Why airlines aren’t passing fuel cost increases to passengers – United Nigeria Airlines

By Dickson Omobola

United Nigeria Airlines (UNA) announced on Thursday that domestic carriers have not yet experienced a significant drop in the price of aviation fuel, known as Jet‑A1, even though analysts had expected costs to fall after the Strait of Hormuz reopened.

Chief Commercial Officer Mr. Adedayo Olawuyi explained that airlines have chosen not to transfer the entire increase in fuel prices to passengers, opting instead for revenue‑management tactics to keep operations viable.

Chairman of Air Peace, Allen Onyema, also expressed concern, noting that operators are borrowing from banks to buy fuel and reducing flight schedules to stay afloat.

Speaking to the League of Airport and Aviation Correspondents during a visit to Lagos, Olawuyi said: “We have not seen a major decline in the cost of aviation fuel. You can verify that. It is still the same. If you know, as of December, we are buying about N900. Now, it is still about N1,700 or N1,650. So, there is still a huge difference. Have prices in tickets doubled? What everybody is trying to do is to use revenue management principles to see how you can get the best out of it.”

“But the truth is, it is not sustainable. It is not sustainable for us. At one point, we paid N3,300 per liter, yet ticket prices still did not go up by 300 per cent or even 100 per cent. We are still selling tickets of N120,000 to N110,000. So, prices (base fares) went up, but they have been balanced out based on demand and supply.”

Meanwhile, Olawuyi revealed that the airline is preparing a major expansion into West and Central Africa, with plans to launch new routes to Monrovia, Banjul, Dakar, Abidjan and Conakry in the near term.

He added: “Our plan is to grow in the region and also internationally. In the short term, we are looking at increasing our presence in West Africa. First, starting with the West African expansion, looking at routes like Monrovia, we are looking at Banjul, we are looking at Dakar, we are looking at Abidjan and we are looking at Conakry.”

“I am sure you also read about the partnership with Guinea‑Bissau. There are also plans for us to set up an airline in Guinea‑Bissau which will also help us increase our field in West Africa. In Central Africa, we are looking at Douala, we are looking at Libreville and much further down, we are looking at South Africa, Johannesburg. Despite the attacks, we will continue to look at South Africa because it is beyond the issues that are happening today. It is about trade between the two countries. Those are our plans on the regional and African front.”