The airline industry is in dire strait as airline operators under the aegis of Airline Operators of Nigeria (AON) have written to the Nigerian Civil Aviation Authority (NCAA) seeking the approval of the regulatory body to impose 40 percent fuel surcharge as an ameliorative measure to cushion the effects of the continues increase in the high price of Jet A1 on airline operations in the country.
The implication is that airfares would technically go up and beyond what an average passenger can afford.
Aviation Metric had exclusively reported last week that as a result of the astronomical increase in the prices of aviation fuel, otherwise known as Jet A1, the operators were devising a means to further adjust airfares through the introduction of fuel surcharges.
The introduction of a fuel surcharge would lead to another round of fare increases. The astronomic rise in prices of Jet fuel and the introduction of surcharges will inevitably translate to the high cost of flying.
The Director-General of the International Air Transport Association (IATA), Willie Walsh also warned that the introduction of surcharges will translate to the high cost of flying.
Meanwhile, some airlines have introduced fuel surcharges which are treated like government taxes that make new tickets more expensive and appear as extra costs to travelers.
The soaring price of fuel threatens the airline industry’s recovery just as passengers are returning to the skies. As crude prices remain elevated, airline bosses face a critical calculation: how much of their fuel bill can they pass on to customers without leaving their planes empty?
The heads of Europe’s biggest airlines met in person for the first time in a few weeks at a conference in Brussels, Belgium each reporting a burst of demand as pandemic-related travel restrictions are rolled back. Carriers fear raising ticket charges will hit passenger demand but they may have little choice.
The United Arab Emirates (UAE) national carrier, Etihad Airways has retained its $49 surcharge on flights between Abu Dhabi and Delhi. At the domestic level, Nigeria is already seeing the effects of the hike and scarcity of aviation fuel which has risen by over 200 per cent in the last few months from N250 per litre to more than N600 per litre.
A letter written to the Director-General of NCAA, Capt Musa Nuhu, dated July 18, 2022, and signed by the AON President, Dr. Abdulmunaf Yunusa Sarina noted that in addition to the crippling effect of intermittent shortages of Jet A1 which price had risen from N200 per litre in February 2022 to N720 per litre as at yesterday.
This he said has greatly increased the operational cost of airlines by over 130 percent, yet airlines are unable to increase fares as well as suffer from the unavailability of foreign exchange to conduct their operations.
He explained that in order to forestall a backlash and shutdown of the system, “Airlines are hoping to resort to an introduction of a fuel surcharge of between 25 and 40 percent of NUC as a way of offsetting the additional burden brought about by increased fuel cost bearing in mind that jet fuel accounts for about 40 percent of total operational expenses”.
“We, therefore, solicit your kind understanding and support by reconsidering and reviewing the following decisions taken by your organization such as immediate review of the decision that airlines are required to obtain approval for an initial three months before implementation of a fuel surcharge”.
“Others include waiver of the demand that airlines pay an additional five percent on the fuel surcharge entirely separate from the 5 percent Ticket Sales Charge (TSC)”.
According to the operators, unless this is done, it will mean in effect that whatever is collected by the airlines as fuel surcharge to cushion the effect of the high fuel price will be taken away once again by the NCAA.
“This in effect will amount to double jeopardy as airlines will be unable to offset the additional cost which the Fuel surcharge is meant to address in the first place”.
They however proposed that taxes should be based on the portion of the fare due to airlines less the fuel surcharge which they hinted is specifically for the purpose of cushioning the effect of rising jet fuel price and not on the total paid for the ticket inclusive of fuel surcharge.
To them, fuel surcharge should be exempted from the TSC, just as the operators urged the NCAA to consider and affect their proposal to help alleviate the suffering of the airlines in the country given the current scarcity and consistently rising cost of Jet fuel.
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By - Admin