Flying on Borrowed Time, Money Amid Respite

The “No-Pay-No-Service” list underscores the brutal structural asymmetry of running an airline in Nigeria: earning in Naira while burning in Dollars. The directive has fundamentally shifted the conversation from a routine regulatory dispute to a stark exposure of the structural vulnerabilities undermining Nigerian domestic aviation, writes WOLE SHADARE

For years, the industry regulator, the Nigeria Civil Aviation Authority (NCAA), has played the patient parent, issuing ultimatums, extending deadlines, and pleading for financial transparency.

But patience has officially run out. Acting on its stringent Zero Debt Strategy, the NCAA has brandished its biggest stick yet, placing 11 domestic operators on a strict “No-Pay-No-Service” list.

The directive is absolute: no financial clearance from the Directorate of Finance and Accounts, no regulatory services. No exceptions.

By threatening to lock 11 local carriers out of critical administrative and technical services, the regulator has pulled back the curtain on a sector operating on razor-thin margins, plagued by systemic cash-flow mismatch, and highly vulnerable to macroeconomic shocks.

Relief

Relief, however, came the way of the carriers as the NCAA suspended the “No Pay, No Service” directive against airlines indebted to the regulator over unpaid statutory charges.

The decision was announced in a statement signed by the Director General of NCAA, Captain Chris Najomo, late yesterday. The move offers temporary relief to affected airlines, but the NCAA insists it is not backing down on debt recovery.

According to Najomo, the suspension does not amount to debt forgiveness, warning that all airlines involved remain under obligation to settle outstanding remittances.

The regulator noted that President Bola Tinubu had earlier approved a 30 per cent discount on debts owed to aviation agencies as part of efforts to stabilise the sector and cushion the impact of rising operating costs.

Defending the five per cent TSC and CSC,  the NCAA explained that the funds are collected by airlines on behalf of the aviation system and are critical to sustaining safety oversight, regulatory functions and other essential services across the industry.

Najomo described the suspension as a strategic balancing act designed to keep the industry afloat while ensuring airlines meet their financial obligations.

The Trust-Custody Breach: Using Passenger Funds as Working Capital

This isn’t a minor administrative dispute; the cumulative debt burden hanging over the sector is estimated to sit between ₦10 billion and ₦19 billion, alongside roughly $7.8 million in unremitted foreign currency.

What is playing out exposes a deep, structural paradox within Nigerian aviation. An underfunded regulator directly risks the country’s international aviation safety ratings.

The most glaring vulnerability exposed by this debt crisis is the industry’s reliance on unremitted statutory funds to survive.

The 5% Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) are not operational taxes levied on airline profits; they are collected directly from passengers at the point of sale.

That nearly the entire domestic airlines have failed to promptly remit these funds proves that carriers are routinely absorbing regulatory trust funds into their daily working capital.

Using passenger-funded levies to plug severe cash gaps, such as paying for skyrocketing ground handling fees or immediate fuel supplies, highlights how desperately short of liquid cash these businesses actually are.

Anatomy of a Billions-Naira Debt Trap

To understand how we arrived at this dramatic showdown, one must dissect how aviation agencies are funded. The lifeblood of the NCAA is the statutory 5% Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC).

Instead, these funds have historically been treated by some operators as informal, interest-free overdrafts to shore up their own cash flows amid turbulence. When airlines fail to remit this money, they aren’t just breaking a rule; they are legally starving the very agency tasked with ensuring the planes don’t fall out of the sky.

An internal memo dated May 22, 2026, obtained by Aviation Metric, directed all NCAA directorates to withhold services from affected airlines pending financial clearance from the Directorate of Finance and Accounts. The move immediately raised concerns across the industry over the wider implications of unresolved financial obligations within Nigeria’s aviation sector.

Director of Finance and Accounts, Mr Olufemi Odukoya, signed the memo, which was circulated across the authority’s operational departments and regional offices. The directive was also copied to the Director-General of Civil Aviation (DGCA), regional managers and other senior officials within the authority.

Airlines named in the directive include Air Peace Limited, Ibom Air Limited, Arik Air Limited, United Nigeria Airlines, Umza Air, NG Eagle, Max Air Limited, Caverton Helicopters, Overland Airways, Rano Air and ValueJet. Industry observers said the development reflects mounting financial obligations facing operators amid worsening economic pressures.

Industry sources, however, said stakeholders are expected to engage quietly to prevent disruptions to critical aviation operations and regulatory activities. Several stakeholders believe both airlines and the regulator may seek compromise measures that allow essential services to continue while outstanding financial obligations are addressed.

Aviation consultant and publisher of Arrival Magazine, Mr Adeola Fadairo, said the decision by the NCAA to consider withdrawing services from indebted airlines over the non-remittance of statutory charges is not only justified, but it is also long overdue. What makes this situation particularly disturbing is that these funds do not belong to the airlines in the first place.”

 “The 5% Ticket Sales Charge (TSC) is a statutory levy paid by passengers and collected by airlines in trust for the regulator under the laws establishing the NCAA. Once collected, such monies should be remitted promptly and transparently — not retained to finance operational shortfalls or balance struggling books”.

 He further stated that collecting these statutory charges from passengers and deliberately failing to remit the amounts to them is a grave abuse of public trust and corporate responsibility, adding that no airline has the legal or moral authority to appropriate funds meant for aviation safety oversight, consumer protection, regulatory efficiency, and sectoral sustainability.

 He added, “The argument that remitting these obligations could worsen the financial condition of airlines is untenable. Financial difficulties, no matter how severe, cannot justify the withholding of public funds. Airlines are commercial entities, not custodians of government revenue. If every operator begins diverting statutory deductions to survive operationally, the entire regulatory framework of the aviation industry would collapse.”

 “Yes, Nigerian airlines are operating under enormous pressure, particularly due to the rising cost of Jet A1, foreign exchange instability, multiple taxation, and infrastructure limitations. But these challenges are global realities affecting operators across different jurisdictions. None of these realities, however, gives any airline the licence to hold on to monies legally due to the regulator.”

 He noted that the NCAA itself relies heavily on these remittances to discharge its statutory responsibilities — including safety inspections, consumer protection enforcement, economic regulation, and industry oversight — stressing that weakening the regulator financially ultimately undermines the entire aviation ecosystem and compromises public confidence.

Severe Headwinds Facing the Sector

The timing of this strict clampdown underscores a deepening rift between regulatory enforcement and the hard realities of airline economics in the region.

Domestic operators continue to struggle against massive operational cost shocks. Aviation fuel costs remain the single largest operational burden, consuming up to 60% of revenues for some carriers.

While the Federal Government recently approved a 30% discount on debts owed by airlines to various aviation agencies to ease operational friction, bureaucratic processes have delayed its actual implementation.

The NCAA’s rigid stance serves notice to the domestic sector that financial transparency and compliance are non-negotiable, even as stakeholders warn that pushing cash-strapped airlines into regulatory blockades could risk further flight disruptions for the travelling public.

If these cash-strapped carriers are locked out of regulatory services, the resulting operational paralysis could trigger widespread flight cancellations, degrade public confidence, and severely disrupt the 2026 travel calendar.

Last line

Stakeholders are now watching closely to see if the Ministry of Aviation will step in to broker realistic, long-term repayment structured plans before the gridlock forces flights out of the sky. This policy serves as a stress test, highlighting longstanding structural, financial, and operational weaknesses in Nigerian commercial aviation.

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