Nigerian airlines drown in N60bn debt as jet fuel costs soar

Nigerian airlines have collectively taken on over N60bn in debt from local banks to fund aviation fuel purchases, as soaring jet fuel prices push carriers deeper into financial trouble. The Airline Operators of Nigeria (AON) disclosed this through Roland Iyayi, a member of its Board of Trustees.

Iyayi told Sunday PUNCH that domestic operators are now struggling to survive. "There are some airlines that are owing over N60bn from local banks just to be able to procure fuel. That's how bad it is," he said.

Fuel prices 270% above global benchmark

Iyayi blamed the crisis on the government's failure to act on industry recommendations meant to reduce aviation fuel costs. He said Nigerian airlines pay about 270 per cent of the global benchmark price for Jet A1 fuel, while airlines elsewhere pay between 60 and 80 per cent.

"There hasn't been any intervention by the government to address the issue of why it is that fuel price in Nigeria is 270 per cent of the original value. So Nigeria is a peculiar case," Iyayi said.

Talks produced no action

The AON had threatened to suspend all flights in February over the worsening fuel costs. That prompted the Minister of Aviation and Aerospace Development, Festus Keyamo, to call a meeting with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), fuel marketers and the AON.

Iyayi represented the AON at those talks. He said the sessions produced only recommendations to the government, with no concrete action. "To date, nothing has been done," he added.

Ticket charges withheld

The financial strain has also stopped airlines from remitting the mandatory five per cent ticket sales charge to the Nigerian Civil Aviation Authority (NCAA). According to Iyayi, all income from ticket sales is now being redirected to fuel procurement.

"All the earnings from ticket sales are put towards buying fuel for the operation. The alternative will mean that the airlines will shut down completely, there won't be any services, and the entire economy will ground to a halt," he warned.

Airlines have not been able to raise ticket fares enough to cover the surge in fuel costs. Iyayi said they are left with no choice but to keep flying at a loss. "The airlines are there, having to fly even though the operations are not profitable. They're more indebted now than they ever were. And yet the same government through the NCAA is insisting that airlines must pay up the five per cent ticket sales charge," he said.

What it means for the naira and consumers

The deepening debt burden raises the risk of flight disruptions or a repeat of the February shutdown threat. For consumers, any further deterioration could mean higher fares or reduced domestic flight options, while the aviation sector's financial distress adds another strain on an economy already battling inflation and foreign exchange pressure.