5% Ticket Sale Charge Hurting Airlines – Operators

The federal government’s five per cent Ticket Sales Charge (TSC) collected by the Nigerian Civil Aviation Authority (NCAA) violates global aviation standards and is impacting the country’s airlines, an industry operator has stated.

The alarm was raised by the chairman of United Nigeria Airlines, Prof. Obiora Okonkwo, during an interaction with select journalists at the launch of the airline’s Lagos–Abuja–Accra route over the weekend.

LEADERSHIP reports that, in line with the Civil Aviation Act 2006, the NCAA is mandated to collect a five per cent sales charge on all tickets originating from Nigeria, including cargo operations and charter/contract flights.

Airlines collect the charge from passengers at the point of ticket purchase and remit the funds to the NCAA.

However, Prof. Okonkwo, who also serves as spokesperson for the Airline Operators of Nigeria (AON), said the charge had become an unbearable burden for airlines, despite the government’s position that passengers pay it.

“We also think that even the five per cent passenger charge is becoming extremely too much for us to bear. They always say passengers pay, not airlines. But the bottom line is that these charges violate global aviation rules.

“By international standards, revenues generated in aviation should only be commensurate with the cost of providing services, not used to generate income for government,” he said.

According to him, the funds collected as TSC could have strengthened airlines’ operational capacity, but instead are channelled into non-aviation government expenditures.

He further explained that airlines already pay for virtually every service rendered by aviation agencies.

“Apart from the money collected as five per cent, we pay for every single service. If they go for inspection, we cover the costs. For transfers, we pay. For renewals or certifications, we cover the costs. So what exactly is this five per cent for?

“The NCAA is one of the agencies remitting revenue to the TSA. This revenue, which could have supported our operations, is used for non-aviation activities. It is not done anywhere in the world,” he said.

Prof. Okonkwo urged the federal government to recognise aviation as an essential sector critical to economic growth.

He argued that a robust aviation industry is essential to support middle- and upper-income earners, who drive economic activity and generate substantial tax revenue.

“Aviation should not be seen as a business of individuals. When aviation is strong, it becomes a catalyst for economic growth. Restricting air travel affects business activities in Abuja, Lagos, and across the country.

“No economy can grow by focusing only on lower-income groups. Policies must also support the middle and upper classes because they generate income and higher revenue. These revenues are then used to fund social welfare for the lower class,” he stated.

According to him, for Nigeria to achieve meaningful economic development, aviation must be treated as a strategic enabler, not a revenue-generating arm of government.

Also speaking, the managing director of Aero Contractors, Capt. Ado Sanusi, said Nigerian airlines are among the most heavily taxed in the world.

He, however, called for an outright review of the taxes in the aviation industry to stimulate growth and streamline the system for greater transparency.

According to Capt. Sanusi, airlines are not asking for zero taxation but for an effective, transparent, and smart method of tax collection.

“The 5 per cent TSC is very old and needs to be reviewed. Airlines in Nigeria are heavily taxed, and I think they are among the highest in the world. We have been clamouring for a review of taxes in the aviation industry to stimulate growth, to streamline them, and to make them more transparent.

“If Airline A decides to sell its ticket for N10 and Airline B decides to sell its ticket for N100, you take 5 per cent of each of those prices and give it to the NCAA, yet you expect the NCAA to provide the same quality of safety oversight for both airlines. I think that is not fair, and I have been clamouring for a change for a long time.

“There is a need to review and streamline the taxes to make them more effective. We are not saying we want zero taxation, but we want an effective, transparent, and smart way of collecting taxes. As it stands, airlines are overtaxed, and this has contributed to the stunted growth of the aviation industry.”

He added that unless the country goes back to the basics and adopts a holistic review of all aviation taxes, the sector will continue to struggle.

“I am not saying the 5 per cent rate is too high, but there must be a holistic approach. Airline taxes should be reviewed. They have not been effective over the past 30 years, and they will not be effective in the coming years,” he said.