By Louis Ibah
Airline owners and Nigerian aviation professionals are heaping blames on the doorstep of the Federal Government for the misfortunes and collapse of Arik Air and Aero Contractors among others struggling domestic carriers .
A statement on Sunday by the Airline Operators of Nigeria (AON), described government fiscal policies which include taxes paid to regulatory and airport managers as “a system that is continuously manipulating, feasting and pushing the financial envelope of airlines by inflicting multiple taxes, charges and levies to the extent that airlines are now under pressure while some are going bankrupt.”
The statement said the AON had been screaming and complaining about the same issue over the years but that government failed to listen, leading to the death of over 27 airlines in the past 25 years. “A case in point is the recent takeover of Arik Air and Aero Contractors by the Asset Management Corporation of Nigeria (AMCON) in the face of huge financial burdens that were the fallouts of the multiple and sometimes unfair charges, levies and taxes airlines are forced to grapple with on a daily basis,”said Capt. Nogie Meggison, Chairman of Airline Operators of Nigeria (AON).
In a similar reaction, a statement by the Aviation Round Table (ART), said “We all saw it coming to Arik and others more than a year ago. Treating the Arik case in isolation will be to trivialise the magnitude of the problem.”
“Essentially it is a Nigerian business environmental factor. Business and government are permanently at variance. Cost is permanently higher than income. Tax overburden and infrastructural deficit erode revenues steadily. Gazetted policies that will enhance performance are not implemented. Credit is not in the Nigeria business dictionary. Yet aviation is prone to the most minute situation in the economy ranging from weather to politics, reckless holidays, among others,” added the statement by the ART signed by its President, Mr. Gabriel Olowo.
The Airline Operators of Nigeria (AON) statement said, “Ordinarily, airlines meet so many costly foreign exchange components on daily basis that accounts for 70 per cent to 80 per cent of their direct operational cost such as Jet fuel, spare parts, insurance and simulator training among several others
“Domestic airlines, on the average, pay about 35 per cent to 40 per cent of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges. These include 5 per cent Ticket Sales Charge, 5 per cent Cargo Sales Charge, 5 per cent Value Added Tax (VAT), Passenger Service Charge, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges, Terminal Navigational Charge, En-route Charge, fuel surcharge, airport space rent, electricity charges, and apron pass, ramp access charges, ODC and a newly imposed registration fee, all of which are paid to government agencies.
“Many of these taxes and charges amount to double taxation such that any incentive seemingly provided by government to airlines is taken back by the agencies,” the AON added.