Follow Us on Google
…Seek 6-month tax freeze, credit extension from marketers
…Want single-digit loans
By Chinelo Obogo
Struggling to stay afloat amid a suffocating operating space, domestic airlines have called on the federal government to urgently cushion the heavy losses they suffered following a 300 per cent surge in Jet A1 prices imposed by oil marketers.
Daily Sun learnt that the local carriers spoke through their union, the Airline Operators of Nigeria (AON) and reeled out other relief measures, which include immediate suspension of aviation-related taxes, fees and charges for at least six months. According to AON, the sharp rise in fuel costs has further strained airline operations, making urgent intervention necessary to sustain services, protect jobs and stabilise the already pressured aviation industry.
These demands were contained in a letter dated April 21, signed by the AON President, Abdulmunaf Sarina and addressed to the Minister of Aviation and Aerospace Development, Festus Keyamo, in response to his intervention to their concerns over the astronomical increase in the price of JetA1 fuel and the existential threat they said it poses to the airline industry.
The minister met with the airlines on Wednesday and informed them that he had spoken with President Bola Tinubu, who in turn instructed him to articulate what can be done by the federal government to help the airlines. The AON then put their demands together and presented them to the minister which among other incentives include the suspension of all applicable taxes, fees and charges charged to members by the various government agencies for a period of six months with immediate effect. They also want domestic airlines to be allowed to introduce non-taxable fuel surcharge, which is the standard international practice, to curtail the excessive cost burden introduced by the hike in aviation fuel price and a directive to all oil marketers to provide credit notes to all domestic airlines that have been exposed to the excessive and arbitrary price hikes.
Other News
They urged the minister to immediately constitute a high powered industry tax reforms committee which would review the applicability and continued relevance of the various taxes, fees and charges applicable in the industry today and this committee should be mandated to review, determine, and recommend the duplicitous nature or otherwise; the historical context of each taxes, fees and charges; conformance with international standards; relevance in the domestic context etc.
They also want all relevant government aviation agencies and industry service providers to suspend all debt recovery exercises over the next six months after which point it should be reviewed. They said the minister could take due cognisance of the International Civil Aviation Organization (ICAO) provision, which emphasises cost recovery as the basis for every aviation related tax, fee or charge. For that reason, they urged the minister to champion the principles of ICAO and ensure that domestic aviation is recognised and treated as a strategic economic asset, rather than a convenient source of government revenue generation, to the detriment of the overall economy and national security. They also want the Federal Government to fund the Bank of Industry and enact a policy which would enable domestic airlines get loans at a single digit interest rate.
The letter to the minister reads in part: “Further to your letter of appeal requesting for a stay of action regarding our earlier planned shutdown, our members have gone out of their way to further extend themselves in acceding to your request to continue to provide and sustain flight operations, despite the huge cost burden and threat to their corporate existence, in deference to your office and timely intervention.
“It is noteworthy that your letter not only called for restraint in the shutdown of operations, but also requested that our members should not introduce any hike in air fares. We wish to bring to the Honorable Minister’s attention that this gesture requiring the continued operations at the current levels of fuel prices and the continued application of existing industry taxes, fees and charges is unsustainable. We therefore urge you to promptly consider our prayers for airlines to be able to continue to sustain air transport services under the prevailing difficult conditions.”
The AON had on April 14, threatened to shut down operations on Monday, April 20 over a 300 percent increase in aviation fuel, accusing marketers of exploitation, saying that the price of aviation fuel has increased from N900 per litre to N3, 300 per litre in less than two months while crude oil prices have increased by about 30 percent internationally. They said the increase in fuel costs by marketers in has been disproportionate and indicative of market exploitation rather than genuine supply dynamics.
But fuel marketers pushed back against claims that airlines are being charged N3,300 per litre for aviation fuel, describing the figure as more than N1,000 above their average price, while also assuring domestic operators that the cost of fuel is expected to fall in the coming weeks. The Major Energies Marketers Association of Nigeria (MEMAN), stated that any airline currently paying N3,300 per litre for fuel should seek alternative suppliers, stating that cheaper options are available in the market. The association attributed the current increase in fuel prices to the tensions in the Middle East, which it said have disrupted global supply chains and caused an increase in cost of petroleum products, adding that the cost of domestic transport has risen by an average of 50%.
But despite denials by marketers that there is no manipulation in the cost of aviation fuel, the AON insisted they are causing artificial scarcity and inflation. Speaking on Channels TV recently, the spokesperson of the AON, Prof. Obiora Okonkwo, said: “The AON are insisting that fuel marketers are to be blamed for what they describe as deliberate price manipulation and artificial scarcity, accusations the marketers have denied. We want to call out the marketers because we do not want a shutdown. We are truly at the last breath. If nothing is done between now and Sunday, some airlines may not survive into Monday.”
