A fall in global crude oil prices would ordinarily be expected to ease the cost of aviation fuel and, by extension, reduce airline ticket prices.

However, that has not happened in Nigeria, and according to an energy strategist and entrepreneur, Dr. Thomas Ogungbangbe, the reason lies in how the country’s Jet A1 market is priced.

Ogungbangbe, who is the Chief Executive Officer and Co-founder of CITA Energies, formerly CITA Aviation Fuelling Company, explained that the pricing mechanism for aviation fuel in Nigeria is currently disconnected from the international benchmarks that traditionally determine jet fuel prices.

He said despite movements in the global oil market, domestic aviation fuel prices have not adjusted in line with international market realities.

According to him, “It is still not in line with global Platts that dictates the aviation fuel cost build-up. Dangote Refinery is charging about N200 per litre more for domestic supply than for export.”

He noted that in the international aviation fuel market, Platts serves as the benchmark pricing assessment used by refiners, fuel suppliers, airlines and traders when negotiating jet fuel contracts.

Typically, changes in crude oil prices are reflected in Platts jet fuel assessments, which then influence the price airlines pay for fuel in many parts of the world.

However, Ogungbangbe argued that Nigeria’s pricing structure is operating outside that established framework, meaning domestic airlines are unable to benefit from lower global oil prices.

The development helps explain why Nigerian carriers have been unable to significantly reduce airfares even as crude oil prices softened in the international market. Aviation fuel remains the single largest operating expense for most airlines, accounting for between 35 and 45 per cent of total operating costs.

Industry analysts say that unless domestic Jet A1 pricing becomes more closely aligned with internationally recognised benchmarks such as Platts, Nigerian airlines will continue to face high operating costs, leaving little room to reduce ticket prices.

The situation also raises more questions about the pricing methodology for locally refined aviation fuel and whether domestic consumers, including airlines, are receiving the expected benefits of increased local refining capacity.

For passengers, the implication is straightforward: until airlines begin purchasing Jet A1 at prices that reflect global market trends, domestic airfares are likely to remain elevated despite fluctuations in international crude oil prices.