Multiple taxation, forex pushing air tickets up –Okonkwo
For Nigerians to enjoy lower air travel tickets, the federal government must step in to save the aviation sector by moderating the over 20 taxes paid on every ticket purchased by travellers as well as reign in the astronomical rise in the foreign exchange regime, says Professor Obiora Okonkwo, chairman of United Nigeria Airlines.
Speaking in an Arise TV Programme, PrimeTime, Okonkwo said airlines operating in Nigeria are overburdened by multiple taxation.
He also disclosed that the forex regime, which stands at about N1,605.00 to one dollar, is impacting negatively on local airlines as operators are forced to buy spares and fix their aircraft in dollars even without increases in the cost of such spares abroad.
According to Prof. Okonkwo, government must act fast to salvage the industry as the forex regime threatens to push up ticket prices further.He called for a review of taxes on each air ticket as some of them are repetitions.
“As long as the government does not understand the importance of aviation and make the appropriate investments in the sector, investments like creating the enabling environment for the aviation sector to survive, which means access to single digit capital, reduction in all the charges and taxes that impact negatively on air travel business, we will still see increases in ticket prices.
“We just came back from South Africa on an IATA (International Air Travel Association) conference and it is on record that Nigeria still has the highest cost of aviation services. Every airline here pays higher than what is even paid by their peers in the western world, and we the local operators are victims of these,” he said.
Noting that the taxes are just too many, the United Nigeria Airline boss said “for every ticket that we sell, we have about 20 to 22 deductions. Some are even repetitions. We have been crying out and no one is even asking to know what the issues are and how to resolve them. We are worried about it and if nothing is done, and quickly too, the factors militating against the sector are not turning out right for the country.”
He expressed concern that the federal government is deriving a lot of revenue from the aviation sector without re-investing to provide the necessary facilities and support to boost the sector adding that “these taxes, fortunately, form part of the revenue for government.”
Okonkwo said, “It is on record today that Nigeria Civil Aviation Authority (NCAA), which is an agency under the aviation ministry, is the fourth largest contributor of revenue to government. The question is where is that money coming from? It is coming from profit that operators would have retained and reinvested in growing their businesses. So, they are sucking us dry. It is not healthy for the industry and not healthy for our services. Still, the government is not investing adequately in the sector because any investment in the aviation sector is an investment in the future and progress of a country, given theimportance of this sector.”
This, he said, is in spite of the International Civil Aviation Organisation (ICAO) regulation which required that money made by an aviation agency should be reinvested in the sector. He added that with ICAO rules, regulators and agencies only have to charge enough to cover their expenditure and not to make huge profits.
Urging government to show more interest in supporting the growth of the aviation sector, Prof. Okonkwo said the government was in a position to recoup its investment in the sector.
He said: “Aviation is a very critical sector. Investment here is a win-win for government. It is one sector that guarantees government an income from every ticket sold. If government invests in the sector, it will get the money back and one way or the other, government would be facilitating other businesses across the ecosystem of the economy.”
The United Nigeria Airlines chairman also lauded airline operators in Nigeria for their resilience in the face of multiple challenges saying that the operators are patriotically primed to weather the storm and help propel Nigeria’s economic development.
“We have been weathering the storm,” he said, adding that “we have been resilient. If we do not have the ability and the resilience, we would have been grounded. There have been enough shocks in the industry for us to have collapsed, but we have remained resilient because of our patriotism and our resolve to push forward with the development of our country. For us, it is for patriotism.”
Okonkwo also lauded the leadership of the NCAA for ensuring high safety standards in the industry. He said Nigeria has one of the strongest aviation regulatory agencies and best safety records in the world adding “we have one of the strongest regulatory agencies in the world, that is, NCAA under the leadership of Capt. Chris Najomo. We are more regulated than most countries in the western world. Regulation is about safety and for instance, in Africa as a whole, you have 31 IATA Operational Safety Audit (IOSA) registered airlines. Six of those are in Nigeria including United Nigeria Airlines. IOSA certification is about your safety quality. NCAA will not compromise on safety.”
