Chinedu Eze
There have been strident calls for the review of the Nigeria Civil Aviation Regulations (Nig. CARs). The regulation provides statutory and operational framework for civil aviation in Nigeria, which is enforced by the Nigeria Civil Aviation Authority (NCAA).
The regulation in addition to many functions standardizes safety, personnel and equipment certification, airspace and aerodrome oversight, economic regulation and enforcement.
The major force behind the review of the Nigeria Civil Aviation Regulation are domestic airlines under the umbrella of Airline Operators of Nigeria (AON). The operators said that there is strong argument to review the civil aviation framework to redefine issues concerning high operation costs, safety and technology dynamics, legislative alignment.
This push may not be unconnected to the outcome of the Middle East crisis, which led to the high cost of aviation fuel, thus forcing airlines to borrow money to fund their operations, as revenues generated from flight tickets and cargo could not fund the cost of operation. In the crisis, the operators failed to pay their 5% ticket sales charge (TSC) and cargo sales charge (CSC), which they pay to NCAA, which shares it with for other aviation agencies.
The operators are also pushing for the end of the remittances by aviation agencies to the federal government statutory account. Since 2020, the federal government insisted that the aviation agencies must pay a percentage of their earnings to the Single Treasury Account of the federal government.
About six years ago, a directive from the Office of the Accountant-General of the Federation, precisely in April 2020, required parastatals like the Federal Airports Authority of Nigeria (FAAN), the Nigeria Civil Aviation authority and the Nigerian Airspace Management Agency (NAMA) to remit 25% of their inflows into the federation account, a policy that escalated to 50% deductions under the Treasury Single Account (TSA). The percentage was later reviewed downwards but the remittances are collected from source by government.
The airlines said that the revenues generated in the industry should be used to develop the sector. This is in tandem with International Civil Aviation Organisation (ICAO) recommended practice. ICAO stipulates that revenues generated from the aviation industry should be ploughed back to the sector to further develop it. And there is so much to do with money but the money is not there.
Many of these issues were encapsulated in the exclusive interview the Chairman and CEO of Air Peace, Dr Allen Onyema, granted Arise TV on Tuesday. Onyema said that it is very expensive running airline business in Nigeria and that is why the country records very high airline casualties.
“Some will start operation but within 10 years they will go under. This is why the International Air Transport Association (IATA) stated that it is very expensive to operate airline business in Nigeria. In order to generate money for the federal government, airlines are made to pay very high charges and IATA warns that such high charges and taxes impede the growth of air transport in Nigeria.
“That comment (from IATA) was not complimentary, but we welcome it because over the years, airlines in Nigeria have been crying to governments for its support. Aviation is a catalyst of national strategic importance. There is no UAE without Etihad and Emirates. They might not be making money for themselves, but they are doing other things that are engineering the ecosystem to make money for the country. That is what they are doing.
“They supported the airlines during COVID-19, America doled out billions of dollars to their airlines. Maybe the least got about $5 billion just to help them to recover. The entire 34 airlines in Nigeria we were given N4 billion. That was less than $2 million, all the airlines in Nigeria. Some airlines got 8 million naira only. Tell me what you’re going to do with that. Over 70 airlines have come and gone in this country. Nigeria has the highest mortality rate of airlines worldwide,” he said.
Onyema called for the review of the charges as contained in the Nigeria Civil Aviation Regulations, saying that if those charges are not reviewed, “airlines will continue to crumble in this country.”
“The International Civil Aviation Organization rules that aviation agencies will sustain their operations cost recovery. You don’t use airlines per se to raise revenue for the nation. Airlines are not used to raise revenue directly; but indirectly. They energise the ecosystem for government to make money through tourism, economic integration, and so many other things. Airlines bring those things to bear indirectly. But taxing airlines directly to raise revenue for government is something very, very, very bad,” he said.
He said OAN is seeking to meet with President Bola Ahmed Tinubu to table these issues before him.
“Time has come and I believe this government will listen. We are seeking an appointment with the President. And we think the President should see us and hear from us. We are patriotic citizens of this country. We appreciate what this government has done for us. But they need to listen more to us and get to know the pain points that are hitting these airlines.
“If an airline goes down, banks will take a hit. And it creates massive job unemployment. A lot of people will be thrown into the unemployment market. We don’t want anybody to go between us and him. We want to sit with our Minister, who is very progressive, sit down with him, sit down with the President and tell him the honest truth,” he said.The Air Peace Chairman said that airline operators will let the President know that the 5 per cent Ticket Sales Charge and Cargo Sales Charge dig a big hole in the finances of the airlines and also explained that it is somewhat deceptive when it is claimed that it is money paid by passengers, which airlines are mandated to collect for the Authority.
He argued that the charges erode the investment of the airlines because it is not a fixed amount which can be added to the total fare but a percentage of the cost of a ticket.
“The truth we have to tell the President is that the 5 per cent passenger TSC, they charge the airlines. And they will tell you that, oh, it is the passengers that pay it. We refuse to accept that. If I charge 100,000, NCAA will take 5 per cent. If I charge 200,000, NCAA will take 5 per cent of 200,000. I did not set up business with you. Because aviation itself does not give you 5 per cent gain. But they tell you, oh, it is the passengers that pay it. No, then take it from the passengers.
“We want Mr. President to set up Aviation Taxes and Charges Review Committee. It is very important so that it does not look as if we are trying to fool the government. Let the government select people, technocrats, people from aviation, and then some of us from the airline industry, raise a committee of Aviation Taxes and Charges, I mean, review committee to look into these charges that airlines have been crying over time to be responsible for the demise of airlines in this country,” he said.
Onyema noted that if the Nigeria Civil Aviation Regulations is reviewed it will save the airlines and put to an end the high mortality rate of Nigerian airlines.