Despite the reopening of the strategic Strait of Hormuz following a memorandum of understanding (MoU) between the United States and Iran, Nigerian domestic airlines are yet to feel the financial relief of falling global oil prices.
While Brent crude reduced to $72.50 per barrel as commercial tanker traffic resumed across the Persian Gulf, the local price for aviation fuel (Jet-A1) in Nigeria remains high, costing between N1,600 and N1,700 per litre.
Speaking during an interactive session with the League of Airport and Aviation Correspondents (LAAC) on Thursday, Adedayo Olawuyi, Chief Commercial Officer (CCO) of United Nigeria Airlines (UNA), explained that local market conditions have detached from global crude drops, forcing domestic carriers to rely on revenue management strategies just to remain solvent.
According to Olawuyi, the current fuel regime is unsustainable when measured against current domestic ticket prices. While operational realities forced fuel prices to surge from N900 to N3,300 per litre earlier during the peak of global maritime disruptions, base airfares failed to reduce due to consumer purchasing limits.
“The truth is, it’s not sustainable for us,” Olawuyi stated candidly. “Even when we paid up to N3,300 per litre, ticket prices did not grow by 300 percent, or even 100 percent in that case. We are still selling tickets for N120,000. Our prices went up, but they have been balanced out strictly by demand and sales dynamics. Everyone is trying to use advanced revenue management principles to extract the best yield possible, but market forces are aggressively in play.”
