Nigeria will become the first country to ground flights on Monday, 9 May, as increasing prices for aviation fuel makes the business unprofitable.
The Airline operators “will be discontinuing operations in the country” until further notice, said their union in a statement. It is a recent sign of the widespread effect that Russia’s invasion of Ukraine has made. However, one carrier, Ibom Airlines Ltd., opted out of the cessation, mentioning commitments toward customers.
The war between Russia and Ukraine has caused widespread disruption to energy markets, with Russian feedstocks utilized to make jet fuel and diesel becoming unavailable for many regions of the world.
China has also cut short its oil product export quota, limiting supplies. The loss of 3.2 million barrels per day of refining capacity during the pandemic years also does not help.
The 23 airlines of Nigeria say that they have been subsidizing flights for the last four months and can no longer take the costs after the cost of aviation fuel has more than tripled to 700 naira ($1.68) per liter.
Jet fuel makes up a major proportion of input prices for these airlines. Any alteration in the expenses can push ticket prices that could lessen travellers, particularly in price-sensitive markets.
Vice president of operations at Lagos-based tour operator Leisure Afrique, Victor Enwezor, said, “Many airlines are operating at a loss already. Any other price hike will destroy their business.”
Grounding flights may result in destroying Africa’s biggest and largest economy, where the International Monetary Fund (IMF) already predicts that growth will become slower this year and next.
It is still not clear what the solution to this problem is. In March, following discussions with the government, the Nigerian National Petroleum Co. decided to grant licenses to airlines to import fuel to increase supply and perhaps bring down prices.
