Airlines flying across the East African region have started mulling over an imminent increase in their fuel supplements, charged over and above the ticket costs to cover for the present price explosion.
Since the outbreak of political unrest a few weeks ago in Tunisia the wave of protests have since also swept the Egyptian government from office, but it was the crisis now evident and unfolding in Libya which drove crude oil prices up even more.
Prices for crude in Europe and the US has risen by over 25 US Dollars since the onset of the troubles, and this translated to immediate rises in the cost of Jet A 1 and AVGAS for the East African supplies now landed in Tanzania, Kenya, Uganda, Rwand, South Sudan, Burundi, Eastern Congo and Ethiopia.
One airline executive said on condition of strict anonymity: ‘the fuel price increase in 2007 and 2008 was a major factor for airlines losing money. It drew focus to fuel hedging but this can only do so much and if one does not get it right, the losses can be even worse. Cost of jet fuel are already much higher in East Africa than other parts of the aviation world and an airline cannot totally absorb the rise in fuel cost since our margins are already very thin. I see no option but to consider raising fuel supplements soon, if the prices for the next Jet A 1 delivery is higher again than the last one. If we don’t do that our fares will not cover our operating cost and we end up making losses.’
It is expected that AFRAA will soon address this issue too on behalf of their African airline membership but unless political stability returns soon, prices may rise to new record heights first, hurting aviation and the economy in general not just in Africa but the rest of the world.