Airlines to enjoy forex priority status
*Seek waiver execution
Ministry of Aviation is working with the Central Bank of Nigeria (CBN), Ministry of Budget and National Planning and Ministry of Finance to include airlines in priority list of foreign exchange allocation, Minister of State for Aviation, Hadi Sirika has said
The Minister stated this in a paper he presented at the stakeholders’ meeting he held with airline operators, aviation agencies and experts in the sector where he unfolded plans to tackle the myriads of problems bedevilling the industry.
The Minister lamented that aviation being internationally regulated sector, a lot of transactions are done in foreign currency. Such transactions he noted include aircraft acquisition, purchase of spare parts, maintenance and training which are all paid for in foreign currency.
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One of the bane of Nigerian carriers is their inability to source foreign exchange to expand their operations and maintain the airplanes while their revenues are generated in Naira. The carriers sell their tickets in Naira and have to pay for services in forex.
President, Airline Operators of Nigeria (AON), Capt. Noggie Meggison had recently told New Telegraph that the CBN had clandestinely remove airlines from priority list of firms that need foreign exchange, saying the situation portends grave danger to their business.
He disclosed that the airlines under the aegis of AON had petitioned the apex bank on the need to rescind their policy to save their businesses and by extension, the airline industry.
But the CBN swiftly reacted, describing claims by some airlines that they are unable to access foreign exchange to repatriate the proceeds of their operations as untrue.
Sirika also disclosed that currently the Federal government has approved waivers on duty on importation of aircraft and spare parts which he said has contributed immensely to the survival of airlines.
He assured that government was working towards sustaining the waiver for continued growth. This did not however sit with airline operators who alleged that government only paid lip service to waiver on duty on importation of aircraft and spare part.
They are piqued that three years after the Government approved waivers on Customs duties for aircraft and spare parts, indigenous airlines are yet to benefit from the policy.
The operators said that they could have saved over N500 billion if government had implanted the policy since 2012. Managing Director of Arik Air, Mr. Chris Ndule, lamented that airlines still pay 50 per cent Customs duty on spare parts.
The airline chief said that the situation had made operations of airlines very difficult. Investigations by woleshadare.com revealed that airlines spend billions of Naira as Customs duties on aircraft and spare parts imported into the country.
In most parts of Europe and the United States, the current rates of import duty on civil passengers is zero per cent in relation to small aircraft, that is those that have less than 50 seats and weigh less than 120,000 kilogramme.
It would be recalled that government, through the Federal Ministry of Finance, in the aftermath of Dana’s MD 83 aircraft, had sent notification letter to Nigeria Customs Service (NCS) for the commencement of the new policy while the Comptroller General of Customs had also sent a circular to his officers, but up till now, the airlines alleged that they have not benefited from the gesture.
However, at a forum recently, the managing director of a helicopter firm, who pleaded anonymity, said that on the average, the airlines spend about $4 million on customs duties for aircraft acquisition.
He emphasised that if fully implemented, such funds could be used for construction of two standard maintenance hangar facilities.
He emphasised that if fully implemented, such funds could be used for construction of two standard maintenance hangar facilities.
He warned that without the removal of this policy, Nigerian carriers would continually find it difficult to compete with their counterparts across the world.
He noted: “Payment of Customs duties for aircraft and its spares only happen in Nigeria and nowhere else does this happen. A carrier pays an average of $4 million on import duties on an aircraft. That is huge.
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