Due to a combination of Russia-Ukraine war and COVID-19, Nigerian airlines and others across Africa will lose $700 million in 2022.The International Air Transport Association has said.
This was made public at the ongoing 78th IATA Annual General Meeting and World Air Transport Summit in Doha, Qatar.
IATA said that inflation, interest and exchange rates would affect the growth of the aviation industry globally, stressing those countries should learn from the COVID-19 pandemic.
Speaking at the summit, the IATA’s Director General, Willie Walsh, said, “Governments must have learned their lessons from the COVID-19 crisis. Border closures create economic pain but deliver little in terms of controlling the spread of the virus.
With high levels of population immunity, advanced treatment methods, and surveillance procedures, the risks of COVID-19 can be managed. At present, there are no circumstances where the human and economic costs of further COVID-19 border closures could be justified.”
The IATA listed risk factors to the aviation sector, including the war in Ukraine and COVID 19.
It said that the impact of Russia’s invasion of Ukraine on aviation paled compared with the unfolding humanitarian tragedy.
It noted that the war in Ukraine would not escalate beyond its borders, but the rising fuel costs and a dampening demand due to lowered consumer sentiment would have a negative effect on the aviation sector.
It said the Russian international market, Ukraine, Belarus, and Moldova accounted for 2.3 per cent of global traffic in 2021, noting that about 7 per cent of international passenger traffic would normally transit Russian airspace (2021 data), which was now closed to many operators, mostly on long-haul routes between Asia and Europe or North America.
“There are significantly higher costs for re-routing for those carriers affected,” it said.
It disclosed that just under 1per cent of global freight traffic originated in or was transited through Russia and Ukraine, but the greater impact was in the specialized area of heavy-weight cargo where Russia and Ukraine were the market leaders.
It said at $192 billion, fuel was aviation industry’s largest cost item in 2022 (24 per cent of overall costs, up from 19per cent in 2021).
“This is based on an expected average price for Brent crude of $101.2/barrel and $125.5 for jet kerosene. Airlines are expected to consume 321 billion liters of fuel in 2022 compared with the 359 billion liters consumed in 2019.”
According to the source, the supply of products to oil marketers was subsequently reduced due to issues around product diversion.
“We had a meeting with PPMC two weeks ago where we were told that the volume of product we load is too high. So, the NNPC has reduced the volume they give to us,” the source said.
Nigeria consumes an estimated 60 million litres of fuel per day. However, findings showed that by PPMC’s record, marketers loaded as much as 106 million litres per day as of April.
“So, PPMC kept lamenting and asking us where the extra products go. Of course, we all know that they go to neighboring countries where they are being sold at higher prices. Apart from the fact that diesel price for transporting products is on the high side, fuel is a product highly subsidized by Nigeria, and Nigerians are not allowed to enjoy the benefits,” our source disclosed.
Diesel is a deregulated product. Checks on Monday showed that the product was sold between N780-N820/litre.
“That’s why marketers find it difficult to take products to the North. I don’t know why Lagos is experiencing scarcity. Already, buying and transporting the product to my station is at N170 per litre. So, how much will I sell? That means price has increased itself. If you go to states like Ibadan, Ekiti, Akure, it’s impossible to see the price at N165 because cost of transporting one litre is already N20. So, by the time you take it to states like Ekiti, you already have it at N182,” our source added.
A former chairman, Major Oil Marketers Association of Nigeria and Chairman/CEO, 11 Plc, Tunji Oyebanji, told The PUNCH that the scarcity was temporary.
“As of last week, there were some talks about low stock and suppliers not giving products, but I think it’s a temporary glitch because NNPC told us they have sufficient stock of fuel,” he said.
Fuel sold at N165/ltr in places like Ikorodu, Anthony, Surulere, Ikeja, Festac, Ago and VI in Lagos on Monday, but prices were higher at Isheri and its neighboring towns.
In a telephone interview with The PUNCH, the National Operations Controller, IPMAN, Mike Osatuyi, said the scarcity was no fault of oil marketers.
Meanwhile, the Secretary of the Independent Petroleum Marketers Association of Nigeria, Akeem Balogun, in a statement on Monday, said that considering the current price, it is impossible for the product to be sold at N180 per litre.
