5N-OSA
30th Jan 2009, 04:40
Finally, after much pressure from National Assembly, airlines and other aviation stakeholders, aviation fuel marketers, Thursday, announced a 50 percent cut in the price of the product.
BusinessDay investigation revealed that two days ago, Jet A1 sold between N160 and N165 per litre, but following an amicable agreement, the product is now to be sold for N80 per litre.
It would be recalled that airlines had particularly urged government to wade into the issue of pricing of the product following the crash in international market, complaining that they were not making money.
During the period, some of the airlines threatened to go outside the shores of the country and buy the product.
Respite, however, came their way early this week as all the stakeholders after several meetings agreed that the product would be sold for N80.
With this development, passengers may also enjoy from the price drop as airlines had always claimed that the high cost of aviation fuel was responsible for high cost of air fares.
Some airline officials, who spoke with BusinessDay on condition of anonymity, expressed joy on the resolution, stating that if government had waded into the issue before now, air fares would not have been as high as it is now.
Price of the product started rising about three years ago from N45 till it reached about N165 in December, last year.
This had also been responsible for the hike of air fares by airlines from N10,000 for a flight of one hour to N18,000 by December, last year.
With this development, Rufai Chanchangi, director, finance and administration, Chanchangi Airlines, said airlines can now heave a sigh of relief as they can now meet up with their financial obligations.
“A lot of us had been battling with paying some of our bills because of the high cost of aviation fuel. Now we can safely pay our debts and also get spare parts without going through so much stress”, he said.
At a recent interview, Jacky Hathiramani, chief executive officer, Dana Air, had promised that if the price of fuel is reduced, the likelihood of reducing air fare is high.
According to him, if deliberations with the House of Representatives committee on aviation with airlines and oil marketers are successful, air passengers may begin to enjoy low air fares again.
At least, an hour flight may then cost about N13,000 from the about N16, 000 it goes for now, making a 23 percent cut in air fares.
“If oil marketers can bring their prices down and we get it cheap as it is sold in other countries, then passengers would pay less, as low as N13,000”, he said.
It would be recalled that the House of Representatives committee on aviation summoned the major oil marketers, airline operators and the management of Petroleum Products Pricing and Regulatory Agency (PPPRA) to determine the remote causes of unprecedented jump of price of Jet fuel to N160 per litre, last week.
The incessant rise in Jet fuel price led to increased flight charges and a drop in flight schedules of many airline operators in Nigeria.
Bethel Amadi, chairman, House committee on aviation, had expressed grave concern on the consequences of unfair jet fuel pricing in the aviation industry, which if not properly determined could lead to the collapse of Nigerian airline operations.
At the meeting, Kayode Odukoya, chief executive officer, Belview Airlines, accused petroleum marketers of constituting themselves into a cartel by fixing price of jet fuel without free and open market-bidding to determine appropriate pricing.
According to Odukoya, the cost of jet fuel in Nigeria is about 50 percent higher than that of some African countries that had just emerged from both economic and political crisis, such as The Gambia, Cote D’voire, Liberia and Cameroon.
Odukoya reiterated the importance of jet fuel pricing in determining the success or failure of airlines operators, pointing out that aviation fuel consumes 40 percent of airlines total operation cost worldwide.
Responding to allegation against petroleum marketers, Obafemi Olawore, who spoke on behalf of Major Oil Marketers Association of Nigeria (MOMAN), objected that they are a cartel.
He stated that pricing for petroleum products is determined by certain key factors prevailing in any environment.
According to Olawore, the cost of jet fuel is determined by both internal and external factors such as cost of freighting, demurrage, landing cost, NPA charges, storage charges, foreign exchange cost and interest rate, saying all these have the capacity of impacting on the pricing of aviation fuel.
At the end of deliberations, a new benchmark of N68.92k was achieved as landing cost with additional 20 percent administration cost granted to major oil marketers.
Consequently, the oil marketers except AP, according BusinessDay investigations, are now selling the product for N80.:D:D:D
Oil marketers cut aviation fuel price by 50% (http://www.businessdayonline.com/index.php?option=com_content&view=article&id=2669:oil-marketers-cut-aviation-fuel-price-by-50&catid=95:aviation&Itemid=284)
BusinessDay investigation revealed that two days ago, Jet A1 sold between N160 and N165 per litre, but following an amicable agreement, the product is now to be sold for N80 per litre.
It would be recalled that airlines had particularly urged government to wade into the issue of pricing of the product following the crash in international market, complaining that they were not making money.
During the period, some of the airlines threatened to go outside the shores of the country and buy the product.
Respite, however, came their way early this week as all the stakeholders after several meetings agreed that the product would be sold for N80.
With this development, passengers may also enjoy from the price drop as airlines had always claimed that the high cost of aviation fuel was responsible for high cost of air fares.
Some airline officials, who spoke with BusinessDay on condition of anonymity, expressed joy on the resolution, stating that if government had waded into the issue before now, air fares would not have been as high as it is now.
Price of the product started rising about three years ago from N45 till it reached about N165 in December, last year.
This had also been responsible for the hike of air fares by airlines from N10,000 for a flight of one hour to N18,000 by December, last year.
With this development, Rufai Chanchangi, director, finance and administration, Chanchangi Airlines, said airlines can now heave a sigh of relief as they can now meet up with their financial obligations.
“A lot of us had been battling with paying some of our bills because of the high cost of aviation fuel. Now we can safely pay our debts and also get spare parts without going through so much stress”, he said.
At a recent interview, Jacky Hathiramani, chief executive officer, Dana Air, had promised that if the price of fuel is reduced, the likelihood of reducing air fare is high.
According to him, if deliberations with the House of Representatives committee on aviation with airlines and oil marketers are successful, air passengers may begin to enjoy low air fares again.
At least, an hour flight may then cost about N13,000 from the about N16, 000 it goes for now, making a 23 percent cut in air fares.
“If oil marketers can bring their prices down and we get it cheap as it is sold in other countries, then passengers would pay less, as low as N13,000”, he said.
It would be recalled that the House of Representatives committee on aviation summoned the major oil marketers, airline operators and the management of Petroleum Products Pricing and Regulatory Agency (PPPRA) to determine the remote causes of unprecedented jump of price of Jet fuel to N160 per litre, last week.
The incessant rise in Jet fuel price led to increased flight charges and a drop in flight schedules of many airline operators in Nigeria.
Bethel Amadi, chairman, House committee on aviation, had expressed grave concern on the consequences of unfair jet fuel pricing in the aviation industry, which if not properly determined could lead to the collapse of Nigerian airline operations.
At the meeting, Kayode Odukoya, chief executive officer, Belview Airlines, accused petroleum marketers of constituting themselves into a cartel by fixing price of jet fuel without free and open market-bidding to determine appropriate pricing.
According to Odukoya, the cost of jet fuel in Nigeria is about 50 percent higher than that of some African countries that had just emerged from both economic and political crisis, such as The Gambia, Cote D’voire, Liberia and Cameroon.
Odukoya reiterated the importance of jet fuel pricing in determining the success or failure of airlines operators, pointing out that aviation fuel consumes 40 percent of airlines total operation cost worldwide.
Responding to allegation against petroleum marketers, Obafemi Olawore, who spoke on behalf of Major Oil Marketers Association of Nigeria (MOMAN), objected that they are a cartel.
He stated that pricing for petroleum products is determined by certain key factors prevailing in any environment.
According to Olawore, the cost of jet fuel is determined by both internal and external factors such as cost of freighting, demurrage, landing cost, NPA charges, storage charges, foreign exchange cost and interest rate, saying all these have the capacity of impacting on the pricing of aviation fuel.
At the end of deliberations, a new benchmark of N68.92k was achieved as landing cost with additional 20 percent administration cost granted to major oil marketers.
Consequently, the oil marketers except AP, according BusinessDay investigations, are now selling the product for N80.:D:D:D
Oil marketers cut aviation fuel price by 50% (http://www.businessdayonline.com/index.php?option=com_content&view=article&id=2669:oil-marketers-cut-aviation-fuel-price-by-50&catid=95:aviation&Itemid=284)