The Chairman and Chief Executive Officer of Air Peace Limited, Dr Allen Onyema, has called on President Bola Ahmed Tinubu to intervene in the challenges confronting Nigeria’s aviation industry, particularly the financial burden of the five per cent Ticket Sales Charge (TSC).
Onyema said Nigeria’s reported designation by the International Air Transport Association (IATA) as one of the most difficult places to establish and operate an airline business could change if the factors behind the classification were addressed.
He spoke in Lagos on Wednesday while delivering the keynote address at the 30th annual conference of the League of Airport and Aviation Correspondents (LAAC), with the theme, ‘Towards a Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth.’
The Air Peace boss said indigenous airlines needed an opportunity to present their challenges directly to President Tinubu, expressing confidence that the administration would consider measures to address the issues affecting the sector.
He said presidential intervention could resolve the financial difficulties associated with the five per cent TSC.
According to Onyema, Nigeria could reduce the high rate of airline failures through an equitable system of taxes and charges that protects airlines, aviation agencies and passengers.
He argued that the current arrangement, under which airlines pay five per cent of each ticket’s cost to the Nigerian Civil Aviation Authority (NCAA), places a significant financial burden on operators.
Onyema proposed introducing a fixed flat charge on air tickets, saying the measure would make payments more predictable and reduce financial pressure on airlines.
He said this was one of the reasons airline operators were seeking President Tinubu’s intervention, recalling the President’s decision to waive the four per cent Free on Board (FOB) levy, a statutory charge introduced by the Nigeria Customs Service for airlines.
Onyema, who is also Vice-President of the Airline Operators of Nigeria (AON), said the government’s revenue objectives should be balanced with the need to sustain airlines and promote growth in the aviation sector.
Dr Onyema, who is also the Vice President of Airline Operators of Nigeria (AON), said that when the matter came to President Tinubu, he exempted the airlines from paying the levy within 24 hours.
He said, ‘One thing I must say is that I’m certain any day President Bola Ahmed Tinubu sees us, if they allow us to see him, because I know he will not mind meeting with us, that will be the day a new revolution in the airline industry in this country will occur because Mr President abhors anything capable of adversely affecting indigenous businesses that provide jobs for the people.
‘I remember when we complained to the Comptroller General of Customs, Mr Adewale Adeniyi, of the debilitating effects of the newly introduced 4% FOB customs duty on airlines. He, Wale Adeniyi, took it up with the presidency the same day. I was there in the Presidential Villa with the Customs boss, a fantastic man. This President acted swiftly and waived it for airlines within hours of being made to understand the would-be effects of such a charge on the viability of indigenous Nigerian airlines.’
The customs boss thinks about the overall wellbeing of the country, not just revenue. He asked me, ‘Is it going to hurt airlines?’ I said, ‘We are already bleeding. This 4% will hurt us.’
He said, ‘Okay, let’s go see the President.’ This man helped to save Nigerian airlines. Within 24 hours, the 4% was removed. That is the power of listening. President Tinubu is a listening President.’
‘The problem is that the President has not heard from us on why his country was so described by IATA, who equally compared Nigeria to Afghanistan.’
When he does see us, aviation will flourish in this country. It will benefit the agencies, the government, and the flying public.’
Dr Onyema also recalled that he promised to create 1000 jobs for Nigerians after the President removed airlines from paying the 4% FOB levy. 78000 Nigerians applied for the job and from that number 1000 young Nigerians were employed as he promised. The interview was held at the University of Lagos Auditorium.
The Air Peace Chairman reiterated that Nigerian airlines will not grow if they continue to operate under numerous taxes and charges which is what is currently their situation.
He said that if the Ticket Sales Charge is made a specific amount of money attached to the ticket, it will help the airlines and it will even benefit NCAA, the other aviation agencies, the flying public and more in the long run.
He also reiterated the reports, which indicate that no fewer than 62 commercial airlines have collapsed or gone default in Nigeria since independence in 1960. With over 22 shutting down in a recent 24-year window due to high tax burden, which are too many.
‘At several aviation fora, IATA has identified Nigeria as one of the most expensive countries in the world in which to operate an airline, citing high operational costs that continue to challenge the viability and growth of local carriers.
The Association has reiterated that the high cost environment has made it difficult for Nigerian airlines to remain competitive and profitable, limiting the sector’s ability to reach its full potential. They wondered how Nigerian airlines survive and even compared Nigeria to Afghanistan, which is not good for our country’s image,’ Onyema added.