Stakeholders: Multiple Taxation, Operating Cost, Responsible for Hike in Domestic Flights

Chinedu Eze

Aviation industry stakeholders have identified multiple taxes, high operating cost and charges levelled against the airlines by aviation agencies, as the factors responsible for the hike in domestic flights.

According to the stakeholders, airfares on domestic flight service have been on the increase in response to cost of operation, thus making it difficult for some Nigerians to continue to travel by air.

All these factors, in addition to the high cost of aviation fuel, known as Jet A1, are passed on to the passengers, such that the average fare for domestic flights is now N65,000 for one hour flight, and N80, 000 during peak periods.

THISDAY gathered that Nigerian travellers pay 5 per cent ticket sales charge (TSC) and 5 per cent cargo sales charge (CSC) through the airlines and the revenue generated are shared among aviation agencies, including the Nigeria Meteorological Agencies (NIMET), the College of Aviation Technology (NCAT), Zaria, the Nigerian Airspace Management Agency (NAMA) and the Nigerian Safety Investigation Bureau (NSIB). 

In addition to TSC and CSC, NAMA collects from the domestic airlines navigational and terminal charges, while international airlines flying across Nigeria’s airspace pay over-flier charges.

Also, the Federal Airports Authority of Nigeria (FAAN) collects from the airlines passenger service charge (PSC) in addition to landing and parking charges and from both the domestic and international airlines, FAAN collects fuel surcharge of N2.50 per litre (this amount may have increased).

THISDAY learnt that jet A1 is about N700 per litre and a Boeing 737 classic, which is the predominant aircraft type in Nigeria burns about 3, 300 litres of fuel for one hour flight, which is about N2, 310, 000.  When the taxes and charges are added and built into the ticket, airlines may barely break even at the current fares, an operator told THISDAY.

Currently Air Peace, Ibom Air, United Nigeria, ValuJet, Overland, Dana Air, Max Air, Arik Air and others charge about N65,000 as base fare and there are indications that as Naira continues to drop in value, fares will continue to rise.

A senior official of airport managing company in charge of one of the most successful state airports in the country told THISDAY that the federal government must intervene and modernise airport infrastructure to make airlines fly longer hours.

He said that government should repair existing runway lights and install new ones where none existed, install appropriate Instrument Landing System (ILS) to enable airlines operate till 10:00 pm to most of the airports in the country and 24 hours to the four international airports.

“When you buy a ticket you pay 5 per cent ticket sales charge to NCAA. That money is shared by NAMA, NCAT, NIMET, NSIB. After collecting those charges, NAMA still collect more charges. FAAN collects charges too. This is why cost of ticket is high. So, the federal government should come in here to fund some of these agencies so that they stop building charges into tickets. this will bring down the cost of tickets and more Nigerians will travel,” he said.

The former Managing Director of NAMA, Captain Fola Akinkuotu, had told THISDAY that in Nigeria, airlines flog their aircraft for average of eight hours a day, stating that this is underutilisation of mid side and narrow body aircraft that can fly for 18 hours.

“It will be difficult for airlines to break even operating aircraft for such short period and most often airlines would want to operate to some airports till 10:00 pm, “he said.

However, THISDAY learnt that the major challenge airports face in Nigeria is electricity.

The Chief Operating Officer of one of the state airports told THISDAY that in one hour an airport could consume 700kw of power at the cost of N49,000 under public power supply and N70, 000 under the use of generator.

“So, if an airport extends operations from 7:00 when most daylight airports close to 10:00 pm, the three hours extra would cost the airport N210, 000. This cost will also be passed to the passengers and currently airlines that want to extend flight time pay airports management, especially state owned airports.

“If you are going to expend such money on powering the airport, somebody will have to pay for it. But it does not make economic sense to extend operating hours if airlines will not operate at such times. But many airlines will like the daylight airports to be extended to 10:00pm because it will help them fly their aircraft for longer hours, which is good for the equipment. The role of the federal government is to find ways to make air travel cheaper for the benefit of other sectors of the economy because air transport is catalyst to economic development. it galvanizes other sectors to make money, create jobs and boost tourism, “he said.

Last week during the African Aviation conference in Abuja, the International Air Transport Association (IATA), identified Nnamdi Azikiwe International Airport (NAIA) Abuja as topping the list of airports with highest airport charges, followed by the Murtala Muhammed International Airport (MMIA) Lagos. The association described the high taxes in the continent as inimical to the growth of the sector in the country.

The Vice-President of IATA for Africa and Middle East, Kamil Al-Awadhi, noted that the African airlines have same unique issues different from Asia, Europe and other continents.

Al-Awadhi said the issues that have joined to affect the continent’s carriers are high interest rate at over 25 per cent.

This, he said, is killing the carriers and prevented them from competing with their counterparts in other parts of the world.

According to him, equally worrisome is aircraft lease rental rate, which he said are three times higher than Europe, with charges he described as ‘killing’.

Also in Abuja last week during a presentation at Airbus press briefing, the Chief Operating Officer (COO) of Ibom Air, George Uriesi, warned that if airfares are pushed beyond the current prices, Nigerian airlines would begin to fly empty.

He expressed the wish that the Naira will begin to firm up against the dollar and forex will become available so that airlines could access foreign exchange for their operations.