Louis Ibah 

By July 5, 2019, Air Peace Airlines would commence it’s international operations with an inaugural flight on the lucrative Lagos – Sharjar/Dubai route. 

That would be the fourth foray by a Nigerian carrier on that route as previous attempts by three other airlines, Virgin Nigeria, Arik Air, and Medview Airlines to link Nigeria and the United Arab Emirates (UAE), ended rather abruptly as still-birth.

Information in the public sphere was that Nigerian carriers were run out of business by the unfair competition created by the gulf carriers – Emirates,  Etihad, and Qatar, who enjoy the advantage of tax waivers and discounts on aviation fuel from their home governments. Such advantages, according to the Nigerian operators, negated the harsh operating environment created by the Nigerian government for local airlines still encumbered by multiple taxation and charges as well as the exorbitant aviation fuel (Jet A-1).

Although, Air Peace Airline has been more proactive (where the three other Nigerian airlines failed) by sealing an interlining deal with other carriers in Sharjar to enable passengers transit from Sharjar to Dubai and to other cities in Asia, it’s foray into the UAE still elicits some feeling of cynicism from stakeholders.

In recent years, the Lagos – Dubai route has proved a most lucrative income earner for foreign airlines, just as the Lagos – London, Lagos – New York, and Lagos – Johannesburg routes given the high volume of Nigerian passengers on them.

There is no denying the fact that Air Peace is the most stable local airline in Nigeria that accounted for about 40 per cent of the 2018 total passengers on domestic routes.

But the question on the lips of most industry analysts remains how prepared is Air Peace to weather the storms on the Lagos – Sharjar/Dubai route and how long can it sustain it’s operations with the expected stiff competition from the gulf carriers.

Annually, the Nigerian economy loses about N450billion in capital flight to foreign airlines, and so the emergence of strong local airlines plying international routes remains key to the country’s aspiration to stemming the huge capital flight and increasing the sector’s contribution to national gross domestic product and job creation for the citizens.

The burden of multiple taxation 

The Consumer Protection Directorate of the Nigerian Civil Aviation Authority (NCAA), recently released the data of air travellers in Nigeria for year 2018, showing that about 14.2 million air travellers were recorded during the period.

Specifically, 34 airlines on the international routes in Nigeria flew 4.08 million passengers, while nine domestic airlines collectively hit the 10.09 million passengers mark in 2018. The traffic figure, compared to the 2017 estimate of 11.2 million, represented a 20.8 per cent traffic rise. There is no doubt that the increase in passenger patronage of local airlines from 8 million to 10 million in 2018 comes with a significant return on investment for serious local operators. But it is also a record tells more of the exploits of local airlines, weathering the storm of a toxic business environment that has made it almost impossible for most Nigerian airlines to last beyond their fifth anniversary.

According to the Airline Operators of Nigeria (AON), sundry charges, under the guise of taxes and levies at airports nationwide account for at least 65 per cent of revenue accruing to them.

The only tax exemption enjoyed by the airlines being Customs duty paid on imported aircraft engines, spares and parts which has been abolished by President Muhammadu Buhari.

So far government’s order to abolish the payment of Value Added Tax on air transport is yet to be gazetted to allow it’s enforcement by the Federal Inland Revenue Service.  In addition, local airlines are made to pay a statutory five per cent charge on every ticket bought by passengers from the airlines, which is remitted to the Nigerian Civil Aviation Authority (NCAA). This payment is meant to be shared by the Nigerian AirSpace Management Agency (NAMA), Nigerian Meteorological Agency (NiMET), Nigerian College of Aviation Technology (NCAT) and the Accident Investigation Bureau (AIB). Aside this, the local airlines are still made to pay other charges on their operations to the same agencies.

They include: landing charge to the Federal Airports Authority of Nigeria (FAAN); Air Navigational Charge (ANC) to NAMA: the five per cent Cargo Sales Charge (CSC); five per cent Value Added Tax (VAT) to FIRS; Passenger Service Charge (PSC) of N1, 000 per ticket on local routes; Aircraft inspection fees;  simulator inspection fees; parking charges and terminal navigational charge to FAAN. Others are enroute charge, fuel surcharge levy, airport space rent, electricity charges, apron pass fees, , avio bridge, aircraft registration and processing fee, annual toll gate fees for their vehicles to access the airports.

Together, these charges eat deep into earnings leaving the airlines with less than N10, 000 profit on a passenger ticket sold at an average price of N30, 000.

Related News

Imperative of government’s support  

Chairman of the Airlines Operators of Nigeria (AON), Captain Nogie Meggison, recently raised the alarm on the high mortality rate of Nigerian carriers, noting that in the last 18 years, 50 indigenous airlines had sprung up, but sadly only nine are flying at present.

“The mortality rate of airlines in Nigeria is high. The owners of the defunct airlines have all been success stories in other business endeavours, except in aviation,” Meggison said.

“Could all of them have been responsible for the failure of their airlines? The answer is no! Rather, the unfriendly policies and harsh operating environment have been the bane of aviation sector’s growth in Nigeria.We are mindful that if these issues and policies are not addressed urgently, the remaining airlines run the risk of becoming defunct in no time,” Meggison said.

It is a view also shared by the Chief Executive Officer of Air Peace, Mr. Allen Onyema, who recently warned that unless the current regime of taxation is not removed, the survival of the local airline industry hangs in the balance.

Onyema said though the charges had been in the system for long with some as fallouts of government legislations, it was high time they were reviewed to ease the burden on commercial airlines.

“Let the government raise a consulting firm to go round the country to find out why airlines have been dropping off. Heavy taxation is part of it. We are suffering,” said Onyema.

“Air Peace supports payment of taxes to government; no government runs without the citizens paying tax. Airlines must pay their taxes. But what we are asking is for these taxes to be streamlined in such a way that it will help us to help the government and help the country,” he added.

Indeed, commercial airlines are a catalyst for the economic development in any country. It is for this reason that countries all over the world support their airlines.

“We are not asking for any financial assistance but for an enabling environment that makes things work. It is not complimentary for us as a country that all our airlines are dying,” Onyema said.

Regulate for safety, survival not extinction

Without doubt, aviation remains a most regulated industry and aviation rules and regulations are binding on all operators, and are implemented to the letters. But making it antagonistic by tightening the noose just for the sake of it will not help the industry, but instead could erode confidence and hurt operators.

According to the President of the National Association of Nigerian Travel Agencies (NANTA), Mr. Bernard Bankole, there is a lot to be gained by regulators, airport service providers, airlines and other stakeholders working in harmony than in silos and with a policy direction for growth and mutual benefit.

Bankole said Nigeria should take a cue from a country like Ghana where all regulatory agencies work to create   the right enabling environment for aviation to thrive.

“Today, a lot of airlines still prefer to go to Ghana to fuel up or to make repairs. Why? Because they have made available the processes and infrastructure for the comfort of any airline that is coming to their country to refuel,” said Bankole.

Job creation is the hallmark of any successful government and in the aviation industry, one Boeing 737 flying in the sky daily can create 200 direct and indirect jobs, hence the need for government agencies in the aviation sector to focus more on regulating the airlines to survive and not to go bust. There are thousands  of people whose lives are directly and indirectly positively impacted daily by these airlines.

It is in this light that the foray of Air Peace into the international market should be seen as a move that is central both to the industry and the Nigerian economy and the airline needs all the support to remain in operations and succeed. Where the need arises, the Nigerian government must stand up to its airlines in the international market. A stifling operating environment that  runs the local airlines out of international operations will not only affect Nigerian jobs, but will also hurt the economy.