The Chairman of Air Peace, Allen Onyema, has called for a review of taxes, charges and revenue-remittance arrangements in Nigeria’s aviation industry, warning that excessive financial burdens on airlines could undermine the sustainability and growth of the sector.
Onyema made the call while speaking at the 30th Annual Conference of the League of Airport and Aviation Correspondents (LAAC) in Lagos, held under the theme, “Towards a Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth.”
He said government aviation agencies needed adequate funding to provide critical infrastructure and safety equipment, but argued that the method of collecting revenue from airlines should be redesigned to prevent airlines from being saddled with unsustainable costs.
According to him, the remittance of more than 25 per cent generated through the airlines was putting pressure on both airlines and government agencies, stressing that a reasonable portion of such revenues should remain with the agencies to enable them to develop aviation infrastructure.
“The remittance of over 25 per cent or 50% is hurting those agencies too,” Onyema said, noting that the Airline Operators of Nigeria (AON) believed that government agencies should retain a good percentage of the revenues generated through airlines.
He warned that inadequate funding could lead to infrastructure and safety equipment deterioration, with airlines eventually bearing the consequences.
“If FAAN doesn’t have money to buy equipment to chase birds, you don’t blame them. They need money. And you shouldn’t blame the airlines,” he said.
Onyema highlighted the financial consequences of bird strikes, revealing that one airline recorded 56 bird strikes last year, amounting to an average of more than one incident every week.
He said a single bird strike could have significant operational and financial consequences, particularly when an aircraft engine or other major component was damaged.
“We had one in Abuja last week on the brand new E2. The inlet cowling was damaged. And the OEM came to us with an invoice of $1,852,000, almost $2 million,” he said.
He questioned the economic impact of taking an aircraft out of service for such an incident, adding that the airline incurred more than N3 billion in damages in 45 minutes, according to his estimate.
The Air Peace chairman used the incident to illustrate why government agencies responsible for airport safety and infrastructure must have sufficient resources to perform their duties.
Onyema also rejected the perception that airlines are making excessive profits simply because passengers are seen queuing at airport terminals.
He pointed to the sharp increase in operating costs, particularly aviation fuel, as one of the major pressures confronting airlines.
“People assume that we are making money because of the passengers they see in the terminal queuing to board a plane,” he said.
“They are not even thinking about the fueling, which has quadrupled.”
He argued that the industry needed a revenue framework that would allow airlines to remain viable while ensuring that government agencies received adequate funding.
Onyema proposed replacing the current 5 per cent charge with a predictable flat-rate levy that could be directly communicated to passengers.
He suggested that a charge of N5,000 or N7,000 per passenger could be introduced as an aviation development fund, allowing passengers and airlines to know exactly what is payable.
“We could even contribute more if you make it a flat rate. The airlines can contribute more,” he said. “Call it aviation development fund. It’s N5,000 or N7,000. Every passenger knows that.”
According to him, the flat-rate system would make revenue collection easier and more transparent because airlines would know their obligations based on passenger numbers rather than waiting for government agencies to calculate what a percentage represents.
“If you take off with 100 people, you know you are owing NCAA and other government agencies N5,000 times the 100 people,” he explained.
He said the present percentage-based system could create disputes over what constitutes the chargeable amount, particularly when fuel costs are included in calculations.
Onyema criticised the application of percentage charges to what he described as airlines’ direct operating costs.
He argued that charging 5 per cent on fuel-related costs effectively increases the burden on airlines because fuel is one of their largest expenses.
“When we talk, we become villains,” he said, stressing that airlines were not opposed to paying legitimate charges or supporting government agencies.
“We are not saying we shouldn’t pay. We are not saying passengers should not pay. Let’s do it in such a way that will be very helpful.”
