Airport charges, taxes cost airlines 38 per cent revenue
The multiple charges and taxes levied by airports in Nigeria and other African countries have gone up some notches, and now cost the carriers as much as 38 per cent of total earnings.The Director of African Airlines Association’s (AFRAA), Aaron Munetsi, who disclosed this yesterday, said despite the heavy cost of operations, the “poor air travel infrastructure” were still obstacles to passenger traffic and tourism development on the continent.
Recall that airlines in Nigeria had lately cried out over multiple charges in the industry, often under the guise of taxes and levies at airports nationwide. Besides the five per cent charge on every ticket bought by passengers, which goes to all five regulatory agencies, there are other 35 sundry charges on the operators.
They include the five per cent Cargo Sales Charge, five per cent Value Added Tax (VAT), Passenger Service Charge of N1000 per ticket on local route, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges and Terminal Navigational Charge. Others are En route Charge, Fuel Surcharge, Airport Space Rent, Electricity charges, Apron Pass, ODC, Registration Fee, Service Recovery Charge, Processing Fee, Avio Bridge, Aircraft Registration and Processing Fee.
The airlines also pay Toll Gate Fee, VIP Lounge, Trolley Service, Clearance Fee, Check-In Counter Charge, Courier/Tarmac/Pre-Release charges, Import Charge (Dom), Export Charge (Dom), Import Royalty, Export Royalty, Ports Charge, Exports Charge, Transhipment, and Concession Fee.
Munetsi, at the aviation day in Lagos yesterday, said the plan of aviation authorities, who also own and control the airports, was to squeeze the airlines of every cent, and that explains why the airlines are always bleeding.“I can tell you that the residual value that stays with the airport has gone up from 21 to 38 per cent. The burden is so huge that the airlines would be lucky have anything left because everyone that can make money off the airlines is doing so, while the airlines are losing.
“African airlines have lost a total of $140 billion because of these charges from the airport, yet there is no commensurate value in infrastructure quality. For instance, the airport in Blantyre, Malawi, has been shutdown in the last five month because of the collapse in infrastructure. But airlines have been paying charges to the airport. What has happened to the money?”
Munetsi said the poor infrastructure is not peculiar to Malawi, but across the African States and underscores the perennial low air traffic despite the “asset” of 1.2 billion population in Africa.He observed that Africa, with a total of 62 airlines, 419 airports and 817 aircraft could only account for 88 million passenger traffic in 2018. The traffic represents just 2.2 per cent global air traffic according to the International Air Transport Association (IATA).Compared to Hartsfield–Jackson Atlanta International Airport in the United States that does 184 million a year, Munetsi said the African traffic size is unacceptable, and the reason airlines should take their plight to their governments.
He added that besides airlines losing money due to unattractive airports, the situation is also hurting tourism, with only Morocco welcoming as much as 10 million tourists a year.
“Africa just needs to wake up because other countries will just continue to take advantage of us. These figures are shameful, because I have seen Islands and desert countries clearly doing better than us in Africa. It is a lot cheaper and faster to build airport than roads. An airport should be able to give airlines efficiency, capacity, time and comfort to operate. We are tired of hearing that airlines are not profitable. It is not their fault, but that of the government and the system,” he said.
The Chief Operations Officer (CEO), African World Airlines (AWA), Sean Mendis, however, said the airlines had become the leading profitable carrier in the region due to the favourable operating environment the Ghanaian government created and also the world-standard Kokota International airport.Mendis said that airline currently does a weekly 34 and 11 flights out of Lagos and Abuja, in that order.