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How airlines fleece govt, passengers via hidden surcharges
The cry by domestic airlines that they are not having good returns on their investments may not be totally true as there are indications that between 40 and 60 per cent of ticket fare are hidden as fuel surcharge, Woleshadare.net has learnt.
The carriers have permanently loaded their fuel charges so high. Even when fuel sold for $35 per barrel some few months ago for over three years before it went up to $70 just recently, fuel charges by the airlines never came down.
There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities. The non-remittances run into billions of naira that have been declared, albeit unofficially as bad debts.
There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities. The non-remittances run into billions of naira that have been declared, albeit unofficially as bad debts.
This newspaper’s investigation shows how airlines rip passengers off and short change the government aviation agencies, which services are said to be many.
A former ticketing staff of one of the carriers who spoke on condition of anonymity, said for passenger ticket charges, the basis of some of these charges is not known and is quite arbitrary.
The source disclosed that that an amount ranging from 45 per cent to 65 per cent of the airfare is hidden as fuel surcharge (also known as YQ), adding that the computation of this fuel surcharge is unknown to both passengers and government alike.
A former ticketing staff of one of the carriers who spoke on condition of anonymity, said for passenger ticket charges, the basis of some of these charges is not known and is quite arbitrary.
The source disclosed that that an amount ranging from 45 per cent to 65 per cent of the airfare is hidden as fuel surcharge (also known as YQ), adding that the computation of this fuel surcharge is unknown to both passengers and government alike.
He noted that this cost element has been omitted by the airlines in the computation of both Value Added Tax (VAT) and Ticket Sales Charge (TSC) resulting in significant loss of revenue to the Federal Government
His words: “There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities. From the tickets analysed, some airline operators deliberately charge as high as nine per cent of Base fare as Ticket Sales Charge as against the statutory five per cent (expected to be remitted to government through the Nigerian Civil Aviation Authority (NCAA).
His words: “There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities. From the tickets analysed, some airline operators deliberately charge as high as nine per cent of Base fare as Ticket Sales Charge as against the statutory five per cent (expected to be remitted to government through the Nigerian Civil Aviation Authority (NCAA).
airline
“The issue has been of concern to government for years without the will power to actually resolve the problem. The closest government came into looking at the matter was in 2014 during the tenure of Chief Osita Chidoka as Minister of Aviation when he set up a ministerial committee to review aeronautical, non-aeronautical & passenger charges in Nigeria, which came up with findings and recommendations, as part of plans for reforming and repositioning the sector.”
However, highlights of the report submitted to the minister recently shows that between 40 and 60 per cent of ticket fare are hidden as fuel surcharge, with the code YQ, adding that “the computation of this sum is unknown to both passengers and government alike.”
The report noted that “this same cost element has also been omitted by the airlines in the computation of both VAT and Ticket Sales Charge to government, resulting in significant loss of revenue to the Federal Government.
“There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities, which was unimaginable.”
The report noted that “this same cost element has also been omitted by the airlines in the computation of both VAT and Ticket Sales Charge to government, resulting in significant loss of revenue to the Federal Government.
“There is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities, which was unimaginable.”
Besides, the report signed by Ahonsi Unuigbe, chairman of the committee, said: “There is also a prevalence of poor service quality to passengers in the face of non-enforcement of the passenger bill of rights. The passenger bill of rights, as contained in the NCAA Act, clearly entitles passengers to several means of redress, in the event of any infraction. These rights are not known to most passengers nor are they being enforced by NCAA, resulting in a lot of passenger apathy.
“There is inappropriate business model of most domestic airlines. The minimum capitalisation requirement for domestic airlines is only N500 million, which at today’s exchange rate, barely covers the cost of effectively operating and maintaining one aircraft and therefore, does not ensure a fleet size that allows for economies of scale.
“There is need to sanitise the aviation industry through the introduction of minimum capital requirement and monitoring of the capital adequacy of airlines and monitoring of the health and viability of airlines.”
“There is need to sanitise the aviation industry through the introduction of minimum capital requirement and monitoring of the capital adequacy of airlines and monitoring of the health and viability of airlines.”
“There is need for the undertaking of a full independent audit of the YQ fuel surcharge as charged by airline operators and the introduction of standards as well as sanctions for non-compliance.”
Not a few believe that the imposition of over 34 charges by the different aviation agencies such as the NCAA, the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) and others, have made airlines to outwit the government and fleece passengers.
Not a few believe that the imposition of over 34 charges by the different aviation agencies such as the NCAA, the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) and others, have made airlines to outwit the government and fleece passengers.
