By Anscella Obike
The disclosure by United Nigeria Airlines that it lost about N10 billion within three months due to the spike in aviation fuel prices following disruptions around the Strait of Hormuz has once again exposed the vulnerability of Nigeria’s aviation sector to global geopolitical events. While the airline’s losses are significant on their own, the development raises broader concerns about the sustainability of domestic air transport in an economy that depends heavily on imported refined petroleum products and is increasingly exposed to international supply chain disruptions.
Speaking during the unveiling of two newly acquired Boeing 737-800 Next Generation aircraft, Executive Chairman of United Nigeria Airlines, Obiora Okonkwo, revealed that the closure of the strategic Strait of Hormuz triggered a dramatic increase in Jet A1 prices, costing the airline billions of naira over a short period. According to him, airlines have been forced to absorb enormous operational costs while attempting to maintain services for passengers.
The Strait of Hormuz remains one of the world’s most important energy corridors, carrying roughly one-fifth of global oil supplies. Any disruption immediately reverberates across international energy markets. Although Nigeria is an oil-producing nation, its aviation sector relies largely on imported aviation fuel, making domestic airlines highly susceptible to global price volatility rather than domestic crude production. Perhaps the most alarming statistic is the reported 266.7 per cent increase in Jet A1 prices, which rose from about N900 per litre to N3,300 per litre within two months. For airlines, fuel typically accounts for between 35 and 45 per cent of total operating costs under normal market conditions. When fuel prices more than triple, profit margins disappear almost instantly.
Unlike manufacturers or retailers, airlines cannot easily pass every increase in operating costs to consumers. Higher ticket prices suppress demand in an already price-sensitive market, while maintaining lower fares means airlines absorb significant financial losses. The result is an industry trapped between declining profitability and weakening passenger traffic.
The situation demonstrates that Nigeria’s aviation challenges extend beyond management efficiency. Even airlines with relatively modern fleets and expansion plans remain vulnerable to external shocks beyond their control. Ironically, the announcement of the N10 billion loss came during the unveiling of two newly acquired Boeing 737-800 NG aircraft, part of a six-aircraft fleet expansion programme by United Nigeria Airlines. The acquisition signals confidence in Nigeria’s long-term aviation market despite current difficulties.
Fleet renewal is essential for improving fuel efficiency, lowering maintenance costs and enhancing safety. New-generation aircraft consume less fuel and offer better operational economics than older fleets. However, even these efficiency gains can be overwhelmed by extraordinary fuel price spikes such as those experienced during the Strait of Hormuz crisis. The expansion, therefore, reflects both optimism and necessity. Nigerian airlines must modernise to remain competitive, yet doing so requires significant capital at a time when financing costs remain among the highest in Africa.
Okonkwo also acknowledged that policy reforms introduced by the Federal Ministry of Aviation have helped stabilise aspects of the industry, particularly in aircraft certification and regulatory support. He praised the Nigerian Civil Aviation Authority (NCAA) for reducing bureaucratic delays during the induction of the new aircraft.
However, he argued that broader structural issues continue to undermine the industry’s competitiveness. Citing a recent report by the International Air Transport Association (IATA), he maintained that Nigeria remains one of the most expensive countries in which to operate commercial airlines. Among the issues raised were multiple regulatory charges, high operating costs, and the deduction of substantial portions of internally generated revenue from aviation agencies. According to Okonkwo, these deductions reduce the capacity of agencies such as the NCAA and the Federal Airports Authority of Nigeria (FAAN) to improve infrastructure and service delivery
The episode also exposes a wider national energy paradox. Despite being Africa’s leading crude oil producer, Nigeria remains vulnerable to international fuel price shocks because domestic refining capacity for aviation fuel remains limited. Greater local production of Jet A1 could reduce dependence on imported supplies and cushion airlines against geopolitical disruptions abroad. Recent investments in refining capacity may eventually improve supply conditions, but the benefits will depend on whether locally refined aviation fuel becomes consistently available at competitive prices. Until then, domestic carriers will continue to be exposed to events occurring thousands of kilometres away, whether in the Middle East, Europe or other major energy-producing regions.
For passengers, prolonged increases in aviation fuel prices are likely to translate into higher airfares, reduced flight frequencies and possible route rationalisation. Smaller operators with weaker balance sheets may struggle to survive prolonged periods of elevated fuel costs. Industry consolidation, which has long been predicted for Nigeria’s aviation market, could accelerate if external shocks become more frequent. Airlines with stronger capital bases and newer fleets may be better positioned to weather future crises, while financially weaker operators could find survival increasingly difficult.
The United Nigeria Airlines experience serves as a reminder that aviation has become inseparable from global geopolitics. A conflict affecting oil transit thousands of kilometres away can quickly translate into higher operating costs, financial losses and more expensive air travel in Nigeria. While individual airlines can improve efficiency through fleet renewal and better management, long-term resilience will require broader structural reforms. These include expanding domestic aviation fuel production, improving access to affordable financing, reducing regulatory costs and strengthening aviation infrastructure. The N10 billion loss should therefore not be viewed simply as one airline’s financial setback. Rather, it is a warning that Nigeria’s aviation sector remains highly exposed to external energy shocks. Building resilience against future disruptions will require coordinated action across both the aviation and energy sectors if the industry is to achieve sustainable long-term growth.