Domestic and foreign airlines operating in Nigeria may begin shutting down services from April 20 as the cost of aviation fuel, JetA1, increased to about N3,000 per liter.
Tunji Oyebanji, Chief Executive of Energy Advisory and former Chairman of Mobil Nigeria, disclosed this in a statement on Friday.
He warned that at least one airline may have already suspended operations as operators struggle to cope with the soaring fuel price, which they insist is unsustainable.
He attributed the development to both domestic supply dynamics and tightening global markets linked to the ongoing conflict in the Middle East, particularly involving Iran and the United States-Israel.
“Airlines are threatening to shut down operations effective April 20th due to the high cost of JetA1. One may already have suspended operations. They argue that the prevailing price of N3,000 per liter is not sustainable,” Oyebanji said.
He explained that most aviation fuel marketers in Nigeria currently source from a local refinery, which has become a major player in the domestic market.
However, he noted that unlike international carriers that rely on long-term supply contracts, local airlines largely purchase fuel on a spot basis directly at airport tarmacs or depots—making them more vulnerable to price volatility.
“Unlike international airlines that sign long-term contracts with suppliers, local airlines generally buy spot on the tarmac. Which means that when supply is tight, prices will be higher, but when there is a glut, prices at the tarmac are generally much cheaper than if you have a long-term contract tied in at higher prices,” he said.
Oyebanji added that the absence of hedging mechanisms exposes domestic carriers to sharp market swings, while international airlines are better protected due to structured supply agreements.
He also highlighted financial constraints facing operators, noting that aviation fuel transactions in Nigeria carry significant credit risks for oil marketing companies, forcing many to insist on cash payments.
“Sales to domestic airlines carry very high credit risk. Hence, OMC prefers selling on a cash basis, which is a challenge to their working capital,” he said.
Beyond supply and pricing issues, Oyebanji urged airlines to reassess their business models, accusing some operators of raising ticket fares excessively during peak travel periods.
“They also jack up prices astronomically during festive seasons,” he noted.
On the global front, he pointed to a sharp drop in JetA1 availability due to disruptions in Middle Eastern refining output amid the conflict, leading to increased international demand.
“Internationally, there is an acute shortage of JetA1 due to the war with Iran. Jet A1 supplies from Middle Eastern refineries have dropped significantly,” he said.
According to him, in the United Kingdom, for instance, many airlines have reduced their flights because of the shortage of JetA1.
He added that a significant portion of production from the Dangote Refinery is now being exported to meet global demand, raising concerns about whether domestic supply is being affected.
Oyebanji warned that without urgent intervention, Nigeria’s aviation sector could be heading toward another major crisis driven by fuel scarcity and escalating costs.
Click to signup for FREE news updates, latest information and hottest gists everyday
Advertise on NOP NIGERIA to reach thousands of our daily users
