Official says persistent price spikes are pushing the industry beyond sustainable limits.
Nigeria’s domestic airlines on Thursday say aviation fuel has become the single most burdensome cost in their operations, now accounting for as much as 40 per cent of total expense, well above global averages and a level operators warn is increasingly unsustainable.
He said while fuel typically represents about 30 per cent of operating costs globally, Nigerian carriers are now spending significantly more due to recent spikes in Jet A1 prices and structural inefficiencies in the local supply chain.
“Plus or minus, in an environment like ours, it is about 40 per cent,” he said.
The figure, operators argue, reflects a widening gap between revenue and operating costs, particularly as airlines struggle to adjust ticket prices in a market where demand remains highly sensitive to fare increases.
Mr Okonkwo explained that when fuel costs rise to such levels, airlines are left with limited options: absorb the losses, increase fares, or reduce flight operations, each carrying significant economic consequences.
“If I factor this into my ticketing mathematics, I should be looking at about N500,000 and above for a one-hour flight,” he said, adding that airlines have so far avoided passing the full cost to passengers due to prevailing economic conditions.
He said the decision to absorb costs has already pushed several operators to the edge of financial viability, especially as the industry is currently in a low-demand season.
According to him, airlines are operating below breakeven levels on many domestic routes, even as fuel prices continue to fluctuate sharply across airports.
Industry operators also link the rising cost burden to inconsistent pricing structures in the aviation fuel market, where Jet A1 is often sold at varying rates depending on location, availability, and supply dynamics.
Mr Okonkwo said depot prices may appear relatively stable, but the final price paid by airlines often escalates significantly due to logistics, scarcity-driven pricing, and market practices.
He also pointed to what he described as irregular supply patterns, arguing that fuel availability is not always consistent across operators, leading to situations where airlines are forced to purchase at prevailing “spot” prices.
Globally, aviation fuel is one of the largest cost components for airlines, but industry data from the International Air Transport Association (IATA) shows that most carriers operate with fuel costs averaging between 25 and 30 per cent of total expenditure.
Nigeria’s higher exposure, operators say, is worsened by foreign exchange constraints, reliance on imported refined products, and the absence of large-scale fuel hedging mechanisms that help airlines in more developed markets stabilise costs.
In Nigeria, most domestic carriers operate without fuel hedging contracts, leaving them exposed to real-time price volatility in the aviation fuel market.
An aviation analyst, Nura Ahmad, said the situation highlights broader structural pressures in the country’s aviation sector, where rising operational costs have consistently outpaced revenue growth, forcing airlines into a cycle of cost absorption and periodic fare adjustments.
The Dangote Petroleum Refinery, which began phased operations in 2024 and has entered aviation fuel production, is expected to improve domestic supply stability. However, operators say its impact on pricing consistency is still evolving as distribution networks and market structures adjust.
The AON insists that the pressure remains immediate, with fuel costs continuing to dictate operational decisions in an industry where margins are already thin.
