Multiple Charges Crippling Aviation Sector-Committee

By Yemisi Izuora

OSITA CHIDOKA

Multiplication of charges has been identified as a major challenge affecting development of the aviation industry.

The Committee on Aeronautical and Passenger Charges recently inaugurated by minister of aviation Osita Chidoka in the cause of carrying out its duty observed that multiple charges in the aviation sector is creating some serious challenges for operators.

They disclosed that there are over 50 different charges imposed by the three major agencies in the ministry of aviation.

The agencies are the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) and Nigerian Civil Aviation Authority (NCAA).

Chairman of the committee, Mr. Ahonsi Unuigbe at forum in Lagos said for instance that port and cargo charges collected by FAAN on the same cargo is a duplication of charges.

The committee is charged with the responsibility to collate all Nigerian aviation industry aeronautical and non-aeronautical charges, benchmark them (charges) with global best practices, especially with those countries with similar regional conditions.

It is also to determine the factors responsible for the disparity between the aeronautical (including passenger) charges as well as give an opinion and/ or make recommendations to the government based on findings.

In the committee’s finding showed that passenger ticket charges, the basis of some of the charges is quite arbitrary.

According to the chairman, The committee analysed the basis of computation of passenger tickets for four domestic airlines (namely, Arik, Dana, Med-View and First Nation Airways).

The analysis shows that an amount ranging from 40 to 65 per cent of the airfare is hidden as fuel surcharge (also known as YQ).

The computation of this fuel surcharge is unknown to both passengers and government alike.  Equally, this cost element has been omitted by the airlines in the computation of both VAT and ticket sales charge, resulting in significant loss of revenue to the federal government.

He added: “There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities.  From the tickets analysed, some airline operators deliberately charge as high as 9 per cent of base fare as ticket sales charge as against the statutory 5 per cent (expected to be remitted to the government through NCAA).

“There is also a prevalence of poor service quality to passengers in the face of non-enforcement of the passenger bill of rights.

The passenger bill of rights, as contained in the NCAA Act, clearly entitles passengers to several means of redress, in the event of any infraction.

These rights are not known to most passengers nor are they being enforced by NCAA, resulting in a lot of passenger apathy;

“The minimum capitalisation requirement for domestic airlines is only N500 million, which at today’s exchange rate, barely covers the cost of effectively operating and maintaining one aircraft and therefore does not ensure a fleet size that allows for economies of scale.”

He also said the committee came up with some of the factors responsible for the disparity in the aeronautical and passenger charges across countries and regions to include inadequate state of support infrastructure, size of airspace, macro-economic environment, continuous changes in government policies and political interference, absence of a national carrier, inadequate business models and absence of transparency among stakeholders.

In the light of the findings, the committee recommended the harmonisation of navigational related charges such as the merging of en-route navigational charge and terminal navigational charge into a single charge to be renamed as navigational charge.

It proposed the violation of airspace fines to be merged with violation of air navigation regulations, the scrapping of the duplication of contractor registration fees by NAMA, as “this is also charged by NCAA.”

Besides, it recommended for the moderation of some of the charges such as cargo vehicle surcharge, car stickers apron pass, documentation of clearing agents fees, registration of freight forwarders fees to be retained at N100, 000 as against an increase to N250, 000 that are deemed to be excessively.

It also recommended that the proposed increase in import and export royalties should be reduced to five cents per kilo as against 10 cents earlier proposed by NCAA.

Others are elimination of air cargo fees, enforcement of the passenger bill of rights as well as a public awareness campaign to increase public awareness about the bill of rights, improved debt recovery by the regulators from airline operators, establishment of an economic regulatory unit under the office of the ministry of aviation, regulate arbitrary charges in the aviation industry as well as sanitise the aviation industry through the introduction of minimum capital requirement and monitoring of the capital adequacy of airlines.

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