• Thursday, May 23, 2024
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BusinessDay

High tariff on aircraft parts stifles airlines’ operations

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FBN Holdings plc, one of Nigeria’s biggest banks by market value, yesterday at the Nigerian Stock Exchange (NSE) released its full year ended December 31, 2012 results.

Profit before tax (PBT) increased by 158.5 percent year-on-year (YoY) to N92.7 billion, against N35.8 billion in 2011, benefitting from revenue growth, lower impairment charges and income from discontinued operations. Profit after tax (PAT) increased by 306 percent year-on-year

the sector the needed relief as envisaged by the Presidency.

The operators are also of the opinion that the policy, if implemented to the letter, would bring about a situation where “there may not be need to give any bail-out , either in the form or aircraft or money which doesn’t work all the time”, adding that “it is enough to save the sector”.

They said the implementation would also help remove part of the financial burden on the airlines, as they are daily saddled with other operational challenges such as cost of aviation fuel.

Mohammed Tukur, assistant general secretary of the Airline Operators of Nigeria (AON) who spoke to BusinessDay on the issue, said this was not the first time such a policy had been initiated, and that President Olusegun Obasanjo did the same. Tukur however lamented that it was not also fully implemented since only one airline benefited from it.

“Obasanjo gave partial waiver on parts importation but President Jonathan has come up with total waiver on all importation, in order to assist airlines. If government implements it, no airline needs any bail-out,” he said, adding that previous bail-outs for many airlines did not work.

“We think the zero tariff is a good policy, it is enough to save the sector, and government should concentrate on airport infrastructure and not bail-out.”

The AON secretary-general explained that operators currently pay as high as 10 percent duty on the cost of an aircraft or parts imported.

“For instance, if you buy an aircraft for $ 400million or $600million, you will pay 10 percent of the amount in cash to customs. If you also want to import a part of that aircraft, you will be made to pay the same 10

percent on the same aircraft you have already paid duty on, which is big money in dollars and that is what we are saying should be free,” he said.

A single bird strike incident, according to experts, will require an airline to cough up about $500, 000 as repair cost, in addition to the duty on the imported part.

Bird strikes are common incidents at airports and can cause air returns. Such incidents are apart from natural faults that a part of an airplane can develop and will require outright change.

Olumide Ohunayo, a travel analyst, observed that ‘it is expected that such zero tariff policy documentation may be hidden somewhere between the ministries if finance, aviation and the Presidency.”

“If the delay will help scrutinise beneficiaries, then I am in full support, the policy should be for scheduled Nigerian registered aircraft only, private jets, whether Nigerian registered or not should not be part of it. We can’t rob the poor to pay the rich,” he noted.