Airlines, NCAA bicker over N15b debt

Ghana removes value added tax
Nigerian Civil Aviation Authority (NCAA) and its operating airlines are currently bickering over debts owe by the operators. While the apex regulatory body estimates the debt in excess of N15 billion, the airlines are insisting that they owed only N2 billion.

The N13 billion difference has further worsened the frosty relationship between regulator and operators. This puts the implementation of the recently introduced automated remittance debit system at risk, with attendant threats to operations and safety in the aviation sector.

Interestingly, the controversial debt burden is accumulation from statutory five per cent add-on on each passenger ticket and cargo sales charges that airlines have deducted but did not remitt as at when due to the regulators.

But while that was ongoing, Nigeria’s neighbour, Ghana, has removed the 17.5 per cent Value Added Tax (VAT) on the domestic aviation industry as part of efforts to revamp the industry and become the aviation hub for West Africa.

The move came about a year after the Ghanaian government slashed the price of aviation fuel by 20 per cent, leaving the price currently at N160 per litre compared to Nigeria’s N250.

Recall that the Nigerian regulators led by the NCAA and airlines operators have never been on the same page when it comes to putting figures on the debt burden. But the current controversy is more significant for the entire sector.

The five per cent Ticket Sales Charge/Cargo Sales Charge (TSC/CSC), an Internally Generated Revenue (IGR) to NCAA and other agencies as enshrined in the Civil Aviation Act 2006 is to enable the regulators run independently and free from interference for the development of the aviation industry in Nigeria.

Besides using the funds to cover it’s day-to-day operations, the fund also enables personnel to get trained for the improvement of air travel in the country.

Of the entire pool, NCAA gets 58 per cent, Nigerian Airspace Management Agency (NAMA) gets 23 per cent, Nigerian Meterological Services (NIMET) gets nine per cent, Nigerian College of Aviation Technology (NCAT) gets seven per cent and the Accident Investigation Bureau (AIB) gets three per cent.

The Federal Airports Authority of Nigeria (FAAN) is outside the bracket since it independently charges N1000 on every domestic ticket and $50 on each foreign ticket for airport maintenance.

The Guardian learnt that the operating system is such that permits a backlog of several years such that attempts to reconcile outstanding becomes difficult if not impossible since some of the local airlines have been grounded.

President of the Airline Operators of Nigeria (AON), Capt. Nogie Meggison, said it is not that airlines don’t want to pay, but for differences in figure.

Meggison said AON members are currently remitting the five per cent TSC charges but despite its members’ improved payment, “infrastructure and service level continue to deteriorate across all facets of the industry under the same authority.”

The AON president added that while a large chunk of the N2 billion owed to the regulators were from some grounded airlines, 70 per cent of the remaining are “owed by the two government’s children (Arik Air and Aero Contractors), under the management of Asset Management Corporation of Nigeria, AMCON.

“So, let NCAA tell AMCON to pay and not come and be disturbing FirstNation or Dana among others struggling to create employment for Nigerians.”

NCAA, however, reminded the airlines that the five per cent charge remains statutory to ensure that the regulators carried out their duties.

Spokesperson for the NCAA, Sam Adurogboye, said, to facilitate easy and seamless remittance of the charges, Part 18.12.6 of the Nigeria Civil Aviation Regulations (Nig.CARs 2015) says: “All Nigerian licensed airlines shall join the IATA/BSP for the purpose of remittance of 5% sales charges, and shall execute a contract to that effect.”

However, the domestic airlines have not joined the International Air Transport Association/Billing Settlement Plan (IATA/BSP). “Therefore; the Aviation Revenue Automation Projects (ARAP) is an alternate means of compliance to smooth remittance provided by the Authority in line with Federal Government’s directive.

“It is pertinent to point out that NCAA is an autonomous regulatory agency, therefore it continues to remain solvent by cost recovery in line with ICAO Standard and Recommended Practices (SARPs).This can only be derived from the five per cent ticket and cargo sales charges statutorily,” Adurogboye said.

He added that the complaints of the airlines notwithstanding, NCAA has resolved that there is no going back on its earlier directive on automation of remittance of the five per cent ticket and cargo sales charges and any airline that failed to comply would be viewed seriously by NCAA.