Nigerian Airlines Are Groaning, Bankrupt Over Multiple Charges———–AON

* AON Chairman, Capt. Mrggison

 

…Says Aviation Agencies Collect 18 Charges From Airlines With Impunity

… Introduction Of Charges Breaches Provisions Of Civil Aviation Act of 2006

…Accuses Agencies of Frustrating Attempt At Harmonising Charges

The Airline Operators of Nigeria (AON) has cried out that airlines in the country are not only groaning over multiple charges by aviation agencies but that some of the carriers also are going bankrupt.

The airline body stated that a time when economic recession is affecting the country, it is rather unfortunate that the system has failed to recognise airlines are pivot and one of the pillars to jumpstart the economy of Nigeria.

The Chairman of AON, Capt Noggie Meggison stated this in a press release made available to journalists in Lagos, to explain the plight of airlines and the how multiple charges are affecting their operations.

AON, Meggison stated had been screaming and complaining about the same issue over the years that have culminated in sending over 27 airlines to their early grave in the past 25 years.

To buttress its point, he cited the recent takeover of Arik Air and Aero Contractors by the Asset Management Corporation of Nigeria (AMCON)in the face of huge financial burdens that have shown that they are fallout of the multiple and sometimes un-fair charges, levies and taxes airlines are forced to grapple with on a daily basis.

* Pic Source : Nigeria Technology Hub

* Pic Source : Nigeria Technology Hub

He added that this is without recourse to the fact that aside from all the multiple charges, levies and fees, airlines still have to pay mandatory statutory corporate taxes to relevant agencies.

“Ordinarily, airlines meet so many costly foreign exchange components on daily basis that accounts for 70% – 80% of their direct operational cost such as Jet fuel, spare parts, insurance and simulator training among several others” He said.

The AON boss lamented that it was unfortunate that domestic airlines have become a cheap target for the agencies that are putting additional pains and burden on operators through multiple taxes, charges and levies, which they demand from airlines with impunity.

He cited the Civil Aviation Act of 2006 (Part 18.12.3), which according to him requires NCAA regulates civil aviation and the charges imposed by civil aviation authorities and/or agencies, adding that these charges, in consultation with stakeholders, are to be approved and reviewed periodically by both parties but that as it today airlines are saddled with charges without any form of consultation whatsoever.

* Pix Source: The Lens

* Pix Source: The Lens

Meggison informed that domestic airlines operating in the country on the average pay about 35 per cent to 40 per cent of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges.

He listed the charges to include: 5 per cent Ticket Sales Charge(TSA), 5 per cent Cargo Sales Charge(CSC), 5 per cent Value Added Tax (VAT), Passenger Service Charge(PSC), Charter Sales Charge(CSC), Aircraft Inspection Fees(AIFs), Simulator Inspection Fees(SIFs) Landing Charges, Parking Charges, Terminal Navigational Charge(TNC), Enroute Charge, Fuel Surcharge, Airport Space Rent, Electricity Charges, and Apron Pass, Ramp Access Charges, On Duty Card(ODC) and a newly imposed Registration Fee all of which are paid to government agencies.

He contended that many of these taxes and charges amount to double taxation such that any incentive seemingly provided by government to airlines is taken back by the agencies.

* Pix Source: allAfrica.com

* Pix Source: allAfrica.com

Specifically, he stated that the Nigerian Airspace Management Agency(NAMA) charges domestic airlines different kinds of navigational charges, which they should ordinarily be exempted from in line with global best practice, except Nigeria, adding that the implemented charges range from Terminal Navigational charges to enroute navigation charges, over-flight charges, clearance charges and extension charges and that even foreign airlines don’t pay enroute charges or extension charges, which the local airlines are forced to pay.

“In spite of all these charges, NAMA still gets 23% taken from NCAA 5% Ticket Sales Charge (TSC) Account. Even with all these charges, many of the airports in the country do not have runway lights and navigational landing aids. This means such airports are only open between 7am and 6pm daily. To this end, airlines can’t fully utilise their airplanes for 24-hours operations. No airplane or factory machine can be profitable only from 7am to 6pm daylight operations. Airplanes and factory machines are supposed to operate for 24-hours. Airlines also sometimes have to pay arbitrary extension fees or cancel a flight entirely with the attendant burden and inconvenience due to no fault of theirs.”

*  Pix Source: Planespotters.net

* Pix Source: Planespotters.net

According to Meggison, “The open ended 5% TSC is to say the least ambiguous and open to debate and manipulations. Ticket prices differ from one airline to the other, hence it precludes that different airlines are charged varying amounts for the same service. It also implies that an airline is being charged different amounts at different times for the same service since prices are not static. Rather than a flat 5% of ticket cost, the TSC should be a fixed charge like standard global practice of N1000 per ticket.”

The body called for an urgent need for a total harmonisation of all agencies’ charges into a one-stop shop payment system, which was recently proposed by a committee set up by government and supported by the airlines, but was eventually frustrated by the agencies.

This, he stated would help in streamlining of all fees and charges by the various government agencies namely NAMA, FAAN, NCAA, NCAT, AIB and NIMET into a single window and remove any confusion and double billing, adding that a situation where each of the agencies comes up with arbitrary fees that are alien to the airlines brings about a lot of confusion and amounts to multiple taxation.

“In the light of the above, we therefore appeal to the Federal Government to assist the airlines by taking a critical look into this issue of multiple charges and come to the aid of airlines by having a single window, removing VAT from air transportation and reducing the heavy burden they currently face.”

Piix Source : Champion Newspapers Limited

Piix Source : Champion Newspapers Limited

He also enumerated some of these incentives to include: exemption of air transportation from VAT as done for road, rail and maritime as shown in their receipts, removal of enroute and terminal navigational charges for domestic airlines as done globally, provision of airfield lighting and navigational landing aids at all airports in Nigeria to reduce delays and cancellations and allow for 24-hours operation and better utilization of airplanes and granting waivers of landing charges in the home-base of airlines.

Other incentives, AON is requesting from the government are extending tax holidays for the first 10 years for qualifying airlines in order to cushion the impact of start-up to ensure the survival and growth of domestic airlines, that all the charges should be streamlined to a single fixed charge window to be distributed between the agencies using an agreed formula, access to land and removal of excessive levies for airlines to develop maintenance facilities.

In his words, “Airlines provide a critical socio-economic services and should not be treated as a cash cow and strangled out of existence by multiple taxes, levies and charges that are sometimes forced on the airlines without due consultations. We pray that Government needs to reappraise the way it sees air transportation and accord it the support it truly deserves as done in other climes.”

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