Nigerian airlines have borrowed more than N60bn from local banks to finance aviation fuel purchases as the persistent rise in the price of Jet A1 continues to worsen the financial strain on operators.
A member of the Board of Trustees of the Airline Operators of Nigeria (AON), Roland Iyayi, disclosed this in an interview with Sunday PUNCH, saying airlines were increasingly relying on bank loans to keep their operations running as fuel costs consumed a significant portion of their revenues.
“There are some airlines that are owing over N60bn from local banks just to be able to procure fuel. That’s how bad it is,” Iyayi stated.
He attributed the growing financial pressure to the government’s failure to implement recommendations made by industry stakeholders to tackle the high cost of aviation fuel.
According to Iyayi, the AON had threatened to suspend flight operations in February following a sharp increase in Jet A1 prices, leading Aviation and Aerospace Development Minister, Festus Keyamo, to intervene.
“The AON had threatened to shut down because of the escalated fuel costs in February. Then Keyamo was in Riyadh. He called to say that the AON should allow him to get back and look at all the issues so he could address them.
“He said everything would be resolved. Yes, meetings were held. The NMDPRA (Nigerian Midstream and Downstream Petroleum Regulatory Authority), the fuel marketers, AON, we all met in his office.”
Iyayi, however, said the meeting failed to produce immediate solutions to the fuel crisis, although a committee involving the NMDPRA, fuel marketers and the AON was later established.
“Of course, the meeting was really not any meeting where anything could be resolved. There was a committee that was set up to see what immediate steps could be taken to address the issue of fuel costs. That committee had the NMDPRA, the oil marketers and AON.
“I represented AON. However, what we came up with were recommendations to the government to indicate that certain things should be done. But to date, nothing has been done.”
He said aviation fuel remained considerably more expensive in Nigeria than in other countries.
“There hasn’t been any intervention by the government to address the issue of why it is that fuel price in Nigeria is 270 per cent of the original value. Whereas other parts of the world are recording 60-80 per cent. So Nigeria is a peculiar case. That’s what the airlines are saying.”
Iyayi also said the rising fuel costs had affected airlines’ ability to fulfil statutory obligations, including payment of the five per cent ticket sales charge to the Nigeria Civil Aviation Authority.
“Now, the ripple effect of the fuel price is that the airlines are not able to remit the five per cent ticket sales charge to the NCAA simply because all the earnings from ticket sales are put towards buying fuel for the operation. The alternative will mean that the airlines will shut down completely, there won’t be any services, and the entire economy will ground to a halt.
“That’s what the alternative will be,” Iyayi said.
He added that airlines had been unable to increase fares enough to compensate for the rising cost of Jet A1, forcing operators to continue providing services despite making losses.
“The airlines are there, having to fly even though the operations are not profitable. They’re more indebted now than they ever were. And yet the same government through the NCAA is insisting that airlines must pay up the five per cent ticket sales charge.
“Airlines are not able to mark up the ticket fares in such a way as to make up for the escalated fuel price. So invariably, to maintain some level of operation, airlines have tried to sustain the old prices, ticket fares, but are not able to operate profitably. So that’s a challenge airlines are having now.”
The AON official said the association had also appealed to the government for relief from historical debts owed by airlines, but the request was allegedly misunderstood.
“The AON had requested as part of our package to the government to ask for a 100 per cent write-off of the historical debts. But what has happened now is that that has been interpreted to mean 30 per cent of the current debt.”
Iyayi explained that a significant portion of the debts recorded against airlines by aviation agencies belonged to carriers that were no longer operating.
“The reason we said historical was that a lot of all the airlines on the books of the NCAA and all the other agencies are moribund airlines.
“And anytime you have the NCAA or any of the agencies talking about debts by airlines, they cite these numbers. And those numbers are numbers owed by airlines that are no longer in operation. So, we sought to have that cleaned up in their books so that there will be a fresh start, that any debts now will be a debt owed by an airline that is in operation.”
He said airlines were still facing serious financial difficulties despite previous government intervention.
“That was the rationale behind the request, but it was misinterpreted. And even at that, it is not managing the exposure of the airlines. So invariably where we are at this point is that nothing much has been done since the fuel hike in February.”
The Public Relations Officer of United Nigeria Airlines, Chibuike Uloka, also said Jet A1 remained one of the biggest expenses for domestic carriers, accounting for roughly half of their revenue.
“JetA1 fuel has not yet gone back to its initial price. We are still struggling. Just a little reduction of about N1 or N2 does not make any difference. We are still hovering around the highest price the industry has seen in many years, and fuel accounts for about 50 per cent of revenue, if not more, today.
“If 50 per cent accounts for your fuel, you’re probably running at a loss. So you’re using the other 50 per cent for service, servicing your equipment, paying salaries and taxes.”
Uloka said the multiple taxes imposed on airlines further compounded their financial difficulties.
“We are aware that the AON is still struggling with the government about taxes, having multiple taxes here and there. So it will take about 45-50 per cent of your revenue. And you have the other things left for salaries, servicing of equipment, and all other costs. So it’s still a crisis for the operators.”
He said airlines relied on financing arrangements to maintain operations, noting that the sector required significant capital because of its high operating expenses.
“But this is a business that is running, and we have partners. It’s a million-dollar industry. This is not an airline that is run by the richest man in the country or in the world. So obviously, there should be a partnership in being able to finance the project.”
Uloka said the combination of expensive Jet A1 and multiple taxes continued to drive up the cost of running airlines.
“The important thing there is that the industry is operating at very, very high, you know, operational costs. And this is as a result of JetA1 fuel and other taxes.”
The development followed a significant rise in Jet A1 prices after the escalation of the Middle East crisis, prompting Nigerian airlines to threaten to suspend flight operations.
The AON had warned that the increase in aviation fuel prices had made domestic operations increasingly unsustainable. The warning prompted Keyamo to meet with airline operators and other stakeholders in Abuja in April 2026.
The meeting followed the AON’s decision to suspend its planned shutdown after Keyamo appealed to the operators to allow for dialogue. Representatives of the AON, fuel marketers and petroleum sector regulators attended the meeting, which was aimed at finding solutions to the rising cost of Jet A1 and preventing disruption of domestic air services.
The Federal Government later announced a 30 per cent relief on airlines’ debts to aviation agencies and directed fuel marketers, airlines and regulators to negotiate a fair price for Jet A1.
However, the intervention has failed to completely ease the financial burden on operators.
The global fuel-price shock associated with the Iran conflict had further worsened the situation, with aviation fuel accounting for more than a third of airlines’ operating costs.
In April 2026, the AON warned that domestic carriers could suspend flights after Jet A1 rose sharply from N900 per litre on February 28 to N3,300 per litre.
