• Tuesday, March 05, 2024
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BusinessDay

‘Halting collection of BASA funds will bring setback to Aviation sector’

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Although there is imbalance in the frequencies flown by foreign airlines in excess of the frequencies stated in the Bilateral Air Services Agreement (BASA) Nigeria signed with many countries, analyst are of the opinion that the collection of royalties on such should not be stopped for now.

They are saying that it could retard the growth of the sector as the funds from the royalties still constitute part of what the sector relies on to put things right.

They decried tat presently, out of the 78 Nigeria signed BASAs, 21 are operational and the foreign airlines operate on all the 21 while Nigeria can only reciprocate five.

One of the analysts, John Ojikutu, chief executive officer of Centurion Safety and Security Ltd, says  that rather than discontinue the collection as insinuated  by the Ministry sometimes ago, Government should aggressively put in place, policy that will strengthen domestic airlines and then retrieve domestic routes from the foreign airlines that now fly to five international airports, adding this will give more market to domestic operators.

“BASAs are reciprocity and are expected to restrict the beneficiaries of states airlines to a single entry point. Conversely, the administration of BASAs in Nigeria are skewed by the ministry of aviation officials more to the advantages of the foreign airlines than for the domestic airline operators such that some foreign airlines operate to all the Nigerian 5 international airports. Consequently, the policy has taken the market on the routes to these airports away from the domestic airlines. In effect, the policy has shifted the balance of trade more in favor of the foreign airlines and their states.

“The official argument in defending this one sided policy should not always be that the Nigeria domestic airlines do not have the capacity to compete with foreign carriers. Rather the reasoning for this policy should be more of national interest by protecting and preserving the domestic routes linking our international airports for the benefit of the domestic airlines.

“A minister of aviation once planned a policy to discontinue by October 2014, the collection of royalties from foreign airlines on Commercial Agreements.  These are legitimate earnings due to government on the imbalance of the frequencies flown by foreign airlines in excess of the frequencies stated in the BASAs which has been on going before the demise of Nigeria Airways. Today, out of the 78 Nigeria signed BASAs, 21 are operational and the foreign airlines operate on all the 21 while Nigeria can only reciprocate 5. Moreover, while the foreign airlines operate  219 flights with 48,433 seats weekly to and fro all the Nigeria 5 international airports, the only Nigeria airline operating international routes can only operate 17 flights with just 3889 seat capacity weekly to and fro only 2 of the international  airports.

“If my knowledge of mathematics is right, the royalties on the imbalance on 21 BASAs and the Commercial Agreements, at about 50 Dollars per seat for the extra of about 45,000 seats, should fetch the government about 117 million Dollars or 27 billion Naira annually. Whatever informed a minister to take such a reverse decision to discontinue the royalties on this imbalance in 2014 can only bring a setback for an economic sector that has the potential to contribute up to 20% to the GDP but was contributing less than 1% because of the various unilateral exploitations policies”, he said.

He lamented that politicians and lobbyists had in the past, arm-twisted government into implementing some policies such as that of lopsidedness of BASA, in order to favour them.

He said rather than put national interest first, as Ministry officials or as airline operators, they prefer to skew the system to the detriment of Nigeria.

“In concert too, political appointees work with the ministry technocrats who often do not have sufficient knowledge on the working or nature of international airlines operations and the methods of negotiating Commercial Aviation Businesses Agreements. Without reference or input from major public and other private aviation operators they develop administrative policies, not national policies, which are exploitative, irrational and unilateral. Such are the nature of the policies for the administration of Bilateral Air Service Agreements (BASAs), Commercial Airline Agreements and the Aviation Intervention Funds.

“The policy of Aviation Intervention Funds is one in which political appointees and the technocrats in the ministry in ally induced government institutions through the Presidency to provide ‘loose’ funds for the private airline operators at interest rates as low as 6 percent annually; some favoured operators got theirs at 2 percent interest rate.

This was done at a time when the average interest rate on bank loans was about 20 percent or more”, he added.

Sade Williams