Multiple charges, unfair taxes are killing domestic airlines- AON frets

…requests review of TSC, enroute charges, VAT others

DOMESTIC airlines under the aegis of Airline Operators of Nigeria (AON) have expressed worry over their existence given what they described as multiple and unfair taxes inflicted on airlines stating that these taxes are stifling the airlines.

The AON also called on government to review  such taxes as Ticket Sales Charge (TSC), enroute charges and even Value Added Tax (VAT) arguing that in the case of VAT other modes of transportation are excluded but airlines are not, positing that it amounts to unfair taxing of airlines

Chairman of the AON, Captain  Nogie Meggison who spoke at the weekend decried that domestic airlines have become  cheap targets for government agencies and this has put additional pains and burden on operators thus providing the reason why 27 airlines have died in the last 25 years.

The Civil Aviation Act of 2006 (Part 18.12.3) requires that the NCAA regulates civil aviation and the charges imposed by civil aviation authorities and/or agencies, these charges, in consultation with stakeholders, are to be approved and reviewed periodically by both parties a policy Meggison said is not being adhered to as airlines are saddled with charges without any form of consultation whatsoever.

He said,” Domestic airlines, on the average, pay about 35% to 40% of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges. These include 5% Ticket Sales Charge, 5% Cargo Sales Charge, 5% Value Added Tax (VAT), Passenger Service Charge, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges, Terminal Navigational Charge, Enroute Charge, Fuel Surcharge, Airport Space Rent, Electricity Charges, and Apron Pass, Ramp Access Charges, ODC and a newly imposed Registration Fee all of which are paid to government agencies. “

Meggison lamented 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.

“NAMA charges domestic airlines different kinds of navigational charges which they should ordinarily be exempted from in line with global best practice, except Nigeria. The implemented charges range from Terminal Navigational charges to enroute navigation charges, Over-flight charges, clearance charges, and extension charges. Even foreign airlines don’t pay enroute charges or extension charges which the local airlines are forced to pay.”

The AON chairman lamented that even with all these charges, many of the airports in the country do not have runway lights and navigational landing aids stating that such airports are only open between 7am and 6pm daily.

He continued, “ 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.

“ According to the existing Nigerian VAT Law, all forms of commercial transportation are exempted from VAT. Only Nigerian carriers are subject to pay VAT. Air transportation in Nigeria is subjected to 5% VAT contrary to the law. Road, Maritime and Rail transportation don’t pay VAT. Even foreign airlines operating in Nigeria don’t pay VAT.”

The AON  thanked the President Buhari administration for approving the implementation of the provision as per the above provision allowing aircraft goods and spare parts to have zero duty but stated that the law is not being fully applied by the relevant agency to commercial air transportation which is a critical service to drive the economy.

On its recommendations, the AON stated that,” there is an urgent need for a total harmonization 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 will 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. A situation whereby 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,” said Meggison.

He further called for incentives for domestic airlines which should 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 include,” Extending tax holidays for the first ten (10) years for qualifying airlines in order to cushion the impact of start-up to ensure the survival and growth of domestic airlines as well as access to land and removal of excessive levies for airlines to develop maintenance facilities among other.

“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,” Sir Meggison submitted.