Airlines fault FIRS action on carriers’ migration to tax platform

Chairman of Air Peace, Allen Onyema has called on government to design a package of incentives for domestic airline operators who are struggling with a myriad of challenges.

This is just as the airline boss faulted the recent blacklisting of four airlines by the Federal Inland Revenue Service (FIRS) over delay in migrating to the tax platform designed by the agency but poorly communicated to the airlines.

The airlines include: Air Peace, AZMAN, Overland Airways and First Nation Airways. He said rather than going public to tell Nigerians not to buy ticket from the airlines, the FIRS should have done its homework by engaging the airlines through the NCAA before taking a decision that has dipped sales of ticket by the affected airlines  Onyema called on the tax agency to immediately retract the public notice on the airlines.

The airline chief said the challenges are not limited to high cost of operations and an unfriendly investment environment and the re- introduction of import duties on aircraft spares as well as absence of tax holidays for fledging carriers.

He said such package has become imperative to cushion the effects operators go through in their bid to provide air transport services around the country.

Speaking in an interview in Lagos, he said rather than encourage indigenous airline investors, some agencies of government continue to erect obstacles on their way thereby frustrating efforts militating against the development of air transport sector.

He said government ought to consider tax holiday for fledging indigenous carriers to enable them create more jobs for Nigerians in the transport sector. According to him there is need to remove unnecessary bottlenecks that kill private businesses.

The airline boss said it is important for the regulator of the sector: Nigerian Civil Aviation Authority (NCAA) to mediate between domestic airlines and other agencies to avoid any infraction on airline operations.

Onyema said rather than criticize domestic airlines, government should look at the challenges operators struggle with, as it affects the cost of aviation fuel, import duties on spare parts by the Customs which will contribute to making airline business unprofitable.

He said the harsh operating environment could be reduced through investment friendly policies that would make it conducive for new players in the air transport sector.

It is his opinion, that government has to create a more enabling environment to allow indigenous carriers benefit from the duty waiver on aircraft spares and parts as the activities of Nigeria Customs Service requesting airlines to pay duties on such items is contrary to the directive of government.

According to him, some agencies of government are in constant habit of introducing measures, policies and directives that act as huge disincentive to operators in a business he said has very low returns on investment.

Onyema listed the challenges indigenous airline owners grapple with to include: prohibitive costs of aircraft maintenance, high cost of securing airport land, difficulty in getting aircraft spares, multiple taxes and unfriendly policies that discourage investment in aviation. His words:” Talking about challenges, they are enormous.

To start with, there is the problem of procurement of spare parts for aircraft when it develops a problem. “Nigeria is very far away from the sources of these aircraft spare parts.

We get aircraft spare parts from either America or from Europe. If you have a snag on your airplane and you do not have that particular part in your store, then you are in trouble.  “You might wait for about four days to even get that aircraft spares into the country.

And when it finally arrives, the Nigeria Customs Service will keep it because you have to pay customs duties.  Airlines are not supposed to pay such duties because in 2009 government approved import duties waiver on aircraft spare parts . “So these are the issues; all these things aggregate to making the running of airline in Nigeria prohibitive.  “The cost is so prohibitive that it may not be wise to run the business with a loan taken from the banks which runs at double digit interest rate.”

He accused some government agencies of frustrating efforts by airlines to expand due to what he described as ‘overzealous attitude to recover revenue through taxes’.

Such agencies he said should design programmes to grow indigenous carriers rather than think of ways to kill the business. He said about the recent action of Federal Inland Revenue Service (FIRS): ” I will give you an example of what government did recently that I didn’t like and I doubt if this present president will support what they did.

They were just being overzealous.  “Recently, a government agency, the Federal Inland Revenue Service (FIRS) sent out a public notice to Nigerian reading public that they should not buy the tickets of Air Peace, Overland, AZMAN and First Nation airlines, that these airlines did not subscribe to the VAT Portal they created and which I am sure they created in conjunction with these tax consultants.

Meanwhile, nobody had contacted us before now, we have not even seen what the VAT Portal looked like, but a government agency went to the press and gave out a public notice that could derail the operations of emerging airlines that have provided thousands of jobs for innocent Nigerians which if through the agency’s action their fortunes could go down in future.

And the most annoying thing is that if it happens, this agency cannot afford to give these Nigerians jobs. And when you give job to one Nigerian, it’s like you are giving jobs to 10 Nigerians.  “But a government agency like FIRS did this, telling Nigerians not to buy our tickets.

Is that what a government agency should be doing? No! it is unheard of; people who saw it frowned at it, it was all over the world and people said what kind of government agency is this and that is government for you. ”

He continued: “Government is supposed to package incentives for airline owners who provide jobs.  “They should create enabling environment for those who provide jobs and not the other way round.

I am telling you that in America, if you are able to create jobs for 50 people, the government gives you every support you need because you are helping them to curb the state of insecurity and you are helping people to live a good life.  “Somebody should call the tax agency to order.

If not for anything they should rather give tax rebate.  “That is how it is done, so that we can create more jobs.  They should be looking at the number of Nigerians we have employed.

In the real sense, we have been providing jobs on behalf of the government.  “Government  agencies should behave responsibly; that is not how to do things, I am really piqued at what the tax agency did by calling on the public not to patronize some airlines over alleged failure to migrate into a tax collection platform.  “That to me is the height of wickedness in killing private investment.

And when you express your reservations over such unfavorable conduct you are given names. “At times people recommend to government, policies aimed at a particular person they don’t like. We cannot grow as a nation like this.

For us to succeed, in aviation and every other sphere, government must think about job creation actions. “Government or any of its agencies must not act as a disincentive to job creation.

The president should call to order, some of these agencies, they are not acting in the best interest of the nation.

The best thing government should do is to create a conducive environment for entrepreneurship and not to strangulate private investment”.