The Chief Executive Officer of Top Brass Aviation Limited, Capt. Roland Iyayi, has warned that the continued imposition of multiple taxes, fees and charges on airlines is undermining the growth and sustainability of Nigeria’s aviation industry.
Iyayi, who spoke during a panel discussion at the 30th Annual Conference of the League of Airport and Aviation Correspondents (LAAC) in Lagos, said airlines operating in Nigeria were confronted with as many as 54 different lines of taxes, fees and charges, describing the situation as detrimental to the development of the sector.
The conference was themed “Towards a Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth.”
According to Iyayi, the aviation industry was fundamentally based on the principle of cost recovery, but the current revenue structure had gone beyond that principle, with multiple government agencies imposing separate charges on operators.
He argued that the five per cent Ticket Sales Charge (TSC) had become unnecessary because aviation agencies already impose separate charges for the services they provide.
“ICAO says aviation is premised on cost recovery. What we are saying essentially is, as an agency of aviation, you are required to provide services to stakeholders and charge commensurately for the cost recovery,” he said.
“What we have in aviation today is not cost recovery.”
5% ticket charge questioned
Iyayi provided a historical perspective on the five per cent ticket sales charge, recalling that Nigeria Airways, the country’s sole domestic carrier at the time, did not pay the charge on the domestic market.
He explained that following the evolution of aviation institutions from the former Nigeria Airports Authority (NAA), agencies including the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agency (NAMA) and the Nigerian Civil Aviation Authority (NCAA) subsequently introduced their own charges for specific services.
According to him, this development meant that the various services for which the five per cent charge was initially justified were already being paid for through separate fees.
“The five per cent ticket sales charge today is superfluous because all the essence in terms of what’s required has been taken care of by the various agencies coming out to introduce separate charges for services rendered,” he said.
Fuel costs surge 270% in Nigeria
Iyayi also highlighted the impact of aviation fuel costs on airline operations, saying fuel accounts for approximately 40 per cent of an airline’s direct operating costs.
He contrasted the increase in fuel prices in Nigeria with developments in other African markets, saying that while fuel prices rose by about 60 per cent in South Africa and 80 per cent in Kenya, the increase in Nigeria reached approximately 270 per cent during the period under review.
“When airlines in Nigeria sell tickets, considering that 40 per cent of their expense is fuel and that has been tripled, you are saying in essence that airlines are already operating at a 20 per cent loss even before taking care of all the other major issues, maintenance, schedule, and the rest of it,” he said.
He warned that imposing additional taxes and charges on airlines in such an environment would further weaken their financial position.
“The continued application of all these taxes, fees, and charges are detrimental to the growth of Nigerian aviation,” Iyayi said.
Government revenue target raises concern
The aviation expert also questioned the practice of setting increased revenue generation as a performance metric for government aviation agencies.
He said such an approach could encourage agencies to impose or increase charges on airlines and other aviation stakeholders regardless of the industry’s capacity to absorb the additional costs.
“When you come up with policies that are inimical to the growth of the industry as a regulator, it becomes a challenge,” he said.
He also raised concerns over the Treasury Single Account (TSA) system and the amount of revenue generated by aviation agencies that is ultimately remitted to government.
According to Iyayi, the government takes a significant proportion of the money paid by aviation stakeholders to the agencies, a situation he said was inconsistent with the principle of cost recovery.
31 airports, 91 airstrips remain underutilised
Iyayi further drew attention to Nigeria’s extensive aviation infrastructure, noting that the country has 31 airports and 91 airstrips, many of which he said were not contributing significantly to the economy.
“These are major infrastructure assets this country has that are not adding any value in terms of GDP,” he said.
He noted that many of the airstrips were located around tourist destinations but remained underutilised because they lacked the facilities and commercial conditions necessary for airlines to operate profitably.
According to him, airlines cannot be expected to serve airports where passenger demand is insufficient to support the aircraft types available to operators.
He therefore called for policies that would stimulate demand, infrastructure development and connectivity rather than increase the financial burden on airlines.
Five-aircraft minimum could discourage new entrants
Iyayi also criticised a new regulatory requirement that airlines entering the Nigerian market must have a minimum of five aircraft.
He said the justification that airlines needed additional aircraft on standby to deal with cancellations or Aircraft on Ground (AOG) situations was unrealistic.
“The rationale for that is that the five aircraft, just in case you are having cancellations, you have an aircraft on standby. Which airline in the world would put an aircraft on standby, waiting for whenever he has a sort of an Aircraft on Ground? Nobody does that,” he said.
He argued that the requirement could raise the barrier to entry and discourage new operators from entering the Nigerian market.
“The point is you raise the barrier to entry,” he said.
Iyayi said allowing more operators into the market could increase competition, encourage innovation and provide passengers with more choices.
“Instead of allowing other people to come into the market, make it more competitive, and allow for products to be innovative, we have not done anything in that regard. We have created more stumbling blocks to stymie growth,” he said.
Calls for policy rethink
The Top Brass Aviation chief urged aviation regulators and policymakers to conduct thorough assessments of the economic consequences of proposed taxes, fees, charges and regulations before implementing them.
He said the NCAA had a dual responsibility of ensuring effective safety and security oversight while also contributing to the development of the aviation industry.
Iyayi maintained that regulations designed without adequate consideration of operators’ financial realities could ultimately undermine the very industry regulators were expected to develop.
“All these taxes, fees, and charges, and all the policies that are put in place that are not really thoroughly looked at before being introduced, are inimical to the growth of this industry,” he said.
He called for a shift from revenue maximisation towards a more sustainable model that would allow government agencies to remain adequately funded while ensuring that airlines could survive, invest and expand.
His submission reinforced the central issue of the LAAC conference: finding a sustainable balance between government revenue generation and the financial capacity of airlines to drive aviation growth in Nigeria.
