Louis Ibah
On May 29, 2019 President Muhamadu Buhari will take another oath of office (for a second term) as President and Commander-in-Chief of the country’s Armed Forces.
In Nigeria’s aviation sector, stakeholders would always commend President Buhari for raising hopes of an improved industry for investors and citizens given his campaign promises which sought to entrench far reaching reforms that included stricter safety regulations on airline operations, improved airports infrastructure across the county, and the establishment of a viable national airline.
Buhari, in a bid to stress how dear the latter was to his dream Nigerian aviation sector, had promised upon assumption of office, to offload or lease some aircraft in the Presidential fleet for the purpose of establishing a national airline.
Sadly, as the Nigerian President rounded off his first term, the promised national carrier project, just as many other promises contained in Buhari’s ‘Roadmap for Aviation Sector’, were never realised. Daily Sun highlights some of the critical infrastructure and policies which President Buhari should pursue as part of his second term vision for the aviation sector.
Maintenance Repair Overhaul (MRO) hanger
This is a long overdue infrastructure for Nigeria. In fact, after a national carrier, the next most important infrastructure that the Buhari government should establish in the country in its next four years is a functional Maintenance Repair Overhaul (MRO) hanger. The need for this facility cannot be overstated. Nigerian airlines, the aircraft in the presidential fleet, Nigerian Air Force and the Nigerian Police spend an estimated $2.5 billion annually conducting C-checks and other levels of aircraft maintenance overseas.
Without a doubt, the establishment of an MRO had formed part of the Buhari’s government Roadmap or plan for the aviation industry which was launched in 2016. But no effort was made to ensure its implementation.
The absence of an MRO translates into the high cost of aircraft maintenance on local airlines, a trend that is responsible for the short lifespan of Nigerian carriers, which operate for average of 10 years.
The establishment of an MRO therefore comes as one important need for the industry that must be addressed by Buhari in his second term.
VAT payment by airlines
In Executive Order issued in 2018, President Buhari had abolished the payment of Value Added Tax (VAT) by local airline operators on all forms of shared transportation taxes.
The policy had become necessary in order to make light the heavy yoke in the overhead borne by local airlines in the form of multiple taxation and exorbitant fuel cost which erodes the profits of local airlines, thus leading to the early demise of many of these operators.
Sadly, more than a year after the policy pronouncement, Nigerian airlines are bemoaning the failure of the Nigerian Customs Service to implement this Executive Order by President Muhammadu Buhari. Secretary to the Airlines Operators of Nigeria (AON), Mr. Iroro Ewos told Daily Sun that the continuous survival of most of the local airlines hung on the speedy removal of the VAT payment. Ewos explained that Customs and the Federal Inland Revenue Services (FIRS) failed to execute the directive of the government to abolish VAT payment by local airlines to free up more funds for investments in more aircraft acquisition and routes expansion within and outside the country.
Ewos said the removal of VAT payment aside the reduction in the already bloated overhead for airlines, would also ensure a reduction in cost of air tickets with more passengers flying on the domestic routes.
“Airline owners are concerned that despite the Executive Order which was given about a year ago airlines are still required to pay VAT due to the insistence of the FIRS that they work with the law and they are yet to see a government white paper to that effect before they can suspend the collection of VAT from air transportation,” said Ewos.
According to him, “only investors in the air transportation sector pay VAT in Nigeria today as all other forms of shared transportation do not pay VAT including marine, road and rail transporter. And we will be too pleased to see this policy implemented by Mr. President in his second term in office.”
Kano, Portharcourt, and Enugu airports certification
The aviation industry revolves majorly around functional airports infrastructure without which the safety of aircraft traffic and passengers cannot be guaranteed. In Nigeria, the state of the country’s airports has not come anywhere close to standards and quality as obtainable in developed and most of the developing countries.
In fact, no Nigerian airport operated under the International Civil Aviation Organisation (ICAO) certification, until the airport remodelling initiative launched by former President Goodluck Jonathan eventually saw to the certifications of the Lagos and Abuja airports. The certification of the Abuja and Lagos airports was pursued with all seriousness and commitment never seen in the industry given that Nigeria is seeking to create an airport hub for the West African sub-region using the two airports. Attracting international airlines and passengers to transit through an airport hub requires that such airports operate at the maximum acceptable ICAO standards. It is for this reason that the government had secured a $500million loan from the Chinese Exim Bank for the construction of new terminals and infrastructure at the Lagos, Abuja, Port Harcourt, Enugu, and Kano airports.
Although, the government has been able to secure the certification of the Lagos and Abuja airports, the same has not happened for the international airports in Port Harcourt, Kano, and Enugu. In fact, the poor state of infrastructure at these other three airports has contributed immensely in stifling the government efforts in attracting reputable international airlines like British Airways, Delta Airlines, Emirates, Etihad, Air France, Virgin Atlantic, among others to operate into these airports.
These airlines continue to cite the poor state of facilities (or non-certification of these airports to international safety standards) as reasons for not flying into the airports.
It was the same safety reasons cited for the refusal of international airlines to operate into the Kaduna international airports following the diversion of traffic from Abuja airport to Kaduna to pave the way for the repairs of the Abuja airport runway in 2017. Only Ethiopian Airlines has been willing to take the risk of operating flights out of the Enugu Airport since its inauguration as an international aerodrome in 2013.