HomeLocal NewsCeteris Paribus: Jet fuel shortage impacts air travel

Ceteris Paribus: Jet fuel shortage impacts air travel

By Eben Mabunda
AVIATION fuel has been in short supply lately, the offshoot of omicron in Asia, the Russia–Ukraine war and a challenging operating backdrop. The net effect has been African airlines have been left thirsty, disrupting the operations of the African aviation sector and unsettling flight schedules.

International Air Transport Association (Iata) stats show that the global aviation capacity was 1,2% above March 2021 (+2,6%) for international operations. Though this is in positive territory, it is a significant decline from the 11,2% year-on-year increase in February.

A concerning matrix is that the March 2022 data for global air cargo markets shows a drop in demand.

According to Iata: “Global demand, measured in cargo tonne-km (CTKs*), fell 5,2% compared with March 2021.”

Notably, jet fuel prices have risen by an average of almost 30% of operating costs for African airlines, compared to previous figures of about 20%, with strong indications the aviation industry operation costs and flight prices will mount further — negating regional and international travel, in the short-to-medium term.

As such, African Airlines have had to work with make-shift plans to keep their operations afloat. The crisis has reflected on the regional fuel supply space as several airlines’ operations have been disrupted over the past few weeks.

On Wednesday last week, Air Zimbabwe, the national flag carrier, released a statement advising of flight disruptions due to jet fuel shortages. On May 8, Air Zimbabwe canceled flight UM467 from Harare (HRE) to Johannesburg (JNB), along with the return flight UM468.

The Airports Company of South Africa (ACSA) made claims that Johannesburg had enough jet fuel and pleaded with airlines not to cancel flights, as this would also have a knock-on effect on their revenue-generating ability.

However, other airports in Africa, such as Dakar International in Senegal, temporarily needed to suspend refueling services for two weeks last month.

In April, Malawi Airlines cut baggage allowance by 70% to allow for extra fuel to be carried from South Africa because of shortages at home.

Last week, Nigerian Airlines said they would stop flying due to the prohibitive fuel costs and only reversed their plans after the country’s Minister of Aviation pleaded with them to keep their planes in the air.

In response to the crisis, several African airlines have formed a committee to negotiate better prices. It hopes to secure deliveries for 12 months starting in July. Until then, we are bound to see more volatility in the jet fuel supply across the continent.

Towards the end of March, Austin Bergstrom International Airport in Texas warned of fuel shortages amid a surge in travel. Buyers for airports on the US East Coast are also anticipating a worsening shortage as supply dwindles due to sanctions on Russian energy exports.

The fallout from Russia’s invasion of Ukraine is driving fuel prices through the roof and suppliers are reducing the amount they hold in stock.

The 23-state Opec+ which comprises the original 13 nations led by the Riyadh-led Organisation of the Petroleum Exporting Countries with another 10 countries steered by Russia, recently stuck to monthly increases of just above 430 000 barrels per day.

Crude oil prices scaled up for the fourth day in a row on Monday, adding 3% to the session after an initial tumble in Asian trading as market participants reacted to poor economic data out of top oil importer China.

London-traded Brent settled at US$114,24 a. barrel, up $2,90, or 2,4% on Monday. New York-traded WTI settled at $114,20, up to $3,71, or 3,4%.

  • Written in collaboration with Eleazar Mabunda – a Commercial Pilot and Flight Instructor registered with the South African Civil Aviation Authority.
  • Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — ebenm@equityaxis.net

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