Posted by: E-Collins
« on: May 11, 2022, 03:32:37 PM »Captain Abdulahi Mahmood, Managing Director of Aero Contractors, has urged the Federal Government to help indigenous carriers swamped by several issues. According to Mahmood, operators' problems require immediate attention to prevent collapsing.
The CEO of Aero Contractors, who lamented the ongoing aviation fuel crisis, said airlines are groaning under various challenges, including foreign currency (FX) and maintenance costs, and that the government must intercede.
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"The industry's current state and our position are not unique to Aero Contractors; the price of gasoline, the currency rate, and our maintenance expenses have all increased." It's exactly what's going on in the aviation industry right now.
"Aero Contractors will not go out of business. "We are making efforts, and I push everyone to focus on our plans and tactics," Mahmood said. "I have spoken with the unions and workers of Aero Contractors, and I have assured them that we must work together to pull this airline out of this difficult situation."
Low passenger turnout, he said, is to blame for the airlines' problems, which has led to lower revenues for domestic carriers.
"The difficult scenario is that people are not traveling, income is not flowing in as expected, and prices have increased." We are flying for less than $100 a seat, but the current fuel price is almost $1.3 or $1.5 per liter, which is not sustainable, but we are trying everything we can to come out of the woods," Mahmood said.
Further criticizing the situation, he stated that aviation fuel now accounts for 60 to 65 percent of a flight ticket, up from 30 to 35 percent previously.
He added that supply chain issues for aviation fuel were also placing pressure on airlines.
"A liter of aviation fuel costs N600 in Lagos today, N650 in Abuja, N680 in Kano, and N700 in Maiduguri, and new rates began yesterday." That is the situation we are in right now. It is a massive beast.
"We had multiple meetings with the National Assembly, NNPC, downstream, and regulatory agencies. At one time, they provided us a subsidy of N500 per liter merely to cushion the effect for two weeks."
"They said they could provide the license, but getting the gasoline to the plane is lengthy." But we're in an emergency scenario; this is what airlines call May Day, and when someone calls May Day, it's a red flag; we're in a May Day situation right now, and something needs to be done quickly.
"We have been crying that unless something is done, the airlines may not be able to continue; if we continue with the prices because what the airlines are avoiding is not profit, but all of these things will be pushed down to the traveling public; if you raise the fuel price, ticket prices will change."
"As of today, the cost of a ticket is less than $100 per seat, but the cost of a liter of gasoline is more than $1; this is not sustainable. It is a reality." If you do the unit cost with this price right now, no ticket will be less than N95,000, and it's not that the airline is carrying a 100 percent load factor; the load factor may be between 60 and 65 percent. If you carry that load factor, remove the fuel component, which is normally 35-40 percent but has gone up to about 60 to 65 percent, so you're left with 35 pence. "These are facts and figures, where we are right now," Mahmood said.
He stated that airlines had multiple meetings with the government about the concerns, during which pledges were given, and that aviation fuel is not subsidized but rather deregulated.
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"So everyone has their pricing, but I believe the government should step in since aviation is the country's economic engine, and we cannot afford for the aviation industry to suffer due to the current security situation." It will have a significant negative impact on the economy. I believe the government should act as soon as possible to rescue this sector. As you can see from yesterday's petrol prices, they're rising, it's not sustainable, and the government needs to act quickly," Mahmood remarked.
The CEO of Aero Contractors, who lamented the ongoing aviation fuel crisis, said airlines are groaning under various challenges, including foreign currency (FX) and maintenance costs, and that the government must intercede.
"Aero Contractors will not go out of business. "We are making efforts, and I push everyone to focus on our plans and tactics," Mahmood said. "I have spoken with the unions and workers of Aero Contractors, and I have assured them that we must work together to pull this airline out of this difficult situation."
Low passenger turnout, he said, is to blame for the airlines' problems, which has led to lower revenues for domestic carriers.
"The difficult scenario is that people are not traveling, income is not flowing in as expected, and prices have increased." We are flying for less than $100 a seat, but the current fuel price is almost $1.3 or $1.5 per liter, which is not sustainable, but we are trying everything we can to come out of the woods," Mahmood said.
Further criticizing the situation, he stated that aviation fuel now accounts for 60 to 65 percent of a flight ticket, up from 30 to 35 percent previously.
He added that supply chain issues for aviation fuel were also placing pressure on airlines.
"A liter of aviation fuel costs N600 in Lagos today, N650 in Abuja, N680 in Kano, and N700 in Maiduguri, and new rates began yesterday." That is the situation we are in right now. It is a massive beast.
"We had multiple meetings with the National Assembly, NNPC, downstream, and regulatory agencies. At one time, they provided us a subsidy of N500 per liter merely to cushion the effect for two weeks."
"They said they could provide the license, but getting the gasoline to the plane is lengthy." But we're in an emergency scenario; this is what airlines call May Day, and when someone calls May Day, it's a red flag; we're in a May Day situation right now, and something needs to be done quickly.
"We have been crying that unless something is done, the airlines may not be able to continue; if we continue with the prices because what the airlines are avoiding is not profit, but all of these things will be pushed down to the traveling public; if you raise the fuel price, ticket prices will change."
"As of today, the cost of a ticket is less than $100 per seat, but the cost of a liter of gasoline is more than $1; this is not sustainable. It is a reality." If you do the unit cost with this price right now, no ticket will be less than N95,000, and it's not that the airline is carrying a 100 percent load factor; the load factor may be between 60 and 65 percent. If you carry that load factor, remove the fuel component, which is normally 35-40 percent but has gone up to about 60 to 65 percent, so you're left with 35 pence. "These are facts and figures, where we are right now," Mahmood said.
He stated that airlines had multiple meetings with the government about the concerns, during which pledges were given, and that aviation fuel is not subsidized but rather deregulated.
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"So everyone has their pricing, but I believe the government should step in since aviation is the country's economic engine, and we cannot afford for the aviation industry to suffer due to the current security situation." It will have a significant negative impact on the economy. I believe the government should act as soon as possible to rescue this sector. As you can see from yesterday's petrol prices, they're rising, it's not sustainable, and the government needs to act quickly," Mahmood remarked.
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