Airline operators say soaring Jet A1 costs have forced carriers into heavy borrowing, while taxes and regulatory debts deepen the financial strain
Nigerian airlines have accumulated more than N60 billion in bank loans to finance aviation fuel purchases, Airline Operators of Nigeria Board of Trustees member Roland Iyayi has disclosed, highlighting the severe financial strain facing domestic carriers after months of elevated Jet A1 prices.
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Iyayi told Sunday PUNCH that some airlines were borrowing heavily simply to keep aircraft in the air, as aviation fuel consumed an increasingly large share of their earnings and left operators struggling to meet other financial obligations.
“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 said.
The disclosure comes months after the AON warned that domestic carriers could suspend operations because of a sharp rise in Jet A1 prices.
The association said the price had climbed from about N900 per litre on February 28, 2026, to N3,300 by mid-April, representing an increase of more than 300 per cent.
The fuel shock was linked to the wider disruption in global energy markets following the escalation of the Middle East conflict.
The sudden increase placed Nigerian operators in an especially difficult position because aviation fuel is one of their largest operating expenses.
In April, the AON threatened to suspend domestic flight operations unless the price of Jet A1 was reviewed.
The Federal Government subsequently appealed to the airlines to maintain services while authorities and industry stakeholders worked towards a solution.
Iyayi said the association had previously raised the issue with Aviation and Aerospace Development Minister Festus Keyamo, who intervened after the operators threatened a shutdown.
According to Iyayi, Keyamo asked the AON to allow him to return from Riyadh and convene discussions involving the Nigerian Midstream and Downstream Petroleum Regulatory Authority, fuel marketers and airline operators.
A committee was subsequently established to examine immediate measures that could ease fuel costs.
Iyayi said he represented the AON on the committee, but argued that the recommendations produced by the group had not translated into meaningful government action.
“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.
Iyayi also questioned why aviation fuel remained so expensive in Nigeria compared with other markets, describing the country as a peculiar case in the global fuel market.
“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,” he said.
The claim comes against a backdrop of disagreement between airlines and fuel marketers over the severity of the price increase.
While the AON reported Jet A1 at about N3,300 per litre in April, the Major Energies Marketers Association of Nigeria disputed that figure and argued that it was significantly above prevailing market realities.
The financial consequences, however, extend beyond fuel procurement.
Iyayi said airlines were struggling to remit the statutory five per cent ticket sales charge payable to the Nigeria Civil Aviation Authority because so much of their ticket revenue was being diverted towards keeping operations running.
He argued that airlines faced an uncomfortable choice: continue flying at losses while accumulating debt or stop operating and create a much wider disruption to passengers, businesses and the economy.
“The airlines are there, having to fly even though the operations are not profitable. They’re more indebted now than they ever were,” Iyayi said.
Airlines have also found it difficult to pass the full increase in operating costs to passengers through higher fares.
Iyayi said carriers had tried to maintain relatively affordable ticket prices despite the dramatic increase in fuel costs, leaving operators with limited margins.
The situation has been compounded by taxes and other regulatory charges.
Chibuike Uloka, Public Relations Officer of United Nigeria Airlines, said Jet A1 remained one of the company’s most significant expenses, accounting for about half of revenue in some circumstances.
“JetA1 fuel has not yet gone back to its initial price. We are still struggling,” Uloka said.
“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 multiple taxes and charges further reduced the funds available for salaries, aircraft maintenance and other essential operating expenses.
The pressure has also exposed the industry’s dependence on external financing.
Uloka said airlines required substantial capital because aviation was an expensive business involving aircraft, maintenance, fuel, personnel and regulatory obligations.
“This is a million-dollar industry,” he said, stressing that airlines depend on partnerships and financing arrangements to remain operational.
The Federal Government has attempted to ease part of the burden. President Bola Ahmed Tinubu approved a 30 per cent reduction in outstanding statutory charges owed by domestic airlines to aviation agencies in April, following the worsening Jet A1 crisis.
The relief covered obligations including parking charges payable to the Federal Airports Authority of Nigeria and navigational charges owed to the Nigerian Airspace Management Agency.
The intervention, however, has faced implementation concerns.
Three weeks after the announcement, The Guardian reported that airlines had yet to receive formal communication or an implementation directive on the relief, while aviation authorities said the process would follow due procedure.
Iyayi said the AON had also sought a clean-up of historical debts attributed to airlines by aviation agencies.
He said the association’s request for a 100 per cent write-off of historical debts was intended primarily to remove obligations belonging to airlines that had ceased operations.
According to him, debts accumulated by moribund carriers continue to appear in agency records alongside obligations owed by active airlines, making it difficult to assess the industry’s current exposure accurately.
The AON therefore wanted historical obligations separated from the liabilities of functioning carriers to give the industry what Iyayi described as a fresh start.
He said that request had been misunderstood and had not provided the relief operators expected.
The continuing financial pressure raises concerns beyond the balance sheets of individual airlines.
Domestic aviation provides an important link between Nigeria’s commercial centres, supports tourism and business travel, and connects regions where road journeys can take considerably longer.
A prolonged squeeze on airline finances could therefore affect passengers, workers, airports, aviation agencies and businesses that depend on reliable air connectivity.
For now, operators remain caught between rising costs and the limits of what passengers can reasonably pay.
The Federal Government’s debt relief offered some respite, but the central problem of aviation fuel costs remains unresolved.
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With airlines already borrowing billions of naira to purchase Jet A1, the industry’s latest warning is a stark reminder that keeping flights operating does not necessarily mean that the carriers behind them are financially healthy.
David Okere is a journalist and contributor to Freelanews.com, covering business, governance, public affairs, and human-interest stories with a commitment to accuracy, balance, and public interest reporting.
