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Coronavirus: Domestic airlines ground 120 aircraft, lose N360bn

Airlines slash fares as competition rise on domestic routes

The Airline Operators of Nigeria (AON) has disclosed that over 120 aircraft are parked at various airports across the country, with airlines required to pay accumulated cost on leased aircraft, staff salaries, allowances for crew, parking and maintenance fees, and recurrent training.

Operators say at present, the domestic airlines have lost an estimated  N360 billion and still counting with no end in sight.

AON is, therefore, calling on the Federal Government to assist with tax waivers, special forex windows and rates, reduction of airport taxes or surcharges, and waivers.

BusinessDay’s checks show that domestic airlines, on average, pay about 35 per cent to 40 per cent of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges.

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“These include 5 per cent Ticket Sales Charge, 5 per cent Cargo Sales Charge, 5 per cent Value Added Tax (VAT), Passenger Service Charge, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges and Parking Charges

Others are Terminal Navigation Charge, Enroute Charge, Fuel Surcharge, Airport Space Rent, Electricity Charges, and Apron Pass, Ramp Access Charges, ODC and a newly imposed Registration Fee all of which are paid to government agencies.

Many of these taxes and charges amount to double taxation such that any incentive seemingly provided by the government to airlines is taken back by the agencies.

In a statement issued by Nogie Meggison, president of  AON, he commended the CBN for acknowledging the adverse impact of the virus on the global and Nigerian economies while urging the aviation agencies to take a cue from the CBN and seek ways to help airlines cushion the effect of the pandemic.

According to the Meggison, ”It is instructive to note that about four weeks before domestic airlines decided to take the difficult decision to suspend both local and International flights to urgently support the government’s effort to curtail the virus, passenger traffic had declined drastically to about nine per cent, leaving the domestic airlines in dire financial strait while raking avoidable cost.

“The AON unequivocally aligns with global concerns and reports which puts aviation sub-sector as the worst hit, as a result of the various containment efforts and strategies world-over coupled with the recent announcement by the International Air Transport Association (IATA) that passenger airliners could lose up to $133billion in revenues this year.  Aviation service providers including Airports, fueling services providers, ground handling service providers, security services providers, catering services providers and many more would be badly hit this year 2020 according to IATA.

“With these troubling statics  likely to threaten the existence of many domestic airlines in Nigeria who are still grappling with over 32 multiple charges, the AON wishes to commend the CBN for announcing a moratorium of one year on all principal repayments of intervention loans effective March 1, 2020; reducing interest rates from nine to five per cent per annum for one year; and creating an N50 billion targeted credit facility to cushion the impact of the virus on businesses, post COVID-19.”

Meggison also suggested that another option could be approving corporate bonds through the CBN, completely waiving some charges to guarantee the survival of airlines and avoid over 100,000 direct job losses post COVID-19.

”We are aware that Russia, the US, Canada, Britain, and some other countries have come up with one measure of support or another for their airlines and Nigeria will not be at default if it looks at options of supporting the aviation industry.

”AON remains the only airline operators still paying VAT on commercial air transportation, which is not obtainable anywhere in the world. We have said this countless times that the VAT is adversely affecting the sector by subtly reducing the number of those who can afford air travel due to high fares, and in view the impact that this pandemic will have on the economy.  VAT will continue to be an increased burden on Nigerian travellers. The AON, therefore, calls for the immediate implementation of VAT removal in line with global best practices,” the group stated.