Minister: Sticking to roadmap’ll solve aviation woes

•    Sector’s input to GDP rises to 0.6%

Adhering to aviation roadmap would help to resolve many of the problems confronting Nigeria’s aviation industry, Minister of State for Aviation, Hadi Sirika, has said.
He said this in a paper made available to Woleshadarenews in Lagos.

Specifically, he said on assumption of duty in November, 2015 an appraisal of the sector was undertaken with many challenges identified.
He listed the challenges as inadequate safety, security and surveillance equipment, decaying/ageing infrastructure and obsolete equipment, large number of unemployed trained Nigerian aviators, high debt profile of domestic airline operators.

Others are ageing and over-bloated work force in the aviation agencies, difficulties in accessing foreign exchange by operators, poor and intolerable condition of airport facilities and equipment (long waiting and check-in times, time–consuming security screening and baggage pick-ups), high cost of funds and shrinking capital market, rising price and scarcity of Jet A 1 (Aviation Fuel), import duties on aircraft, engine and spares among so many other problems.

Arising from above challenges, the minister disclosed that a road map was developed, which was presented to stakeholders during the first meeting on May 16, 2016, stressing that having received a nod from stakeholders, it was subsequently approved by President Muhammadu Buhari in October, 2016.
The aviation sector roadmap, he reiterated, is aimed at creating enabling environment for the industry to thrive, which comprises concession of airports, establishment of a national carrier, development of agro-allied/cargo terminals, establishment of Maintenance, Repairs and Overhaul (MRO) Centre, establishment of an Aviation Leasing Company (ALC), development of Aerotropolis (Airport Cities), review of the Acts establishing the aviation agencies.

He pointed out that the removal of Value Added Tax (VAT) from all shared transportation including commercial flights was one of the biggest achievements for the sector, adding that the Ministry is liaising with relevant MDAs to ensure the smooth implementation of the Presidential Order.
One of the problems that had confronted Nigeria’s aviation industry for many decades were in a stroke of pronouncement became a thing of the past. The problem: VAT on air transport was removed by President Muhammadu Buhari penultimate week.

Aside heaving a sigh of relief over last week’s removal of VAT on air travel, domestic airlines in Nigeria are expected to save over N5 billion yearly.
Figures made available by the Nigerian Civil Aviation Authority (NCAA) indicate that domestic carriers raked in N93, 605, 725, 508.60 tickets in 2017. Local carriers transported no fewer than 10,135, 009 passengers in 2017.

At an average of N25,000 per ticket, five per cent VAT was in excess of N5 billion.
Described as a lifeline to sustaining their operations, which has a very low life span of between 10 and 15 years, operators told our correspondent that it is indeed a welcome development following over 20 years agitation by Airline Operators of Nigeria (AON), umbrella for all operators in the country.

VAT on commercial air transportation is a huge departure from what obtains worldwide and an increased burden on the Nigerian travellers.

Ghana, Benin Republic, Togo and Cote d’Ivoire located next door to Nigeria have all abolished VAT for air transportation.

Road, rail, marine and even foreign airlines operating in Nigeria don’t pay VAT in their home country or in Nigeria with reference to an information circular by the Federal Inland Revenue Service (FIRS), which grants them VAT exemption (Information No.: 9701; Circular Dated January 1, 1997); Part L (b) No. 8.

Managing Director of Aero Contractors, Capt. Ado Sanusi, said that government’s decision to remove VAT on transportation including air travel would lead to fare reduction or at best stability in fares, adding that on no reason should fares be increased because of the huge amount of money airlines would be saving, which he said runs into billions of naira.

Sirika hinted that Nigeria presently has Bilateral Air Services Agreements (BASAs) with 83 countries, many of which have been reviewed to create opportunities for domestic carriers.

He lamented that “they remain largely unutilised (10 per cent) due to limited capacity. The BASA with Qatar and Singapore were recently signed and ratified.”

The minister expressed joy that the sector’s contribution to Gross Domestic Product (GDP) rose from 0.4 per cent to 0.6 per cent.

Sirika, however, took out time to clear the air on insinuations on the suspended national airline, Nigeria Air.

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Wole Shadare