TheCable

The Hayatu-Deen presidential campaign organisation has asked the federal government to review the subsidy system as part of efforts to address the hike in aviation fuel price.

Mohammed Hayatu-Deen, a former managing director of the defunct FSB International Bank, is seeking to contest the presidency on the platform of the Peoples Democratic Party (PDP).

On Friday, airlines under the aegis of the Airline Operators of Nigeria (AON), announced plans to shut down flight operations over the high cost of aviation fuel, also known as Jet A1.

In a statement issued on Sunday by Isa Galaudu, director-general of the organisation, the group said urgent interventions are needed to address the consequences of the planned shutdown of flight operations.

“The economy is fast approaching failure because of neglect and living in denial of policy makers at a time when industry-wide passenger revenue growth is increasing due to the risks and hazards of rail and road travel. As a consequence of this, airlines should be making more money and reinvesting in seat capacity,” the statement reads.

“But this is not the case because of pricing distortions and the consequences of a dysfunctional subsidy regime. It is not rocket science to know that jet fuel represents 40% of the direct operating costs of airlines. Therefore, a 250% increase in the price of this input has completely eroded the thin margins of airline operators.

“The Hayatu-Deen Presidential Campaign Organisation hereby advises the government, as a matter of urgency, to embark on a two-pronged approach to mitigate the cataclysmic and systemic risk this development poses to an already fragile economy afflicted by enormous power shortages.

“First is the immediate need for a massive increase in supply by an import intervention to push down prices and stabilise the market. The other being a more fundamental and strategic move to address  the structural imbalance of the industry. This will entail fast tracking the revamp of the moribund refineries and accelerating the commissioning of the private refining capacity.

“These, together with an efficient review of the failed subsidy system, will bring down prices whilst simultaneously increasing output of refined products including jet fuel, diesel and PMS, thus bringing the industry into full and dynamic equilibrium.

“The transportation and energy sectors are very critical to productivity, output and employment because of their strong linkages.

“Nigerians are already feeling the weight of excruciating economic and social problems, and they do not deserve to be placed under additional unbearable stress.”