Furore As Aviation Sector Groans Under Heavy Taxation

As at the last count, local airline operators pay a minimum of 22 levies and taxes to the federal government through its agencies in the sector. These taxes, it was gathered, contribute to high ticket prices, thereby making air travel out of the reach of the middle class.

Currently, a one way ticket goes for at least N120,000 while a return ticket is N250,000 depending on the time of the purchase.

This current fare, local airlines operators, have warned will still go up except the government reduces the taxes and fixes other challenges facing the sector.

For instance, organisations like the Federal Airports Authority of Nigeria (FAAN), Nigeria Civil Aviation Agency (NCAA), Nigerian Airspace Management Agency (NAMA) and the operator of the Murtala Muhammed Airport Two (MMA2), Lagos, Bi-Courtney Aviation Services Limited (BASL) collect different levies from the airlines.

The levies are divided into aeronautical and non-aeronautical revenues and are added to charges collected from passengers as air tickets by the airlines.

RELATED

TETFund: Solving Brain Drain In Nigeria’s Healthcare, Academic Systems

4 days ago

MIDTERM REPORT: Economy Progresses In Policies, Challenged In Implementation

1 week ago

21 of the charges are paid into the coffers of FAAN, six are paid into NCAA, NAMA collects three while Bi-Courtney collects four of the charges from the airlines that operate at its terminal.

The breakdown of aeronautical charges included aircraft inspection, which is tickets and Duty Tour Allowance (DTA) paid to the coffers of NCAA. The DTA depends on the country the aircraft is being inspected.

Also, landing charges are divided into two; day and night. During the day, airlines pay N25 per Kg kilogramme of the aircraft weight while they are charged N37.5 per kilogramme of the aircraft at night. FAAN collects the charge from airlines.

Also, FAAN collects about N400 per weight of aircraft after 30 hours from airlines as parking charges while the agency also collects between $40 and $50 from airlines for using the Avio Bridge.

For en-route charges, FAAN charges $70 from airlines on international routes while it collects about N3,000 for carriers on domestic routes.

Indigenous airlines are compelled to pay NAMA $75 as a charge for over-flight while it equally collects $195 from airlines that operate international or regional flights outside the country while N6,000 is remitted by indigenous airline operators for the same terminal charge. The aeronautic agency also collects clearance fees for indigenous airlines.

Besides, N2, 500 per passenger is remitted to the purse of BASL as Passenger Service Charge (PSC) for any air traveller airlifted by airlines at the terminal.

The terminal operator also collects $50 from airlines for using its Avio bridge while it collects another $50 as extended Avio bridge usage.

Also, BASL collects $00.50 from operators as a check-in counter fee.

The breakdown of non-aeronautical charges indicates that the NCAA collects five per cent of total fare from airlines as Ticket Sales Tax (TST), and another five per cent each as Import and Export Charges for domestic operators.

The regulatory authority also charges airlines 10 per cent each as Import and Export Royalties.

Also, FAAN collects N2,000 for domestic operations and $50 for international operations as Passenger Service Charge (PSC), and charges N12 per kilogramme as a Ports Charge.

The same agency collects N5 per kilogramme as Export Charge, N20 per kilogramme on Courier/Tarmac/ Pre-release and N5 per kilogramme as Air Cargo.

Other charges from FAAN are N5 per kilogramme as shipment, N50 per kilogramme as Terminal Charge while it equally collects five per cent on turnover on behalf of the Ministry as Concession Fee, 20 per cent or rent as service recovery charge’ N500,000 per office as processing fee, PHCN charges and 75 per cent as electricity charge, N2.50 per litre as fuel surcharge and between 125,000 to N150,000  in Port Harcourt, Lagos and Abuja as apron pass from each of the indigenous airlines.

Speaking on heavy taxation on the sector, the Airline Operators of Nigeria (AON), said local airlines pay over 20 taxes on every ticket purchased by travellers.

The group, however, called for a review and reconciliation of taxes on each air ticket as some of them are mere repetitions.

The public relations officer, AON, Prof. Obiora Okonkwo, further stated that if there is a reduction in taxes and charges, the increase in ticket price will continue.

“As long as the government does not understand the importance of aviation and make the appropriate investments in the sector, investments like creating the enabling environment for the aviation sector to survive, which means access to single digit capital, reduction in all the charges and taxes that impact negatively on air travel business, we will still see increases in ticket prices.

“It is on International Air Travel Association (IATA’s)record that Nigeria still has the highest cost of aviation services. Every airline here pays higher than what is even paid by their peers in the western world, and we the local operators are victims of these,” he said.

Noting that the taxes are just too many, the United Nigeria Airline boss said, “for every ticket that we sell, we have about 20 to 22 deductions. Some are even repetitions.

We have been crying out and no one is even asking to know what the issues are and how to resolve them.

We are worried about it and if nothing is done, and quickly too, the factors militating against the sector are not turning out right for the country.”

He expressed concern that the federal government is deriving a lot of revenue from the aviation sector without re-investing to provide the necessary facilities and support to boost the sector adding that “these taxes, fortunately, form part of the revenue for government.”Okonkwo said,

“It is on record today that the Nigeria Civil Aviation Authority (NCAA), which is an agency under the aviation ministry, is the fourth largest contributor of revenue to the government. The question is where is that money coming from? It is coming from profit that operators would have retained and reinvested in growing their businesses.

“They are sucking us dry and it is not healthy for the industry and not healthy for our services. Still, the government is not investing adequately in the sector because any investment in the aviation sector is an investment in the future and progress of a country, given the importance of this sector.”

Also, a former managing director of Nigerian Airspace Management Agency (NAMA), Capt. Roland Iyayi, said that charges, taxes and levies from Nigeria are one of the highest anywhere in the world.

According to him, the International Civil Aviation Organisation (ICAO) in one of its submissions about two decades ago, rated Nigeria as one of the countries with the highest charges and levies in the world.

Iyayi, who is also the chief executive officer (CEO) of TopBrass Airlines, regretted that 20 years later, the charges remain the same.

He attributed these to the quick collapse of Nigerian airlines and urged the government to reverse some of its levies on the airlines in order to encourage growth in the sub-sector.

On his part, the immediate-past president, Aviation Round Table Initiative (ARTI), Dr. Gbenga Olowo, asked if the airlines were revenue collectors, saying that commercial aviation particularly in Nigeria has not been a priority for successive governments.

“IATA has severally described airlines as cash-cow, meaning that they collect cash from one party and deliver to the other.

“This is truly so, especially in Nigeria when you consider the revelations during the 55th Annual General Assembly and summit of African Airlines Association (AFRAA) in Kampala, Uganda which rose with a statement by IATA that Lagos and Abuja are the most expensive airports in the world.

“Passenger Service Charge in Nigeria is $100 per passenger, while Doha, the best airport in the world, is $44 and Dubai is $40. It is amazing that rather than pay attention to the myriads of problems, I read lately that the federal government allocated N5.5 billion ($6.5 million) to develop new airstrips and repair abandoned ones. Why build only to be abandoned?” he asked.