The Airline Operators of Nigeria (AON) has called for the removal of aviation agencies from the 25 per cent Treasury Single Account (TSA) deduction and the creation of an Aviation Development Fund to finance infrastructure and reforms across the sector.
Speaking at the National Assembly public hearing on the proposed amendment to the Nigerian Airspace Management Agency (NAMA) Act, AON representative Roland Iyayi said Nigeria’s aviation funding framework requires comprehensive reform. He argued that revenues generated by aviation agencies should remain within the industry instead of being paid into the Consolidated Revenue Fund.
“We should be looking at a total reform of the funding structure of this entire industry. The five per cent service charge has outlived its usefulness. It has created a burden on domestic airlines,” Iyayi told lawmakers.
While backing the bill seeking increased funding for NAMA, Iyayi said addressing only the agency’s share of the Ticket Sales Charge would not solve the industry’s wider funding challenges.
Instead, he proposed removing aviation revenues from the 25 per cent TSA deduction and placing them into a dedicated Aviation Development Fund that would finance infrastructure, navigation systems and other critical projects.
“But we are saying we should remove aviation collection from the consolidated revenue through the TSA and set up a special fund. You can call it an Aviation Development Fund, whatever it is. Let all these monies accrue in that pool,” he said.
According to him, once the funds are retained within the industry, government can still determine an appropriate percentage of any surplus for remittance to the Federation Account without depriving aviation agencies of resources needed for development.
“If NCAA can afford to pay ₦500 billion a year and still be in business, then we can have surplus money. My belief is that the entire industry will have, for us to have a complete overhaul of the entire system,” he added.
Aviation Development Fund seen as alternative to TSA deductions
Iyayi maintained that aviation agencies operating on a cost-recovery basis should not simultaneously be expected to generate surplus revenue for the Federal Government.
He argued that the NCAA Act 2022 contains contradictions because it provides for cost recovery while also requiring significant remittances to government under the Fiscal Responsibility framework.
According to him, the NCAA contributed about ₦500 billion through the 25 per cent TSA deduction in 2023, suggesting the authority generated roughly ₦2 trillion in gross revenue during the period.
“I am not sure any domestic airline was able to earn such an income,” he said, arguing that the industry’s internally generated revenues should instead be deployed to improve aviation infrastructure and service delivery.
He also noted that the NCAA charges airlines for virtually every service provided in addition to collecting the five per cent Ticket Sales Charge, increasing the financial burden on operators.
AON proposes wider legislative reforms
Beyond the creation of an Aviation Development Fund, the association urged lawmakers to adopt broader reforms to aviation financing and administration.
Iyayi asked the committee to amend the TSA revenue-sharing formula, which he said currently disadvantages NAMA. He also called for the immediate transfer of statutory fees due to the agency and repayment of revenues previously retained by the NCAA.
In addition, AON proposed replacing the existing ad valorem percentage charging system with a unit charge model similar to the Passenger Service Charge structure used in the industry.
“The five per cent right now is charged on everything an airline presents,” Iyayi said, adding that a unit charge would create a fairer and more predictable system for operators.
He further recommended that the NCAA be mandated to collect all revenues accruing under the Ticket Sales Charge framework.
Airlines face mounting operating costs
Iyayi said the current funding model has become increasingly difficult for domestic airlines because operating costs have risen sharply in recent years.
He pointed to aviation fuel as a major concern, noting that global fuel prices increased by between 60 and 80 per cent while operators in Nigeria experienced increases of about 270 per cent.
“Domestic airlines since March have not been able to pay five per cent to the NCAA,” he said.
According to him, airlines now spend most of their ticket revenue on fuel purchases, leaving little room to meet statutory obligations and invest in fleet expansion or operational improvements.
Infrastructure gaps limiting airline operations
The AON representative also linked funding constraints to inadequate aviation infrastructure across the country.
He cited the absence of low-level navigation charts for helicopters as one example, saying the limitation prevents efficient night operations and restricts the utilisation of aircraft assets.
According to him, aircraft capable of flying between eight and ten hours daily currently average only about six hours because of infrastructure deficiencies. Therefore, he argued that retaining aviation revenues through an Aviation Development Fund would provide sustainable financing for navigation facilities, safety improvements and airport infrastructure.
In addition, Iyayi called for amendments to sections of the NCAA Act 2022 and related legislation, including provisions he said unnecessarily constrain aviation agencies financially.
He maintained that comprehensive reforms would create a more sustainable funding framework, strengthen regulatory oversight and position Nigeria’s aviation industry for long-term growth while ensuring that revenues generated within the sector are reinvested for the benefit of airlines, passengers and the wider economy.
