares

There are strong indications that domestic airlines operators may reduce ticket prices for passengers due to the imminent supply of aviation fuel, otherwise known as Jet A1, by Dangote Refinery.

Considering that there had been sustained increase in the price of jet fuel over the last four years, indigenous carriers were forced to enhance operations by raising ticket prices.

The 12 scheduled airlines, including Air Peace, Aero Contractors, Arik Air, Max Air, Azman, Dana Air, Ibom Air, Green Africa, Overland, Rano Air, ValueJet and United Nigeria Airlines, on February 20, 2022, jointly agreed to increase airfares by 100 per cent to meet up with operational costs.

However, with operators looking at a possible crash in the price of Jet A1, passengers might experience a drop in airfare.

Projections

The Managing Director of Aero Contractors, Captain Ado Sanusi, told Vanguard that although the price of Jet A1 had been steady, airlines would appreciate a price decrease.

Sanusi said: “As operators, we have no idea of the refinery where marketers buy Jet A1, but what we look at is the price. If the price drops, whether it is from Dangote refinery or refineries outside the country, we will appreciate it.

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”The price has been steady and that is what we use in making our projections. The price of jet fuel has been between an average price of N1,200 and N1,400 per litre.

Price drop

On whether the imminent supply could result in a price drop, he added: “It depends on what price Dangote refinery sells Jet A1. If it sells below the market price, then, of course, it would drop price.

”However, if it is not selling below the market price, there won’t be a drop in price. Meanwhile, it is dependent on what crude oil is being sold to him and how much it costs him to refine. What we think will bring down the price of Jet A1 is the cost of freight.

Immediate impact

“If Port Harcourt, Warri and Dangote refineries could give us enough jet A1 for some time and we have steady prices, it will definitely have an impact on price. However, that won’t be possible in a few days. It has to be consistent for a few weeks and even months.”