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Stories by Louis Ibah
A chaotic air now hovers over Nigeria’s civil aviation sky as local airline owners and the Nigerian Civil Aviation Authority (NCAA) battle over the control of the five per cent Ticket Sales and Cargo Charge (TSC) paid by each passenger on any flight originating out of any of the country’s airport. Trouble really started recently when the NCAA, the intended beneficiary of the funds, accused local airline owners of failure to show accountability on the way it was remitting the TSC to the regulatory agency.
Specifically, the NCAA said while foreign airlines were remitting the TSC appropriately, local airlines had misappropriated about N15billion of the TSC funds it had collected on its behalf. The way out, according to the NCAA was an automation of the process of collecting and remitting the five per cent TSC. This method, the NCAA said will ensure seamless deductions of what is due to the NCAA ones passengers make payments to airlines. Local airline owners, under the aegis of the Airline Operators of Nigeria (AON) would however kick against the automation policy, faulting the hiring of a third party to do the automation collection, and also arguing that its terms of execution was ambiguous and that if allowed could kill existing airlines.
“With all intents and purposes we demand clarity of the process; who is behind the private third party being engaged by NCAA to do the automation, and why does NCAA need a private third party company to collect its money?” These cloudy issues need to be cleared first by the NCAA before talking about automation. We want the automation suspended,” said the AON President, Capt. Noggie Meggison.
“History has shown that this kind of shady scheme was attempted in the past between an Aviation Agency and a third party collection firm called Maevis Limited that resulted in N25billion remittance getting missing and unresolved case in the law court.
The Presidency had to wade into the matter and hand over the case to the EFCC. There is another N5billion court judgment awarded against the Agency for unlawful cancellation of the contract to the favour of Maevis Limited,” Meggsion added in a statement signed on behalf of CEOs of local airlines over the weekend.
The NCAA would not however take any of such threats lightly. It would go ahead with the policy, possibly by early May 2017 and defaulting airlines would be sanctioned. According to a statement by the NCAA spokesman, Mr. Sam Adurogboye, “The NCAA wishes to state unequivocally that there is no going back on its earlier directive on automation of remittance of the five per cent ticket and cargo sales charges.”
“Airlines indebtedness to the NCAA has hit N15billion and therefore, any airline that fails to comply will be viewed seriously by NCAA,” the NCAA statement added.
Why the TSC?
The five per cent ticket and cargo sales charges (TSC) are revenue accruable to the NCAA. It is pertinent to point out that NCAA is an autonomous regulatory agency therefore it continues to remain solvent by cost recovery in line with ICAO Standard and Recommended Practices (SARPs).
The NCAA in order not to keep running to the government for revenue to carry out its regulatory functions which usually entails hiring and prompt payment of the most experienced or competent aircraft engineers and pilots to examine and certify any aircraft as fit to fly, had to explore other alternative source of funding. Relying on government funds had its own challenges; the funds may not come at all, or its release may be delayed, a trend that could lead to compromises on safety regulations given how vulnerable an unpaid regulatory official could be to financial inducement by a desperate airline ready to breach the law.
A stakeholders meeting was therefore convened to fashion out a law to grant the NCAA this financial autonomy. And this was how the idea of the five per cent passenger ticket and cargo sales charges came about.
This is contained in Part V Section 12(1) of the Nigerian Civil Aviation Act 2006. But this section merely mandates the airlines to collect the charges paid by the passengers on behalf of NCAA and remit same appropriately and in real time which have not been so.
Components of the billing of the charges, Part 18.12.4. of the Nigeria Civil Aviation Regulations (Nig.CARs 2015) states: “the five per cent air ticket sales charge shall be based on the total cost of travel paid by passengers to the airline.
This shall be the cost of ticket inclusive of fuel surcharge or any other charge added to the total cost of travel by the airline exclusive of government value added tax or any other tax that may be imposed by government from time to time.”
Why airlines fight TSC?
Airline owners in a statement made available to Daily Sun explained that they, “the AON is not asking for the cancelation or suspension of the five per cent of the passengers but asking for suspension of the automation till we have clarity of the cloudiness on what the five per cent should be applied to.”
“It is important to point out that over the years; regulations are deliberately or ignorantly made ambiguous for other reasons than progress. The standard fair base (NUC) is what IATA and all other aviation agencies use across the world. Why should it be different with the NCAA?
“During the introduction of five per cent TSC (which was based on the NUC) in 2001, many of the charges domestic carriers pay today were not in existence. The five per cent TSC (NUC) was introduced and agreed to make the Authority not dependent on funds from government and autonomous, many other charges not exiting before have been introduced now and domestic airlines have been paying the five per cent TSC as well as the other charges.
“When the dust settles Airlines and poor passengers would be forced indirectly to pay for such missing monies and court judgments by levies or below standard services due to diverted funds. AON would not like to find itself in a similar situation with NCAA and the third party company being engaged to collect funds on its behalf, when they can collect it themselves or through the International Air Transport Association (IATA); the norm worldwide,” the AON added.
Airline taxes
Data sourced by Daily Sun indicated that domestic airlines now pay over 37 additional charges that come under the guise of statutory levies and taxes in Nigeria. These include; (i) 5 per cent Ticket Sales Charge, (ii) five per cent Cargo Sales Charge, (iii) five per cent Value Added Tax (VAT), (iv) Passenger Service Charge, (v) Charter Sales Charge, (vi) Aircraft Inspection Fees, (vii) Simulator Inspection Fees, (viii) Landing Charges, (ix) Parking Charges, (x) Terminal Navigational Charge.
Others are (xi) Enroute Charge, (xii) Fuel Surcharge, (xiii) Airport Space Rent, (xiv) Electricity (xv) Charges, (xvi) Apron Pass, (xvii) ODC, (xviii) Registration Fee, (xix) Service Recovery Charge, (xx) Processing Fee, (xxi) Avio Bridge, (xxii) Aircraft Registration, (xxiii) Service Recovery Charge, (xxiv) Processing Fee.
Yet other charges include; (xxv) Toll Gate Fee, (xxvi) VIP Lounge, (xxvii) Trolley Service, (xxviii) Clearance Fee, (xxix) Check-In Counter Charge, (xxx) Courier/Tarmac/Pre-Release, (xxxi) Import Charge (Dom), (xxxii) Export Charge (Dom), (xxxiii) Import Royalty, (xxxiv) Export Royalty, (xxxv) Ports Charge, (xxxvi) Exports Charge, (xxxvii) Transhipment, and (xxxviii) Concession Fee.
The Nigerian Senate has set up a Panel to investigate these multiple charges being inflicted on airlines without consultation that is constantly threatening and that has pushed Nigerian airlines to the brink of bankruptcy/insolvency and already put 25 airlines out of business in 30 years.
