NIGERIA: Airline Operators Cry Over Unfair High Taxes And Expensive Jet Fuel, JET A1

Nigerian airlines are in serious dire straits, raising grave concern over their continued existence. Many of them are already finding it difficult to operate due to high Customs duty, astronomical cost of aviation fuel, otherwise known as JET A1, high interest rate, low passenger traffic, alleged multiple taxation and unfavourable government policies.

Operators said that these challenges were detrimental to the sustenance of their business. Already two carriers (names withheld) have ceased operations, with few others wobbling and providing less than satisfactory services The Managing Director of Arik Air, Chris Ndulue, said that for domestic airlines to grow, the Federal Government must have to support the operators by streamlining taxes, reviewing them downwards and even banish Value Added Tax (VAT), which is not paid by other sectors in the transport industry.

He said that there must be consistent, planned and committed policy by government to grow and encourage domestic airlines to operate profitably. Ndulue added that such help would provide incentives to safety and manpower development by the airlines. He said: “What we expect from government is to provide good environment for doing business. One of the major problems in this environment is borrowing.

The borrowing cost is very high; this can be reduced by 75 to 50 per cent. Multiple taxation is one of the major problems in the industry. “The aviation industry requires special support. It is an industry that government should be supporting, but it has not been getting this support.”

Also, the Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison, said that one of the major challenges being faced by Nigerian airlines was the high cost of aviation fuel, known as Jet A1, which, he noted, was not always available. He explained that aviation fuel used to be piped from Atlas Cove to the airport, but had been stopped many years ago.

Since then government has not deemed it necessary to rehabilitate the pipeline, which would have made it easier to obtain fuel at the airport without trucking it as it has attendant fire risks,” he added. Meggison said that these and other factors had made airline business not too profitable for investors.

Also, it was learnt that the failure of many of Nigeria’s domestic carriers, their short life span and uncertainty of the future have been attributed to wrong use of equipment, poor capitalisation, high cost of fuel and access to credit facility at high interest rates.

Till date, no Nigerian airline on scheduled commercial operation has thrived for up to 20 years, except the defunct national carrier, Nigeria Airways Limited (NAL), which was finally liquidated by the Federal Government in 2004. While the country’s air transport market is viable and highly profitable to foreign airlines, Nigerian operators have been narrating tales of woe, losses and insolvency.