The Airline Operators of Nigeria (AON) has revealed that some domestic carriers have accumulated debts exceeding N60bn from local banks solely to finance aviation fuel purchases, as soaring jet fuel prices push the industry toward financial collapse.
Roland Iyayi, a member of the AON Board of Trustees, disclosed this in an interview with Sunday PUNCH, warning that the situation has become critical for Nigerian airlines.
Debt Burden and Fuel Price Disparity
According to Iyayi, the debt is a direct result of the exorbitant cost of Jet A1 fuel in Nigeria, which stands at approximately 270 per cent of the global benchmark price. In contrast, airlines in other parts of the world pay between 60 and 80 per cent of that benchmark.
“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,” Iyayi said.
He attributed the crisis to the government's failure to act on recommendations from industry stakeholders aimed at reducing aviation fuel costs. “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,” he added.
Failed Government Intervention
The AON had previously threatened to suspend all flights in February over the worsening fuel costs. This prompted the Minister of Aviation and Aerospace Development, Festus Keyamo, to convene a meeting with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), fuel marketers, and the AON.
Iyayi, who represented the AON at those talks, said the sessions produced only recommendations to the government, with no concrete action following them. “To date, nothing has been done,” he stated.
Impact on Regulatory Compliance and Operations
The financial strain has forced airlines to stop remitting the mandatory five per cent ticket sales charge to the Nigerian Civil Aviation Authority (NCAA). Iyayi explained that all income from ticket sales is now being redirected to fuel procurement, leaving no funds for regulatory fees.
“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.
He further noted that airlines have been unable to raise ticket fares enough to cover the surge in fuel costs, forcing them to operate 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,” Iyayi said.
The AON has approached the government seeking relief on the historical debts owed by airlines, but Iyayi said the request had been misunderstood. The ongoing crisis threatens the viability of domestic aviation in Nigeria, with airlines accumulating unprecedented debt and regulatory obligations left unmet.
