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Fresh controversy trails N400b shortfall in aviation revenue

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A fresh controversy has emerged over the total number of passengers that travelled the Nigerian airspace and ticket fares generated in 2016 and 2017, especially the harmonised figures recently released by the Nigerian Civil Aviation Authority (NCAA).

The apex regulatory body disclosed 15 million international and local passengers in 2016, with a total of N422.4 billion in ticket sales.

2017 recorded 14.1 million passengers, with N505 billion in ticket sales.

Stakeholders, however, faulted the new revenue estimates, alleging a shortfall in excess of N400 billion in the two years under review, with attendant shortchange of the mandatory five per cent charges that go to five regulatory agencies from ticket sales.

The stakeholders, who blamed under-disclosure of earnings as one of the reasons for the poor funding of the critical agencies, urged the Minister of State for Aviation, Federal Inland Revenue Service (FIRS) and the National Assembly Aviation Committees to separately set up investigation panels to look into the issues.

By statutes in the Nigerian Civil Aviation Acts (CAA) 2006, the NCAA is tasked in part 12 (1) to collect, on behalf of itself and four aviation agencies, five per cent charges on all airlines passengers’ ticket sales, air chartered services charges, cargo freight charges and so on.

The collection is for the security of infrastructural systems, and services and human capital development of related operations in the aviation sector.

The Nigerian Airspace Management Agency (NAMA), for instance, gets 23 per cent of the five per cent collection; Accident Investigation Bureau (AIB) gets three per cent; Nigerian College of Aviation Technology (NCAT) is allotted seven per cent; and the Nigerian Meteorological Agency (NIMET) shares nine per cent. The rest is allocated to NCAA.

In the wake of the furore that greeted the discrepancies between the NCAA’s estimates and those of the National Bureau of Statistics (NBS)/Federal Airport Authority of Nigeria (FAAN) for 2017, the NCAA came up with harmonised figures.

These were presented by the Director of NCAA’s Consumers Protection Unit, Dr. Adamu Abdullahi, at a breakfast meeting, organised by the Aviation Safety Round Table Initiative in Lagos.

According to Abdullahi, a total of 10.7 million local and 4.3 million international passengers were recorded in 2016, while 2017 pooled a total of 10.1 million local and four million international passengers.

Consequently, local routes earned N79.5 billion, while international routes earned N343 billion in 2016.

For 2017, it was N93.6 billion for local and N411.6 billion for international ticket sales. Year 2016 earned a total of N422.4 billion in ticket sales, while 2017 recorded N505 billion.

Stakeholders are worried that the revenue estimates did not match the average cost of tickets when multiplied by the traffic disclosed.

There is also a shortfall when compared with figures disclosed by both the International Air Transport Association (IATA) and the National Association of Nigerian Air Travel Agencies (NANTA).

From the 2017 figures, for instance, if each of the two million international outbound passengers pay an average of N350,000, that would amount to N700 billion in ticket sales, compared to NCAA’s N411.6 billion, ditto for local passengers.

If each of the five million outbound passengers pay an average of N18,000 per ticket, that would amount to N90 billion in ticket sales.

The total is N790 billion, compared to NCAA’s N505 billion.

In fact, NANTA’s president reiterated at the forum that foreign airlines operating in the country alone amassed about N503.3 billion ($1.4 billion) in travel ticket sales in 2017.

The NCAA, however, denied disparities in figures and revenue, claiming not all passengers ended up using the tickets during the year under review.

The Spokesperson for the NCAA, Sam Adurogboye, had earlier said the apex regulatory body stands by its estimates, because “the figures are verifiable and are harmonised by all relevant aviation parastatals, government agencies and handling companies.”

Adurogboye explained that the five per cent Ticket Sales Charge (TSC) is not based on the total tickets sold, but only on flown tickets. This is unlike FAAN that computes its Passenger Service Charge (PSC) on all categories of passengers flying through the airport.

He said: “Furthermore, five per cent TSC applies to all tickets originating from Nigeria with the exclusion of diplomats, tickets sold offshore, infants’ tickets and staff tickets. These are all classified as non-taxable tickets.

“The authority, hereby, states categorically, that there is no consultant(s) commissioned to collect revenue on its behalf. Payments have since been automated, while processing and data analysis for both international and domestic airlines are handled by NCAA staff.

“The automation process is a transparent system that obtains billable data directly from the reservation system of the airlines. On the international route, IATA is responsible for billing and collection of revenue, which is remitted into NCAA’s TSA account.”

But the Secretary General of Aviation Safety Round Table Initiative, Group Capt. John Ojikutu (rtd), said while one might agree with the NCAA that not all those who bought tickets would have used them within the reviewed periods, and that others could have changed their travelling plans and got their fares refunded, “what is very clear is that the passengers recorded by FAAN are known as those who passed through the passengers access control and screening point into the aircraft; they are those recorded by the Nigerian Airspace Management Agency (NAMA) as persons onboard, and they are those I believe, in the words of the NCAA Director of Consumer Protection Unit, as harmonised passenger traffic figures.”

Therefore, the harmonised figures given by NCAA are deemed to have utilised or expended their purchased tickets, he said.

Ojikutu added that the approximately four million international passengers and 10 million domestic passengers are those who bought tickets and have expended their purchased tickets.

He reasoned that should considerations of about 10 per cent be allowed for those that did not use the tickets from about two million outbound passengers, that leaves 1.8 million passengers to consider. Minus the fares of First and Business Class passengers, if all passengers pay the same fare of about N350,000 per person, “the figure you get in any of the two years cannot be less than N650 billion as earnings on international passengers, not N411 billion or N501 billion, as provided by NCAA for 2016 and 2017.”

“Shortfalls of more than N240 billion and N150 billion, respectively, for the two years, without adding the shortfalls on the domestic airlines figures, are huge. Similarly, if we consider that each of the five million outbound domestic passengers paid N18,000 again, without factoring the First and Business Class passengers’ fares, the earnings cannot be anything less but more than N90 billion.

“The total tickets sales earnings for each of the years can, therefore, not be less than N740 billion. And the NCAA five per cent tickets sales charges for each of the year cannot be less than N37 billion.

“Overall, the shortfalls are huge and the government, through the NCAA, is losing an average of about N20 billion annually on TSC and CSC, and government has lost more than N100 billion between 2013 and 2017,” he said

The Secretary General said further that it is high time the NCAA came clean on these irregular figures.

“NCAA should be courageous enough to ask the airlines to show evidence for the balance of over N300 billion annually on tickets sales, otherwise, NCAA must take responsibility for all the shortfalls.

The minister, the FIRS and the National Assembly Aviation Committees of both chambers must take the matter very seriously,” Ojikutu said.


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