Aeronautic Charges, VAT Not Hindrance To Growth Of Domestic Airlines

Indigenous airlines have been told to take the prompt payment of their charges to respective aviation agencies as a top priority in order for the industry to witness the expected growth. Grp. Capt. John Ojikutu (rtd), the Chief Executive Officer (CEO) of Centurion Aviation Securities in an interview with our correspondent in Lagos, said that aeronautic charges and payment of Value Added Tax (VAT) were not the challenges hindering growth of the airlines as claimed in some quarters.

Rather, he said that most of the airline operators did not prepare sufficiently for the financial commitment of their business and responsibility before venturing into the sector. Onjikutu posited that the manner of their entries, exits and lifespan showed that many of them did not include in their business plan, the aeronautical charges and taxes as contained in the economic regulation of the Nigerian Civil Aviation Regulations (NCARs). He explained that none of the airlines in the sector airlifts passengers on credit and wonder why they could not remit to the appropriate authorities sums collected from passengers on behalf of the agencies. “Generally, they sell cash and carry tickets not on credits, but owe recurring debts to the services providers and staff salaries in multiple arrears. There were records of some of the airlines collapsing within five years of their entry into operation.  “Some others had to appeal for government intervention funds to bail them out of debts from bank loans and recurring, debts from the various aviation services providers. “Many did not plan their flight operations beyond five airports, but were operating to 10 airports or even more without including the costs into their expected earnings. Others expanded their operations to airports that are not sufficiently equipped to support flight operations beyond daylight or sunset.” He insisted that the issue of multiple taxes as claimed by the airlines were spurious as they were not taxes only, but charges, which were not imposed on the airlines alone, but also on other operators, services providers, allied businesses and the passengers. He explained that there were about 38 taxes and charges, but only 11 of these were charges on the airlines. He emphasised that for the airlines, only VAT was a tax; four were statutory charges, two were non-statutory charges, while four others were operational support or services charges. He added that two out of these were optional, while the remaining 27 were charges on other operators not the airlines.


Source: Independent