To encourage unrestricted cooperation among nations, the International Civil Aviation Organisation (ICAO) has urged them to stop collecting air agreement royalties. To this end, Nigeria will stop collecting royalties on the 78 Bilateral and Air Services Agreements (BASA) it signed with other countries from October 27 KELVIN OSA-OKUNBOR examines the implication of this policy for the economy.
From Otober 27, Nigeria will stop collecting royalties on bilateral air services and commercial agreements it signed with other countries – in deference to the International Civil Aviation Organisation (ICAO) regulation, which is to encourage unrestricted agreements among nations.
Nigeria signed about 78 bilateral air services agreements (BASA). It signed a dual designation agreement with Britain and also signed an open skies agreement with the United States and other countries.
There are different categories of air agreements– dual designation, open skies and multi-lateral air agreements. Dual designation prescribes that there should be reciprocity and equality in agreements.
According to civil aviation regulations, Nigeria collects royalties from countries which airlines fly into Nigeria without designation of indigenous carriers into such countries in line with the reciprocity clause contained in the deal.
Should the government go ahead with the policy given the attendant loss of huge revenue that could have been used to fix critical infrastructure.
A storm is gathering as many experts have faulted government’s action in abolishing royalties by foreign carriers .
To drive home their agitation, they met in Lagos last week to discuss the issue, calling for a review of air services agreements.
The President, Sabre Travel Network, Gbenga Olowo, said the way the government has handled BASA was detrimental to the development of the sector.
He said a bogus commercial air agreements would not only destroy the sector, but give foreign carriers an edge.
Multiple entry points granted to foreign carriers would not assist domestic carriers which are supposed to fly passengers to their destinations within the country.
He said many foreign carriers enjoyed the multiple entry points in Nigeria, because indigenous carriers did not have the capacity to reciprocate the frequency of flights into their countries.
This, Olowo said, skewed the Bilateral and Air Services Agreements (BASA) in favour of foreign carriers.
Captain Dele Ore, who leads Roundtable, a thinktank group, said it was wrong for the government to abolish royalties.
Such a move, he said, would further underdevelop the industry and affect the market negatively.
He canvassed the cancellation of the open skies agreement with the US, claiming that, for over 13 years, Nigeria has not benefited from it.
He said this should form part of the new assignment of the Aviation Minister, Mr Osita Chidoka.
Ore said it is unprofitable for the government to grant multiple entry points to foreign carriers, when their countries do not reciprocate, stressing that of the 78 BASA, only 12 were reciprocated.
He said:“If the government goes ahead to abolish the payment of royalties, the sector would be affected in many ways. What we need to do is to ensure a review of bilateral air services agreements to pave the way for a single entry point into Nigeria by forign carriers. That is the only way to make some airports viable for domestic carriers.
“Why should our bilateral services agreements not take care of the inadequacy in our air transport system. This is further affected by the lack of reciprocity, capacity and inability to compete by our domestic airlines.”
The Executive Chairman, Airline Operators of Nigeria ( AON), Captain Nogie Meggison, attributed the problem to the absence of a sound policy to address bilateral air services and commercial air agreements .
He said the new directive by the government was another step to undermine the survival of domestic airlines.
Meggison said the non-payment of royalties would cost the government significant revenue, noting that BASA funds and royalties had assisted to fund major projects.
He said experts were not carried along before the government cancelled the agreements.
Meggison said the government, through the Ministry of Aviation, only informed the umbrella body of domestic carriers after the cancellation.
He said the Ministry of Aviation violated the regulation of notice of rule making, which requires that stakeholders be given a 90-day notice to make their input on any matter before it becomes law.
The AON boss said though the stoppage of payment of royalties is tandem with the Open Skies Policy, Nigeria was not ripe for it.
The move is another attempt to further erode the market, he stated.
Meggison said: ” If something drastic is not done to correct these anomalies, the domestic carriers will be out of business in five years.”
He said with such waiver or stoppage of payment of royalties, how would the government raise substantial funds to liquidate the money it borrowed to fix airport infrastructure.
With such a huge indebtedness, how will the government pay the loans used to fix the airports, when funds accruing from royalties could be utilised to offset such loans? he asked.
“While some African and other foreign countries are slow in embracing the policy, Nigeria had rushed to approve of the decision without considering the economic implications on the industry.
Aviation consultant and Chief Executive Officer, Belujane Konsult Limited, Chris Aligbe, said Nigeria was being exploited by foreign carriers due to its unfavourable BASA policies and the failure of domestic airlines to run successful operation.
Aligbe said: ‘’In the event where one party cannot reciprocate, it collects royalties from its ‘performing’ partner and when the other party indicates interest to reciprocate, it is expected to get equal treatment from its partner.’’
The former Nigeria Airways Public Relations manager added: ‘’That is why countries signing BASA deals assemble a crack team of aviation experts with vast experience in route designation/evaluation, market analysis, aviation politics/law, at the negotiating table.”
The Chief Executive Officer, PDT Consulting, Mr Taiwo Adenekan, said countries should try to protect their domestic carriers from bigger foreign airlines who capitalise on various air treaties to prey on them.
He expressed disappointment at the government’s generosity in granting both extra frequencies and entry points to foreign airlines at the detriment of domestic carriers.
Adenekan, who is an aviation Consultant, said: ‘’Multiple entries gives more money to the foreign airlines at the detriment of the domestic airlines.
‘’However, with multiple entries becoming the order of the day, domestic operators have lost that juicy market to the European carriers that become stronger while Nigeria registered airlines become weaker.’’
Analysts have argued that the country is worse off if she does not protect her market.
