The Airline Operators of Nigeria (AON) has commended the Minister of States for Aviation, Hadi Sirika, for the recent creation of foreign exchange window for airlines by the Central Bank of Nigeria (CBN)
Chairman of AON, Capt. Nogie Megison, told aviation correspondents at a press briefing in Lagos that, among other burning issues affecting the airlines, the minister also interfaced with the Ministry of Finance to review Customs duty tariffs for aircraft engines and spares.
He, however, said that the minister could do more to address other overwhelming issues bugging the airlines, beginning with favorable policy direction.
Megison said: “We have to state herein that we commend the efforts of the Minister of State, Aviation for his efforts in getting some of these debilitating issues addressed for the growth of the industry. It was him who fought for the airlines to be accorded the foreign exchange window by the CBN.
“He also interfaced with Ministry of Finance to address the issue of Customs Duty Waiver for commercial aircraft, aircraft engines and aircraft spares. However, there is so much he could do in his Executive capacity as the Minister, as some of these issues are equally Legislative in nature,” he added.
According to him, the government has provided for zero Customs duty on commercial aircraft, spares and engines, but it was unfortunate that in 2018 the industry is yet to fully benefit from this provision.
The AON leader claimed that this ugly development had resulted in airlines having some of their aircraft fleet grounded for days in some cases, thereby leading to cancellation of flights which often trigger chaos at the airports to the displeasure of esteemed customers.
The association called on the Federal Government to immediately put in place necessary mechanisms to ensure that the Customs duty waiver to commercial airline operators, as proposed and agreed, are fully effected.
Another worrisome issue the AON has always contended is the imposition of a percentage tax model, which creates a distortion in the industry.
“We have recommended and continue to recommend that the unit tax model preferred and practised by over 90% of countries globally and as recommended by IATA be adopted immediately,” said Nogie.
The AON noted that that all the industry agencies, including the NCAA, were established as Not-For-Profit organizations, essentially designed for Cost Recovery.
Unfortunately, over the years, successive governments have encouraged the sourcing and increase in internally generated revenues (IGR) by these Agencies thereby completely negating the primary purpose for which they have been established.
As a result, there has been serious wastage of scarce fiscal resources within some of these Agencies to the detriment of the travelling population.
“On this basis, the AON strongly recommends that the Federal Government put in place the necessary mechanisms to reverse the percentile tax model and adopt the global best practice of the Unit tax model, while taking due cognizance of inflation,” Nogie said.
The association also lamented that Nigerian domestic airline travel was the only mode of transportation that is subjected to the Value Added Tax (VAT) in the country.
This imposition, according to the chairman, creates a suppression of domestic airline travel demand; therefore resulting in airlines not being able to optimally utilize their aircraft assets, thereby creating a market distortion.
The AON’s position is that the “VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT,” said Nogie.
He said it was unfair that some airlines were paying VAT while some other privileged airlines were exempted.
According to him, it is painful that “the VAT which we pay is being used to subsidize our competitors against those that are making payment.”
The AON recalled that as a result of these poor policy issues, many indigenous airlines had closed business