Nigerian airlines may be paying as much as N30 billion annually as Customs duties on imported aircraft parts as the Nigerian Customs Service (NCS) has jettisoned the waiver on payment of Customs duties granted to airlines in 2013 by the federal government.
The NCS said the waiver granted during the regime of immediate for more President Goodluck Jonathan was annual and the duration period had expired.
Aviation Industry insiders have however said with the reintroduction of the payment, airlines would pay five per cent of the cost of the aircraft part imported into the country. Unlike automobile parts, aircraft part is changed when it has used for a certain number of times or a certain period of time and not when the one in the machine had become bad.
So some aircraft parts are changed after about 10,000 landings; some are changed after they have been used for six months, for example.
Therefore, aircraft parts importation is a continuum and every aircraft could have its parts replaced 20 times in a year and for an airline that has about 20 aircraft, it would pay at least Customs duties 400 times in a year, excluding emergencies like bird strike, ground and air incidents which demands replacement of parts during repairs.
The airlines operators are concerned that because major repairs are done overseas and every airline has store for aircraft parts; when these parts are brought into the country duties are paid on them and when they are taken overseas to be fixed on aircraft during maintenance and the aircraft is brought back into the country, Customs insists that duties must also be paid.
Managing Director of Arik Air, Chris Ndulue, reacting to the development said: “Recently I was told that Customs has scrapped the waiver given to airlines on the importation of aircraft parts. They have gone back to charging five per cent duties when you import aircraft parts. That is a new trouble for Nigerian airlines. The worst part of it is that because you don’t do all your maintenance here, sometimes you find the parts, including tyres and wheels and breaks are going back and forth and they go out and come back you need to pay duties.
“So we need to understand this and how to protect this industry. I don’t see the reason why we should be paying duties on spare parts,” Ndulue said.
Another airline official also said that Customs charges five per cent of the cost of an imported aircraft parts as import duty.
“It is another money that the airlines will pay, which their counterparts everywhere in the world don’t pay. That makes a Nigerian airline less competitive than its foreign counterparts. This is because it is the same parts that other airlines in other countries order that the airlines in Nigeria order also,” the official said.
He pointed out the consequences of the reintroduction of the duties, besides the huge money that would be raised by the airlines.
“The consequence of this payment is that it makes the operating environment less safe because some airlines will not be willing to parts for parts that need to be replaced because of the cost; rather, they would manage the existing one in the aircraft and this can lead to accident.”
According to Cape Town Convention, there should not be duty charges on automobile parts which include aircraft parts because without such replacement of the parts accidents may occur.
Former Director General of the Nigerian Civil Aviation Authority (NCAA), Dr Harold Demuren, said shortly before the waiver was secured in 2013, “We are working on how to remove duties for the importation of aircraft and aircraft parts. Cape Town Convention classified aircraft parts as mobile equipment and government is working on that. The Minister of Aviation has written a lot of letters and another letter is going again that government should please remove duties on aircraft and spares. This is going to help the industry.”
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