The Federal Government’s recent reduction of aviation agencies’ contributions to the Treasury Single Account (TSA) from 50 per cent to 30 per cent is a good development. Notwithstanding the relief, Nigeria is still miles away from the International Civil Aviation Organisation (ICAO) recommended practices, OLUSEGUN KOIKI reports.

For about six years, Nigeria’s aviation industry has been trapped in a recurring battle with the Federal Government over revenue deductions from aviation agencies into the Treasury Single Account (TSA).

The government under late President Muhammadu Buhari, through the Office of the Accountant-General of the Federation, introduced, in 2020, automatic deductions from the operating surpluses and inflows of government agencies under the TSA framework.

The government said the initiative, which started with 25 per cent deductions of revenue generated by all agencies, including aviation parastatals, was aimed at improving transparency, reducing leakages and achieving centralised government revenues among its agencies.

The government had named some of its parastatals as “super agencies” – those that generate significant amounts and require appropriate monitoring. The categorisation evolved into one of the most contentious issues in the aviation sector, pitting regulators, aviation unions and industry experts against the government.

The deductions were later raised to 40 per cent by the same government, while President Bola Tinubu, on assuming office in 2023, increased it to 50 per cent.

After numerous agitations, protests, negotiations and appeals from various aviation stakeholders, it was learnt that the Federal Government recently dropped the deductions from aviation agencies’ revenues to 30 per cent from the contentious 50 per cent rate that had triggered widespread outrage across the industry.

Though, the six affected aviation agencies – the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigeria Civil Aviation Authority (NCAA), Nigerian Safety Investigation Bureau (NSIB), Nigerian Meteorological Agency (NiMet) and the Nigerian College of Aviation Technology (NCAT), all kept mute about the decision, a source close to one of the agencies, told The Guardian that the drop was implemented in the last quarter of 2025.

While the decision on deductions has been welcomed as a positive development, many stakeholders still insist that the fundamental issue remains unresolved.

The stakeholders questioned whether aviation agencies should be subject to such deductions at all, especially when international standards recommend that revenues generated within the aviation industry be reinvested in the sector for development and facility upgrades.

The International Civil Aviation Organisation (ICAO) document 8632 on ‘Policies Taxation in the Field of International Air Transport,’ urges member states to “eliminate taxes on the sale and use of international air transport and ensure that any levies generated from aviation are directed back into the industry for aviation purposes”.

ICAO also said that charges imposed on airlines and operators must be directly related to the costs of providing the airport or air navigation services and should not exceed those costs.

It added that any revenues from aviation-specific charges or levies are expected to be used strictly for civil aviation infrastructure, operations, or related safety and security, and that charges should not unjustly discriminate against international civil aviation relative to other transport modes.

Experts in the industry have consistently argued that aviation agencies were not traditional revenue-generating entities, but institutions primarily engaged in cost recovery to fund safety oversight, infrastructure maintenance, personnel training, and service delivery.

They also warned of a looming collapse of critical services if the deductions continued.

The former Director-General of the Civil Aviation (DGCA), Musa Nuhu, in an interview with The Guardian, said deductions of any kind from the earnings of government agencies, especially the NCAA, were unnecessary.

Nuhu explained that the government ought to know that an agency like the NCAA was not revenue-generating and therefore should not remit funds to the government’s coffers.

He explained that this was one of ICAO’s recommendations to member states, but noted that member states could also develop their own policies.

He added: “However, this is contrary to the ICAO recommendation. But the government must have its own reason for doing what it did. We, as industry experts, do not agree with it.

“NCAA does not charge for profit in the services it provides, and cost recovery is not enough to run the agency. Cost recovery earnings are not enough for the agency to pay its over 1,500 staff, and when you compare what the NCAA charges to what the Ghana Civil Aviation Authority (GCAA) charges, it is like day and night. GCAA charges very highly, and they also charge in dollars.”

On the 20 per cent reduction, Nuhu described it as a positive development that showed the government’s sensitivity to industry issues.

He emphasised that it was also necessary for industry experts to commend the government when it takes the right step, saying that the 20 per cent reduction would go a long way toward reducing pressure on operating agencies.

He added: “However, we are not where we are supposed to be, but it is a step in a positive direction.”

Also, an aviation analyst, Charles Amokwu, said that aviation agencies were not traditional revenue-generating entities; rather, they were parastatals engaged primarily in cost recovery to fund safety oversight, infrastructure maintenance, personnel training, and service delivery.

He queried the initial removal of 50 per cent of the revenue generated by agencies, which he said were already facing financial constraints.

Like Nuhu, he insisted that the policy contradicted ICAO’s principles, which stipulate that revenues generated from aviation activities should be utilised for aviation development.

Amokwu expressed that the concern was particularly acute because Nigeria’s aviation agencies depend heavily on internally generated revenues to fund their operations.

He added: “Unlike many government institutions that rely primarily on budgetary allocations, agencies such as NCAA, FAAN and NAMA generate substantial portions of their operational funding from charges paid by airlines, passengers and other aviation service providers.

“Removing any percentage of those revenues will inevitably affect safety oversight, infrastructure maintenance and human capacity development.”

The industry expert, however, lauded the government for the reduction to 30 per cent, but said reverting to zero per cent deductions would lead to ICAO compliance by Nigeria.

Besides, an aviation expert, Samuel Caulcrick, in an interview with The Guardian, said that Nigeria’s aviation funding model was fundamentally flawed.

According to him, the diversion of aviation-generated revenues into the general treasury underwrote the very purpose for which those funds were collected.

Caulcrick noted that charges such as the 5 per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) are specifically imposed to support aviation safety oversight and the development of aviation institutions.

These charges, he posited, are paid by passengers and cargo operators with the expectation that they would be used to maintain a safe and efficient aviation system.

He said: “The financing and budgeting model for Nigeria’s aviation agencies is systemically flawed – viewed any other way is detrimental to air safety. It violates ICAO standards. ICAO is clear: ‘all revenue generated within the aviation industry should be reinvested directly back into the industry.’

“This principle exists to maintain safety standards, fund oversight and develop critical infrastructure. It is not discretionary. It is therefore wrong for the government to demand a 50 per cent deduction from the 5 per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC).

“Their purpose is air travel safety, not to be hijacked for general revenue. Diverting these funds undermines the very safety framework they are meant to support.”

He further emphasised that until the government aligned its funding model with global standards, the country would continue to underfund safety.

He, however, posited that the government could legitimately seek cost recovery from the earnings of aviation agencies where it funds their infrastructure 100 per cent.

He argued that in those cases, some repatriation of revenue was a fair return on public investment.

An aviation consultant, Adebayo Adesanya, said that aviation’s unique technical and safety-sensitive nature made it unsuitable for blanket fiscal policies designed for conventional government agencies.

According to him, the sector required constant investment in modern technology, training and infrastructure to keep pace with rapidly evolving global standards.

He warned that continued diversion of aviation revenues of either 30 or 50 per cent, could eventually lead to deterioration in safety, security and passenger comfort.

Adesanya posited that aviation agencies should be allowed greater operational autonomy, while the government strengthens oversight through its governing boards.

The President of Aviation Round Table Initiative (ART), Ademola Onitiju, said aviation should be viewed not merely as a source of government revenue, but as a catalyst for national development.

He declared that a well-developed aviation sector stimulates trade, tourism, investment and job creation.

Onitiju emphasised that for years, ART had advocated Public-Private Partnership (PPP) models as the most sustainable approach to financing aviation infrastructure.

Under such arrangements, he argued private capital could be attracted into airport development, air navigation infrastructure and other critical projects, provided the operating environment remained predictable and investor-friendly.

Onitiju also stated further that certain sovereign obligations, particularly those relating to navigational services and safety infrastructure, should continue to receive public funding, saying these serve national interests.

According to him, the government must create conditions that encourage both local and international investors to participate in aviation development, noting that tax incentives, concessions and policy consistency were essential components of such a strategy.

However, while the decrease from 50 per cent to 30 per cent may ease some financial pressure on agencies, the deductions should either be eliminated entirely or substantially reviewed to align with global best practices, as aviation agencies still face significant funding challenges, which affect their competitiveness.