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  • Thursday, June 20, 2024
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BusinessDay

Air fares fail to reflect Dangote’s crashed fuel price

Air fares across local destinations in Nigeria have remained high despite reports that Dangote Petroleum Refinery reduced the prices of diesel and aviation fuel to ₦940, and ₦980 per litre, respectively.

This comes after its widely celebrated price reduction to ₦1,000 barely two weeks ago.

Ticket prices have not reduced at all. We still book tickets at a very expensive rate. All we just keep hearing is that aviation fuel price has reduced, yet ticket prices have not changed,” Ndukwe Ginika Ogechi, CEO Geena Travels and Tours Ltd also told BusinessDay.

Ogechi said that since aviation fuel constitutes major operating costs for airlines, she expected that ticket prices will reduce but that has not been the case.

BusinessDay’s findings show that aviation fuel currently takes about 45 percent of operating cost; labour, 17 percent; aircraft rent and ownership, 8.5 percent; non-aircraft rents and ownership, 7 percent; professional services, 4.5 percent; landing fees, 2 percent; food and beverage, 1.5 percent; maintenance materials, 13 percent, and transport related, 1.5 percent.

It cost about $3,000 to operate a B737 aircraft on a one-hour flight when aviation fuel was less than N100 per litre about five years ago. Similarly, when aviation fuel increased to N200 per litre, airlines operate a B737 aircraft at a cost of about $6,000.BusinessDay’s findings show that with the current exchange rate and increase in aviation fuel, which currently cost about N1,500 per litre, airlines operate a B737 aircraft for over quadruple that amount.

BusinessDay’s findings show that a one-way economy class ticket from Lagos to Abuja which cost N55,000 few months ago now cost between N100,000 to N140,000 on Air Peace; N90,000 to N150,000 on United Nigerian Airlines; N75,000 to N130,000 on Dana Air and N150,000 to N190,000 on Ibom Air.

A one-way economy class ticket from Lagos to Abuja which cost about N50,000 some months back now cost N105,000 to N150,000 on Air Peace, N95,000 to N130,000 on United Nigeria Airlines, and N165,000 to N200,000 on Ibom Air.

A one-way economy class ticket from Lagos to Port Harcourt which cost about N55,000 some months back, now cost N105,000 to N170,000 on Air Peace, N85,000 to N120,000 on United Nigeria Airline, N65,000 to N135,000 on Dana Air, N96,000 to N130,000 on Ibom Air and N86,000 to N160,000 on Arik Air.

BusinessDay’s checks show that in July 2023 aviation fuel cost N629 per litre, in August 2023 it cost N818 per litre, in September 2023 N897 per litre: in October 2023 N930 per litre, in November 2023 N991 per litre, in December 2023 N1,000 per litre.

In January 2024, fuel price further increased to N1,042 per litre, in February N1,316 per litre and in March N1,500 per litre.

An airline operator who would not want his name mentioned told BusinessDay that marketers sell to the airlines, as airlines cannot buy aviation fuel directly from Dangote since Dangote is not an authorise fuel marketer at the airport.

The operators said that while fuel prices are not fixed, the prices are dependent on volume discussion as airlines that buy more get some level of discount.

He however noted that the average price for aviation fuel is N1,500 per litre.

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