morganable business/economy
The development underscores growing pressure within the aviation sector, where operators have warned that without urgent intervention, the sustainability of domestic air travel could be at risk
KaNo—
Nigerian airlines have accumulated over N60bn in loans from local banks to sustain operations amid persistently high aviation fuel prices, deepening concerns about the financial health of the country’s aviation sector.
The disclosure was made by a member of the Board of Trustees of the Airline Operators of Nigeria, Roland Iyayi, who said operators were increasingly relying on borrowing to procure Jet A1 fuel, which remains the single largest cost component in airline operations.
“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 told Punch Newspaper, highlighting the severity of the crisis facing domestic carriers.
The rising debt burden, according to Iyayi, is largely driven by the continued high cost of Jet A1, which has significantly eroded airlines’ revenues and left many operators struggling to remain afloat.
He attributed the situation to the failure of the government to implement key recommendations put forward by stakeholders to address the issue.
The development underscores growing pressure within the aviation sector, where operators have warned that without urgent intervention, the sustainability of domestic air travel could be at risk.
Iyayi recalled that the AON had earlier threatened to shut down operations in February following a sharp increase in aviation fuel prices, a move that prompted intervention from the Minister of Aviation and Aerospace Development, Festus Keyamo.
According to him, Keyamo, who was in Riyadh at the time, appealed to the operators to suspend the planned shutdown and promised to address their concerns upon his return.
“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,” Iyayi said.
Subsequent meetings were held involving the Nigerian Midstream and Downstream Petroleum Regulatory Authority, fuel marketers and airline representatives in the minister’s office in Abuja. However, Iyayi said the engagements failed to produce concrete solutions.
“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,” he said.
The committee, which included representatives from the NMDPRA, oil marketers and the AON, was tasked with recommending measures to ease the burden on airlines.
Iyayi, who represented the AON on the panel, said the group submitted its recommendations to the government, but no tangible action has been taken.
“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 added.
Iyayi noted that while other parts of the world have recorded fuel price increases of between 60 and 80 per cent, prices in Nigeria have surged far beyond that range.
“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,” he said.
Airlines struggling To Meet Statutory Obligations
The impact of the fuel crisis is being felt across the industry, with airlines struggling to meet statutory obligations, including the remittance of the five per cent ticket sales charge to the Nigeria Civil Aviation Authority.
According to Iyayi, many airlines now channel virtually all their earnings from ticket sales into fuel purchases, leaving little or no margin for other financial commitments.
“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,” he explained.
He warned that the alternative to continued borrowing and operational losses would be a complete shutdown of airline services, which could have far-reaching consequences for the economy.
“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,” Iyayi said.
Despite the mounting costs, airlines have found it difficult to significantly increase ticket fares to reflect the surge in fuel prices, as doing so could further reduce passenger demand in an already price-sensitive market.
“The airlines are there, having to fly even though the operations are not profitable. They’re more indebted now than they ever were,” he added.
Iyayi also clarified that the AON’s request for a 100 per cent write-off of historical debts owed to aviation agencies had been misunderstood.
According to him, the request was intended to clean up legacy debts associated with defunct airlines, rather than relieve current operators of their obligations.
“A lot of all the airlines on the books of the NCAA and all the other agencies are moribund airlines,” he said, noting that including such debts in official records creates a misleading picture of the industry’s financial position.
Jet Fuel Remains Major Cost Burden
Meanwhile, the Public Relations Officer of United Nigeria Airlines, Chibuike Uloka, also confirmed that Jet A1 fuel remains a major cost burden, accounting for about half of airlines’ revenue.
“Jet A1 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,” Uloka said.
He explained that with fuel consuming about 50 per cent or more of revenue, airlines are left with limited resources to cover other operational expenses, including maintenance, salaries and taxes.
“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,” he said.
Multiple Taxes Exacerbating Financial Strain
Uloka further noted that multiple taxes imposed on airlines exacerbate the financial strain, leaving operators with minimal margins.
The current crisis follows a sharp increase in global fuel prices triggered by geopolitical tensions in the Middle East, which pushed the cost of Jet A1 in Nigeria to unprecedented levels. At one point in April 2026, the price reportedly rose from about N900 per litre to as high as N3,300 per litre.
The spike prompted the AON to warn of a possible shutdown of domestic flight operations, raising fears of widespread disruption to air travel and economic activities.
Although the Federal Government later announced a 30 per cent relief on airlines’ debts owed to aviation agencies and initiated discussions on fair pricing mechanisms for Jet A1, industry stakeholders say the measures have yet to significantly ease the burden on operators.
Analysts warn that unless urgent and sustained interventions are implemented, including addressing fuel pricing and regulatory costs, Nigerian airlines may continue to struggle with rising debt levels, potentially threatening the stability of the aviation sector.
As the crisis persists, stakeholders are calling for coordinated action between the government, regulators and industry players to prevent further deterioration and ensure the long-term viability of the country’s aviation industry.
