Business Day

For­eign air­lines strug­gle to re­fuel in Nige­ria amid huge price hike

- ULF LAESSING and LIBBY GE­ORGE La­gos/Abuja Business · Nigeria News · Airlines · Transportation · Travel · Industries · Nigeria · Spain · Iberia Group · Iberian Peninsula · United Airlines · Lagos · Dubai · United Arab Emirates · Emirates Airlines · Ghana · Abuja · France · KLM · Germany · Lufthansa Airlines · Equatorial Guinea · Guinea · Goodluck Jonathan · Muhammadu Buhari · British Airways · London · ConocoPhillips · Capital Economics · Nigerian National Petroleum Corporation · Accra · Air France · Air France-KLM · Frankfurt · Malabo

FOR­EIGN air­lines fly­ing to Nige­ria have started to re­fuel abroad to by­pass pricey, and in­creas­ingly scarce, air­craft fuel, as the oil pro­ducer bat­tles a hard cur­rency short­age that has made fuel avail­able only at a very high price.

It is the sec­ond blow for air­lines op­er­at­ing in the re­ces­sion-hit econ­omy, in a year that first saw the cen­tral bank make it al­most im­pos­si­ble to repa­tri­ate prof­its from ticket sales, as it tried to pre­vent a cur­rency col­lapse.

The crash in the naira since a de­val­u­a­tion in June had led firms that mar­ket jet fuel lo­cally, such as To­tal, Sa­hara and Cono­coPhillips, to dou­ble the price to 220 naira (69 US cents) a litre in Au­gust, and to as much as 400 naira in Septem­ber, an air­line ex­ec­u­tive said.

Even at the higher costs, mar­keters’ lack of dol­lars has made fuel scarce. Some car­ri­ers have had air­craft stuck, or were forced to can­cel jour­neys, af­ter fran­tic last-minute calls from ground staff warned there was no fuel avail­able.

“The econ­omy is cry­ing out for in­vest­ment, and now it is go­ing to be even harder for any­one to visit,” said John Ash­bourne, an economist with Cap­i­tal Eco­nom­ics. “Who is go­ing to want to park a bil­lion dol­lars in a coun­try that you can’t even eas­ily fly to? It sends the worst pos­si­ble sig­nal.”

A spokesman for state oil com­pany NNPC did not an­swer calls for com­ment.

The cen­tral bank hoped float­ing the naira would at­tract dol­lar in­flows, but the naira sunk 50%, forc­ing oil firms to charge air­lines, stuck with piles of naira, in dol­lars for jet fuel.

“It’s an im­pos­si­ble sit­u­a­tion. The oil mar­keters don’t want to sign long-term agree­ments any­more so we have to ac­cept what­ever prices they de­mand,” one air­line ex­ec­u­tive said. “We sell tick­ets in naira and now they want us to come with dol­lars.”

Spain’s Ibe­ria and United Air­lines can­celled their Nige­ria ser­vices ear­lier in 2016, and two lo­cal car­ri­ers have also halted op­er­a­tions. Other in­ter­na­tional air­lines re­sponded by boost­ing ticket prices within Nige­ria, charg­ing its globe-trot­ting elite as much as $2,000 for an econ­omy class ticket to Europe — more than dou­ble the cost of a La­gos ticket bought abroad.

Dubai-based Emi­rates had started a de­tour to Ac­cra, Ghana, to re­fuel its daily Abu­jabound flight, a spokesman said. The air­line al­ready cut its twicedaily flights to La­gos and Abuja to just one. The move had been aided by a sub­stan­tial drop in Ghana’s jet prices amid tax re­form in Au­gust, ac­cord­ing to the Ghana Cham­ber of Bulk Oil Distrib­u­tors.

Air France-KLM said that it had re­fu­eled abroad in “very ex­cep­tional cases” by jug­gling sup­pli­ers and stom­ach­ing ex­tra costs.

Ger­many’s Lufthansa was load­ing more fuel in Frank­furt for its La­gos flight, where the ground staff doubt their abil­ity to re­fuel for the fi­nal desti­na­tion of Mal­abo, the cap­i­tal of Equa­to­rial Guinea, an ex­ec­u­tive said. The air­line did not re­spond to of­fi­cial re­quests for com­ment.

The scarcity has even pit­ted air­lines against lo­cal con­sumers; a surge in de­mand for cook­ing and heat­ing paraf­fin dur­ing the rainy sea­son, when house­holds can­not eas­ily burn wood or char­coal, means if the air­lines do not pay up, mar­keters will sell to lo­cals.

Air­lines had met with trans­port min­istry of­fi­cials last week in Abuja to press for fuel at lower prices, in­dus­try sources said.

Nige­ria used to be one of the most prof­itable mar­kets for for­eign air­lines, land­ing planes with plenty of first and busi­ness class to cater to ex­ec­u­tives and of­fi­cials jet­ting around un­der former pres­i­dent Good­luck Jonathan.

Pres­i­dent Muham­madu Buhari cut air travel al­lowances for of­fi­cials in a bid to tackle graft; oth­ers sim­ply have less spend­ing power with con­sumer in­fla­tion run­ning at an 11-year high of 17%.

Bri­tish Air­ways, a pop­u­lar choice for well-heeled Nige­ri­ans, said it was us­ing smaller air­craft on its La­gos-Lon­don route, as did Air France-KLM.

 ?? File pic­ture: REUTERS ?? GROUNDED: A staff mem­ber stands be­side a fuel at­tach­ment to a Qan­tas plane at Syd­ney air­port. Air­lines are choos­ing not to re­fuel in Nige­ria due to high jet fuel prices.
File pic­ture: REUTERS GROUNDED: A staff mem­ber stands be­side a fuel at­tach­ment to a Qan­tas plane at Syd­ney air­port. Air­lines are choos­ing not to re­fuel in Nige­ria due to high jet fuel prices.

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