Business – Page 21 – National Daily Newspaper

Leaked court documents allege Shell ignored pipeline safety warnings in Niger Delta

Leaked court documents allege Shell ignored pipeline safety warnings in Niger Delta

Fresh controversy has emerged around oil giant Shell following the disclosure of internal company documents in a United Kingdom court case, with claimants alleging that the...

NCC proposes free access to educational websites for Nigerian students, teachers

Business2 months ago

NCC proposes free access to educational websites for Nigerian students, teachers

Nigeria’s Senate on Wednesday passed a constitutional amendment bill seeking to establish state police, marking a significant step toward overhauling the country’s security architecture...

NAJA auto summit set for July 30, spotlight on Nigeria’s EV, CNG future

Business2 months ago

NAJA auto summit set for July 30, spotlight on Nigeria’s EV, CNG future

Stakeholders in Nigeria’s automotive, energy and transportation sectors are set to converge in Lagos on July 30, 2026, for the 3rd Nigeria Auto Journalists...

SEC orders immediate halt to Dangote Refinery IPO promotions, demands investor refunds

Energy2 months ago

Dangote Refinery denies claims of fuel round-tripping through Togo

The Dangote Refinery has dismissed reports alleging that Premium Motor Spirit (PMS), popularly known as petrol, is being exported from its facility to Togo and subsequently...

Naira falls to N1,373/$, hits weakest level in four weeks

Business2 months ago

Naira falls to N1,373/$, hits weakest level in four weeks

The Nigerian naira weakened further against the United States dollar on Tuesday, closing at N1,373/$ at the official foreign exchange market, its lowest level in four...

NCC chief highlights trust as key to Nigeria's digital transformation

Business2 months ago

Telecom operators to Upgrade 12,000 Network Sites in 2026, NCC says

The Nigerian Communications Commission (NCC) has disclosed that telecommunications operators have committed to upgrading 12,000 network sites across the country in 2026 as part of efforts...

Nigeria’s $5bn swap deal could backfire if naira weakens, Fitch warns

Business2 months ago

Nigeria’s $5bn swap deal could backfire if naira weakens, Fitch warns

Global credit rating agency Fitch Ratings has raised fresh concerns over Nigeria’s planned $5 billion Total Return Swap (TRS) financing arrangement with First Abu...

NNPCL slashes petrol price by N75 as competition heats up in fuel market

Business2 months ago

NNPCL slashes petrol price by N75 as competition heats up in fuel market

The Nigerian National Petroleum Company Limited (NNPCL) has reduced the pump price of Premium Motor Spirit (PMS), commonly known as petrol, by N75 per...

Nigeria’s domestic aviation sector is under fresh financial pressure following the introduction of a new 5% federal levy on air tickets, intensifying concerns over rising operating costs, fragmented taxation, and expensive aircraft leasing arrangements that airlines say are threatening industry sustainability. The new levy, introduced as part of aviation revenue reforms, is collected alongside existing statutory charges imposed by multiple agencies. Airline operators say the additional deduction further compresses already thin profit margins in an industry already weighed down by high jet fuel prices, regulatory fees, and foreign-exchange–linked obligations. Industry stakeholders warn that the cumulative effect could push up ticket prices, dampen passenger demand, and worsen liquidity challenges for domestic carriers already struggling with cash flow constraints. Rising Tensions Between Regulators and Airlines The financial strain has coincided with renewed friction between the Nigeria Civil Aviation Authority (NCAA) and the Airline Operators of Nigeria (AON), following disputes over the remittance of statutory charges and the delivery of regulatory services. Operators say the situation reflects deeper systemic liquidity stress across the sector, where airlines are increasingly unable to meet overlapping obligations imposed by aviation agencies while maintaining operational stability. A Layered and Fragmented Tax System At the centre of industry complaints is what operators describe as a “multi-layered and excessive” taxation structure involving the NCAA, the Federal Airports Authority of Nigeria (FAAN), and the Nigerian Airspace Management Agency (NAMA). Airlines such as Air Peace, Ibom Air, and United Nigeria Airlines are subject to a range of compulsory charges, including the 5% ticket levy, passenger service charges, value-added tax on tickets and aviation inputs, and other operational deductions collected at different stages of the value chain. Industry players argue that the system creates cash flow distortions because several charges are collected upfront or deducted at source, leaving airlines with reduced working capital for day-to-day operations. Beyond ticket-based deductions, carriers also face landing fees, parking charges, overflight fees, navigation levies, and ground handling costs. Combined with jet fuel, which accounts for a significant share of total operating expenses, analysts say profitability on many domestic routes has been severely constrained. Leasing Constraints and Foreign Exchange Pressure Airlines’ challenges are compounded by difficulties in aircraft acquisition and leasing, which remain essential for fleet expansion in the absence of strong local financing options. Most carriers rely on wet and dry lease arrangements from international lessors. Wet leases, which include aircraft, crew, maintenance, and insurance, allow quick capacity deployment but are costly and typically paid in foreign currency. Regulatory limits also restrict their use to short-term arrangements. Dry leases offer more operational control and long-term stability but are increasingly difficult to secure. International lessors often view Nigeria as a high-risk environment due to concerns over aircraft repossession and currency volatility, resulting in higher insurance premiums, security deposits, and financing costs. As a result, airlines are frequently forced into short-term leasing agreements, exposing them to exchange-rate fluctuations and operational disruptions that contribute to flight delays and cancellations. Fuel Costs Deepen Financial Strain Jet A1 fuel remains one of the largest cost drivers in the sector, further squeezing margins across domestic routes. With fuel expenses, taxes, and leasing obligations combined, industry analysts say many airlines are operating with extremely narrow or unstable margins. Operators warn that without coordinated policy reforms, sustained profitability and expansion in the sector will remain difficult. Calls for Structural Reform Aviation stakeholders are calling on the federal government to streamline overlapping charges, review the newly introduced 5% levy, and consider removing VAT on aviation inputs to ease cost pressures. They are also advocating for reforms to centralise fee collection processes, improve transparency in regulatory charges, and support more stable aviation fuel supply mechanisms. In addition, industry groups are pushing for the development of a local aircraft leasing framework to reduce dependence on expensive international markets. Outlook While policymakers continue to explore potential incentives, including tax relief measures and leasing reforms, airlines say they are already adjusting operations through capacity cuts, route optimisation, and tighter financial controls. For now, Nigeria’s domestic carriers remain under significant pressure, navigating what industry players describe as one of the most financially challenging periods in recent years.

Aviation2 months ago

Heading through the storm: Multiple taxes, complex leasing drag on Nigerian carriers

Nigeria’s domestic aviation sector is under fresh financial pressure following the introduction of a new 5% federal levy on air tickets, intensifying concerns over rising operating...

Fitch, IMF flag risks over Nigeria’s proposed $5bn derivative swap deal

Business2 months ago

Fitch, IMF flag risks over Nigeria’s proposed $5bn derivative swap deal

Global ratings agency Fitch Ratings has raised concerns over Nigeria’s proposed $5 billion Total Return Swap (TRS) arrangement with First Abu Dhabi Bank, warning that the...