Jet A1 Crisis: Tinubu to Grant Discount on Debts Airlines Owe Aviation Agencies

• Directs aviation minister to present formal request in writing first thing Thursday morning
• As AON seek total waver, calls for strong funding of BOI

Kasim Sumaina in Abuja

Following the astronomical rise in the cost of Jet A1 fuel and growing concerns within the aviation industry, including the threat by airline operators to shut down operations if urgent measures are not taken, President Bola Ahmed Tinubu, Wednesday hinted at a possible consideration to grant a generous discount on the debts the airlines owned the aviation agencies in the sector.

The President has also mandated the Minister of Aviation and Aerospace Development, Festus Keyamo, to quickly bring a request to him, a formal request in writing first thing Thursday morning

Disclosing this in a closed-door meeting with the Airline Operators of Nigeria (AON) over a 300 percent hike in aviation fuel prices, the aviation minister said: “This engagement underscores the federal government’s commitment to finding sustainable solutions to stabilize the aviation sector and ensure uninterrupted air transport services.

“In the last two hours, we have had very, very deep and robust discussions and frank discussions regarding the threats by the airlines to stop flying altogether because of the astronomical rise in the cost of Jet A1 fuel that has made the cost of their operations almost unbearable for now.

“Before this meeting, I had the privilege of meeting Mr. President to brief him about the meeting, and Mr. President mandated us to quickly bring a request to him, a formal request in writing first thing tomorrow morning, and the first request that he will consider, he will consider and grant is a generous discount on the debts the airlines owing the aviation agencies, Nigeria Airspace Management Agency (NAMA), Federal Airport Authority of Nigeria (FAAN), Nigeria Civil Aviation Authority (NCAA) and so on and so forth.

“So, Mr. President, specifically told me not to wait for a council memo that I should bring the letter to him as early as possible tomorrow, the percentage of discounts and all that, Mr. President will decide he’s so, so concerned about what is happening.

“And he asked me, in particular, to express his deep appreciation to the airline operators he knows the conditions under which we operate.

“And he said I should thank you for not raising your prices despite all that has happened. So, he has to, he has to also respond. So, Mr. President is doing that.”

Keyamo added: “The second request, Mr. President has asked that we should bring for him to fully consider and grant is that he wants to set up a committee to address the issues of levies, taxes and fees on domestic tickets once and for all.

“This request has been on for a long time, so Mister President will put the team together, and he will give them a deadline to report to him as quickly as possible on the fees, the government fees and charges and levies that we can take off domestic tickets for now to give respite to Nigerians who are also buying tickets.

“And of course, he will consider a date for the airline operators to meet him one on one for the other, more robust discussions regarding access to capital and all of that.

“Questions regarding access to capital and all of that. So that is what that’s the message from Mr. President to this body,” Keyamo said.

Representing the Minister of State Petroleum Resources (Oil), the Permanent Secretary of the Ministry, Patience Oyekunle, said: “We have had very fruitful deliberations, and we have agreed to disagree and disagreed to agree.

“So, at this point, since this is an urgent matter on the table, there is the suggestion and the agreement that the marketers will be invited here tomorrow for us to continue this deliberation, and hopefully come tomorrow, by 4pm come tomorrow would have some of these issues resolved.

“So that is where we are from the side of the Ministry of Petroleum Resources. So, we will get the marketers as we invite them tomorrow to engage them and also hear from them, and by tomorrow, we hope to have resolutions to some of the issues that have been raised here today.” She concluded.

Speaking on behalf of the Airline Operators of Nigeria (AON), Chairman/Chief Executive Officer, Air Peace, Allen Onyema, said: “Why are we here in the first place? Was because of the astronomical rise of Jet A1 fuel in Nigeria, which we consider not to be proportionate with the cost of or the rise in the cost of crude oil all over the world.”

According to Onyema, “The world, the standard is, if crude oil rises by 10% the byproduct of crude oil should rise by proportionate raise in the pricing. But in Nigeria, after the Strait of Hormuz blockade, the fuel price in Nigeria increased by about 300% and these airlines are bleeding.

“We are bleeding. Yes, we threatened to shut down, not because we wanted to shut down, but because we had no money anymore, any longer to continue to borrow money from the banks just to pay for fuel and neglecting other things that are supposed to be done in the visual industry.”

He said: “And you know very well that your regime preaches utmost safety, and we don’t want to shorten safety. So, we decided that instead of not having money to do other things like maintenance, but only to be buying fuel that we needed to shut down, we appreciate this government. So, when the honorable minister came to us to say, please don’t do this, we didn’t.

“It didn’t take us a second to obey that plea, because this government has really helped the airlines and the aviation industry more than any since 1960. So, we appreciate Mr. President, and now you all heard it that Mr. President is even willing, as a succour to the airlines, to waive the debts these airlines owe, maybe aviation agencies indirectly owed to government.

“This is a welcome development, but the truth is that the marketers must be brought to book to explain how they got about the 300% increase when even Dangote is even surprised, because what he is selling to us still remains the cheapest, and some of them lifted from there.

“So why the astronomical rise? Thankfully, we are going to meet with them tomorrow. But the most important thing is that we appreciate Mister President for coming to our rescue, but we want to say that instead of for president to decide which discount to give us, we are asking for total waiver.

“We are asking for total waiver of all the debts we owe, and at the same time, a suspension of further payments until Hormuz is opened. So, these are the issues, but this government has really tried for airlines.

“We are happy that we have a businessman president who is very, very responsive and very listening. The other time he removed the 4% FOB for airlines within 24 hours, we must appreciate Mr. President.

“We thank him for what he has done. We thank him for the kind of people he appointed for once, we never had it this good in the aviation industry, right from the honorable minister to the DGCA to the FAAN MD to NiMet to NAMA, we have not had it so good.

“The only other thing we want to ask Mr. President to do for the industry is the cost of acquisition of funding for airlines all over the world, they acquire a 3% in Nigeria, we acquire a 30, 35% this is killing that’s why airlines owe FAAN, owe NCAA, owe everybody, because we are doing a yeoman’s job for the entire country.

“We are the sacrificial lambs. It’s not a lucrative business. So, we ask Mr. President to please fund Bank of Industry (BOI). That is the only bank that is still doing single digit or at least 10% interest to allies, but they don’t have funds now. Mr. President should please help us to fund the Bank of Industry very well, because that is another way of,” Onyema said.

The closed-door session, held at the minister’s conference room in Abuja, includes stakeholders from the aviation and petroleum sectors.

Among them is the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, who was represented by the ministry’s Permanent Secretary, Mrs. Patience Onyenkunle.