The federal government, on Thursday, raised the alarm that foreign airlines fly cargo planes out of the country empty due to exorbitant charges placed on loading export cargoes from Nigeria to other countries.
Speaking during the Business Breakfast Meeting organised by the Aviation Round Table Initiative (ARTI), titled, Nigerian Aviation Sector Charges, Duties & Tariffs: Truly Exorbitant?, the chairman, Sabre Network CWA, West Africa, the Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said expensive overnight parking has also led to some airlines favouring neighbouring countries to Nigeria.
Oyedele, however, assured industry stakeholders of the committee’s readiness to support the aviation sector in overcoming the levy and tariff challenges hindering its growth.
“Some reports indicate that carriers often opt to fly outbound cargo planes empty rather than incur exorbitant charges for loading goods from Nigeria to other countries. Similarly, expensive overnight parking has led to some airlines favouring neighbouring countries. To remain competitive regionally and on the global stage, we must address the burden of multiple agencies, complex paperwork, and a plethora of taxes and levies.
“As a nation, we cannot aspire to be competitive while at the same time burdening businesses with complex processes. We must cease taxing seeds and, instead, foster an environment that encourages businesses to thrive, bearing fruits that we can tax. In this pursuit, the Presidential Fiscal Policy and Tax Reforms Committee was established, with a clear mandate to harmonize taxes and revenue collection agencies, promote business growth, and cultivate a competitive landscape, among others.”
Oyedele also bemoaned the International Air Transport Association’s (IATA’s) ranking of Lagos, Abuja airports as the most expensive in the world .
“Recent revelations from IATA ranks our Lagos and Abuja airports as the two most expensive in the world, no thanks to the endless levies, taxes, fees and charges. Whether or not this assertion is accurate, the mere perception of it is detrimental and demands our urgent attention.
“Equally, a recent news report credited to FAAN indicated that at least 15 airports in Nigeria are not viable. Sadly, beyond the huge capital outlay, we also need to maintain these airports and airstrips at huge costs despite our lean resources. This places undue pressure on the few viable airports, particularly the Lagos and Abuja, perhaps contributing to the myriad of taxes and levies. Solving these challenges requires a departure from the mindset that created the problems in the first place,” he stated.
However, aviation stakeholders raised the alarm that high taxes and levies by the federal government is responsible for the short lifespan of local airline operators.
LEADERSHIP reports that No fewer than 131 airlines registered to operate in Nigeria’s domestic airspace under scheduled and non-scheduled flight have gone into extinction largely due to hostile operating environment as well as bad management.
The chairman, Sabre Network CWA, West Africa, Dr Gbenga Olowo, speaking at the event, said local airlines operators are suffering from numerous taxes and levies.
According to him, while Passenger Service Charges is $100 in Nigerian airports, it is $44 in Doha and $40 in Dubai airports.
He, however, bemoaned the fund of local airlines that are trapped in Nigeria, saying Nigeria has the highest number of blocked fund in the world.
He said while foreign airlines are owed $2.36billion globally, Nigeria owed 36 percent of the global trapped fund.
“Passenger Service charge is $100 while Doha and Dubai charge $44 and $40 respectively. Fuelers pay the Federal Airports Authority of Nigeria (FAAN) on every litre of fuel they discharge inside an aircraft. FAAN will say the trucks used their roads.
Local airlines pay domestic charge, fuel charges, ticket sales charges, parking charges, Night landing charges, on duty pass, terminal navigation, air flight navigation among other charges.”
The airlines cannot survive, it’s not enough to have 100 aircraft because they may come to zero if there is no money to maintain the aircraft. For instance, at the end of the day, 45% are paid to service providers while 55% is left with the operator, how will airlines break even?”, he asked rhetorically.
Speaking on foreign airlines trapped fund in the country, Olowo, said Nigeria is a worst debtor of foreign airlines in the world.
“Nigeria owed foreign airlines $762m and a single foreign airline was owed $281million at at May, 2023. Now, International Air Transport Association (IATA), said it’s tired of mediating between Nigeria and foreign airlines. Nigeria is currently worst debtors to airlines is 32.25% of trapped fund globally,” he stated.
Speaking earlier, the President, ARTI, Air Commodore Ademola Onitiju (rtd), called for an ethical review of the behaviours of airline operators in Nigeria to stall short lifespan of local airlines.
Onitiju, stated that good corporate governance tame bad acquisition policy, poorly considered route expansion and other malfeasance often manifested in the management of Nigerian airlines.
He said, “the short lifespan circuit of Nigerian airlines has been largely attributed to the absence of good corporate governance practice of transparency, accountability and responsibility in the running of the airlines.
“It is our view that there is an urgent need for an ethical review of the behaviours of airline operators in Nigeria. Good corporate governance tame bad acquisition policy, poorly considered route expansion and other malfeasance often manifested in the management of Nigerian airlines. Aviation is international business that requires mutual respect and cooperation of all parties respecting national interests and economic boundaries,” he stated.
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