Industry professionals in Nigeria’s aviation sector are of diverse views concerning the ‘pay as you go’ mode of payment aimed at collecting terminal navigational charges from domestic airlines, which was recently introduced by the Nigerian Airspace Management Agency (NAMA).
With some of the experts in favour of the initiative, other stakeholders in the sector see the development as cumbersome and an additional tax to the highly levied air tickets.
The ‘pay as you go’ fuss, which for two weeks after its pronouncement by the airspace agency resulted in a series of complaints and counter reactions from some airlines, saw to the grounding of Arik Air’s 120 domestic flights in one day, and led to the introduction of a N100 additional ticket charge by Aero Contractors, which the carrier described as “NAMA Tax.”
Explaining that objections by domestic carriers on the new charges is “unnecessary,” Lateef Lawal, an analyst with experience of over two decades in the country’s aviation industry and the editor of Nigerian Aviation News in Lagos, said that the airlines are looking for ways to evade the payment for services rendered to them by service providers in the sector.
Mr Lawal argued that all domestic carriers in Nigeria jointly owe the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA) a “whooping N10 billion if not more,” out of which over N4 billion is owed NAMA.
“Prior to the 1st September 2010 when the management of NAMA took the bull by the horns after the directive of the Minister of Aviation for aggressive revenue and debt recovery drives, there had been several meetings between NAMA officials and those of the debtor airlines on debt reconciliations. Some attended others blatantly refused to attend,” he said.
According to Mr Lawal, a Ministerial Committee was later set up to look at all the issues at stake and come up with recommendations on the ways out, adding that members of Airline Operators of Nigeria (AON) were part of the committee, along with those of the ministry and all the parastatals in the industry.
“After the committee’s two-week sitting, they came up with far reaching recommendations, which included: the spreading of the old debt owed by the airlines since 2005 to June 2010, to be spread across 36 months while they should henceforth make it a point of duty to always pay for services rendered to them,” he said, adding “this recommendation among others was endorsed by the minister for implementation, which was what NAMA started on 1st September this year.”
He said that it is surprising to see an about turn by the airlines that were part of the report to which their representatives at the Ministerial Committee Meeting endorsed their signatures.
Another opinion
On the contrary, Gabriel Olowo, a seasoned expert in the sector and chief executive of Sabre Travel Network, said that the answer to the ongoing issue is to “abolish ticket sales charge.”
Mr Olowo stated that the Airline Operators of Nigeria had in the 90s agreed to give 5 per cent of what they get from the sales of air tickets to the government to enhance the aviation sector, adding that the contract should alternate whatever levy is being put forward by any government organisation on airlines.
“We ordinarily should not speak on the matter waiting before the Supreme Court of Nigeria; but throwing light into the history of Ticket Sales Tax, Airline Operators of Nigeria (AON) during the early 90s, had a gentleman’s agreement with the government to contribute 5 per cent of all ticket sales for aviation development, having appreciated the financial needs of our airports and airspace,” he said.
“While this subsists, it is expected to replace and substitute whatever charge these institutions may have legitimacy to charge. There exists a sharing formula for the fund by the agencies.”
Mr Olowo disclosed that it was after the agreement that the Nigerian Civil Aviation Authority (NCAA) got its independence and the Federal Airports Authority of Nigeria (FAAN) commenced taxation on airlines, stressing that the levies on domestic airline tickets are exorbitant.
“NCAA, thereafter, became autonomous and FAAN was collecting passenger service charge (PSC) known as airport tax, in addition to its Landing and Parking fees. NAMA saw the sense also in collecting Terminal Navigational fees which is tantamount to eating your cake and wanting to have it, as this amounts to double taxation,” he said.
“As you are already aware, Airline ticket contains too many taxes (TST,PSC,VAT) and if we are serious about having strong and thriving Nigerian carriers, additional tax burden on ticket in whatever nomenclature will simply turn the airlines to revenue collecting agents in the face of their already difficult environment of business.”