FG Mulls More Palliatives For Airlines

•   Agencies’ Charges May Be Harmonised

The Federal Government is considering more palliatives that would get airlines out of their precarious situation, WoleshadareNews has learnt. The new measure is coming barely a week after the Federal Government secured a special sectorial allocation of foreign exchange for the carriers in the Secondary Market Intervention Sales (SMIS).

This is to further engender market confidence, ensure access to forex by the airlines and sustain the integrity of the Nigerian Inter-bank forex market.

A very top official of the Ministry of Transportation, who confided in our correspondent, said the government was very concerned about the fate of Nigerian carriers and would do, “everything possible to ensure that no airline dies.”

The source explained that the Minister of State for Aviation, Hadi Sirika, had been meeting with airlines, stressing that the operators were happy with the efforts of government, starting with the removal of import duty on aircraft and spare parts, which has left more money in their coffers.

WoleshadareNews learnt that the fresh palliative may come in the form of harmonisation of charges by the Nigerian Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA); three agencies that collect buck of revenue from airline charges for the government.

There is growing discontent among domestic operators over rising airport taxes and charges. They are querying the rationale for such exorbitant charges in Nigerian, saying they are the highest in the world.

There is considerable concern that the development might cripple the domestic segment of the aviation sector, leading to operators calling on the government to harmonise airport taxes and charges as applicable in other parts of the world.

The International Air Transport Association (IATA) is in agreement with the domestic operators, saying that airport charges in Nigeria are the highest in the world.

Among the charges Nigeria domestic operators are subjected to, are landing and parking fees, fuel surcharge, passenger service charge and ticket sales charge.

Others are ground rent, Value Added Tax (VAT), terminal charges, apron pass charge; toll gate charges, apron licence charge and vehicle permit charge.

Such charges, many of which IATA consider prohibitive, are not customer friendly, and could serve as a disincentive to airlines and other players who are willing to set up similar business in the country.

Penultimate month, domestic airline operators met in Abuja to engage officials of the Ministry of Aviation to explore ways on how to review the domestic charges.

They argued that the prevailing airport charges and taxes if left unchecked could stifle their business.

Many international and domestic airlines attribute the high cost of air tickets to the multiple taxes and charges.

Also, the government is equally looking at collaborating with banks on how to help the airlines get loans at a relatively low interest rate. This seems to be a mountain to climb as lenders are reported to peg interest rate at 15 per cent.

Banks’ interest rates are in double digits even before inflation climbed to 17 per cent per annum, making it extremely difficult for them to repay loans.

Airlines are also the worst hit by the current banks’ apathy to financing activities in the industry, as aircraft, which they hitherto present as collaterals for loans, are no longer accepted by the financial institutions.

As for bail out, the source said government was not thinking in that direction, saying the over N180 billion given to the operators few years ago did not make any impact on their operations. While some said the bail out given to the airlines some seven years ago was not judiciously utilised by the carriers, the operators maintained that the fund did not get to them directly but to the banks, with many of them not having direct access to it.

Aero Contractors, which the Assets Management Corporation of Nigeria (AMCON) had taken over 60 per cent of its equity, owes N30 billion and Air Nigeria, N35 billion, as intervention fund collected by the management of the airline, which had been declared bankrupt and stopped operations. IRS Airlines was also said to have received N9.4 billion.

Chanchangi Airlines got N9.4 billion, while Arik also benefited an undisclosed amount, suspected to be in the region of N40 billion.

Wole Shadare