Local airlines suffocate under burden of multiple taxation, debt

By Odunewu Segun

Huge debt burden which in recent times have toppled some key players in Nigeria’s aviation sector may portend great danger to the sector if adequate measures are not put in place to curb the trend, National Daily investigation has shown.

In the last one year, Aero, FirstNation, Arik and Air-Shuttle Services Limited, OAS, have been hit by financial crisis that has crippled their operations. Three of the affected airlines have been taking over by the Asset Management Corporation of Nigeria (AMCON).

While Aero Contractors was taken over by AMCON in February 2016 over a crippling N20bn debt profile, both Arik and Air-Shuttle suffered similarly fate a year after.

The weight of accumulated debt burdens, totaling over $3.6 billion among other issues, is currently causing concerns among major operators, with fears that other indigenous airlines may not survive.

The main reason being the heavy charges by the government agencies, including NCAA, NAMA and FAAN.

Bearing his mind on the rising trend to National Daily, a former general manager of the defunct Nigeria Airways, Chris Aligbe, said government is gradually taxing the operators out of business.  “Otherwise, things will be worse in the next few years as there is nothing showing that the airlines that are operating are breaking even.”

Also commenting, a Flight Captain with the Dana Airline, Sam Umanam, described the situation facing the industry as one in which the operators are sacrificing so much to ensure that Nigeria remains in the comity of nations still having indigenous airlines.

Meanwhile, in other to prevent total collapse in the sector. Vice Chairman of Association of Airline Operators of Nigeria, Chief Adeleke Ayeni, said the issue of multiple taxation must be tackled headlong.

“There is evidence of more than double taxation on us, in addition to the taxation on ticket, we pay for inspection services by NCAA, we pay certain percentage of our profit as government tax, and this is aside from the security charges from FAAN and clearing of flight by NAMA.”

According to him, foreign airlines, which are known for better turn-over advantage over their local counterparts, are exempted from paying most of the charges for reasons best known by the authorities.

When contacted for reactions, Director General of the Nigerian Civil Aviation Authority, NCAA, Muhktar Usman referred National Daily to a statement issued by the NCAA on Tuesday, Friday 14.

According to the statement, the NCAA said it has set up a committee to advise government on how best to encourage the operators to remain afloat in business. Ironically, nothing was said about the key issue of multiple taxation, and the fact that foreign airlines were exempted from paying some of these taxes.