Airlines Borrow N60bn To Fund Fuel Costs Amid Rising Jet A1 Prices

Nigerian airlines have accumulated more than N60bn in loans from local banks to finance aviation fuel purchases as soaring Jet A1 prices continue to worsen the financial pressure on operators.

A member of the Board of Trustees of the Airline Operators of Nigeria, Roland Iyayi, disclosed this in an interview with Sunday PUNCH, warning that some carriers were borrowing heavily simply to remain operational.

Iyayi said the situation had become critical, with some airlines owing more than N60bn to local financial institutions for fuel procurement.

He attributed the growing indebtedness to the high cost of aviation fuel and the failure of the Federal Government to implement recommendations put forward by industry stakeholders to reduce operating costs.

According to him, the AON had threatened to suspend operations in February following a sharp increase in Jet A1 prices, but the planned shutdown was suspended after the Minister of Aviation and Aerospace Development, Festus Keyamo, appealed for dialogue.

He said subsequent meetings involving the AON, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, fuel marketers and other stakeholders resulted in the formation of a committee to recommend measures to address the fuel crisis.

However, Iyayi said the recommendations submitted to the government had yet to produce any significant intervention.

He also expressed concern that aviation fuel remained considerably more expensive in Nigeria than in other parts of the world, putting local airlines at a competitive disadvantage.

The AON official said the high cost of Jet A1 had also affected airlines’ ability to meet their statutory obligations, including the remittance of the five per cent ticket sales charge to the Nigeria Civil Aviation Authority.

He explained that most of the revenue generated from ticket sales was being channelled into fuel purchases, leaving operators with little money to meet other obligations.

Iyayi added that airlines were unable to increase ticket fares sufficiently to compensate for rising fuel costs, forcing many operators to continue flying despite making losses.

“Airlines are there, having to fly even though the operations are not profitable. They’re more indebted now than they ever were,” he said.

Meanwhile, the Public Relations Officer of United Nigeria Airlines, Chibuike Uloka, said Jet A1 remained one of the biggest expenses for domestic carriers, accounting for about half of their revenue.

Uloka noted that the slight reductions in fuel prices recorded recently had done little to ease the burden on airlines, which were still operating around some of the highest Jet A1 prices seen in years.

He added that multiple taxes and other charges were further increasing the financial burden on operators.

According to him, the combination of fuel costs, taxes, salaries, equipment maintenance and other expenses had left airlines operating under severe financial strain.

The development followed a sharp increase in Jet A1 prices linked to the global fuel-price shock arising from the Middle East crisis.

In April 2026, the AON warned that domestic airlines could suspend operations after the price of aviation fuel reportedly rose from about N900 per litre on February 28 to N3,300 per litre.

The Federal Government subsequently announced a 30 per cent relief on airlines’ debts owed to aviation agencies and directed fuel marketers, airlines and regulators to negotiate measures for a fairer Jet A1 pricing regime.

However, industry operators say the intervention has not sufficiently addressed the financial challenges facing the sector.