Nigerian airlines now depend on bank loans as fuel costs soar

Nigerian airlines are increasingly relying on commercial bank loans to sustain daily operations as the cost of aviation fuel continues to place heavy pressure on the industry.

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The Chief Executive Officer of Air Peace and vice-president of the Airline Operators of Nigeria (AON), Allen Onyema, disclosed this on Tuesday.

Mr Onyema said operators are struggling to remain viable in an environment where fuel prices and borrowing costs have both risen sharply.

Speaking on Arise Television, he said the price of aviation fuel, also known as Jet A1, had risen by more than 250 per cent in recent months from about N900 per litre to as high as N3,300, forcing airlines to depend heavily on borrowed funds.

“We have all borrowed and borrowed billions just to buy fuel alone and fly. We just fly for the fuel vendors,” he said.

“No Nigerian airline is smiling now.”

He said the cost of operating a single flight has increased significantly, noting that fuel expenses that previously stood at about N3 million per flight have risen to between N12 million and N13 million.

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Mr Onyema added that airlines are also grappling with high interest rates, which he put between 29 and 33 per cent, making borrowing increasingly expensive and unsustainable.

He said many operators have been forced to reduce flight frequencies in order to cut losses, describing the operating environment as extremely difficult.

He also attributed part of the rising cost burden to inefficiencies in the aviation fuel supply chain, saying multiple layers of middlemen contribute to price escalation before fuel reaches airlines.

According to him, fuel sourced through arrangements linked to the Dangote refinery via MRS remains the cheapest option, but final costs are still affected by distribution dynamics.

Mr Onyema warned that without urgent policy intervention, more airlines may collapse under financial pressure.

He said more than 70 airlines have shut down in Nigeria over time, describing the sector as one of the most fragile aviation markets globally.

He also criticised the five per cent ticket sales charge imposed by the Nigerian Civil Aviation Authority (NCAA), describing it as an additional burden on struggling operators.

“If those charges are not reviewed, airlines will continue to crumble in this country,” he warned.

READ ALSO: Air Peace to launch London flights from Gateway International Airport this Summer — Onyema

While commending federal government efforts to improve aircraft leasing under the Cape Town Convention and proposed leasing reforms, he called for a comprehensive review of aviation taxes and charges affecting the sector.

The Nigerian Civil Aviation Authority had earlier placed 11 domestic operators on a “no-pay-no-service” sanction list over outstanding obligations, but enforcement was later suspended following concerns over rising operational costs and industry stability.