Domestic carriers and the Nigerian Civil Aviation Authority ( NCAA) are bickering over the automation of collection and remittance of the statutory five per cent ticket/cargo sales charges paid by the operators. According to them, there is more to it than meets the eyes in the project’s implementation, KELVIN OSA OKUNBOR, reports.
These are not the best of times for domestic airline operators. Apart from losses they are incurring from the temporary closure of the Abuja Airport, they are grappling with lower passenger traffic on many routes.
The regulator is planning to wield the big stick on erring operators. They risk being sanctioned for failure to comply with the deadline issued by the Nigerian Civil Aviation Authority (NCAA) to automate the collection and remittance of the statutory five percent Ticket/Cargo Sales Charge ( TSC/CSC).
The automation is a fall out of the Aviation Revenue Automation Project (ARAP) for revenue collection introduced a few years ago .
According to the NCAA, the project was introduced to aid data integrity, transparency, transaction accountability, controls and revenue assurance to the authority.
Last year, the NCAA set January 31, 2017 as deadline for airlines to comply with the new measure, but it extended it by three months at the instance of the Airline Operators of Nigeria at a meeting with the Director General,Captain Mukhtar Usman.
But, the new deadline, March 31, 2017 expired last week, as the NCAA threatened to sanction airlines that failed to comply with the regulation.
In a statement last week, spokesman of NCAA, Sam Adurogboye said with the expiration of the deadline and final warning , airlines were expected to adhere to automation and remit the collected revenue to the regulatory authority.
His words: “Failure to comply will be viewed seriously as the authority will be forced to invoke the necessary provisions of the law against defaulting airlines.”
Five per cent ticket and cargo sales charge, according to Adurogboye, is not a tax or levy on airlines but a charge paid by passengers for services rendered towards the development of aviation in Nigeria.
The charge, he said, is enshrined in the Civil Aviation Act of 2006.
The decision to collect the charges by the airlines, he reiterated, was mooted by the operators and unanimously agreed upon at the 2001 Civil Policy Review with the sole aim to enhance passengers’ facilitation.
Usman clarified : “Let me state that the TSC and CSC are collected at source from passengers by airlines on behalf of the Federal Government, to enable all aviation agencies tackle safety critical issues as they arise to engender safe, secure and efficient air transportation and allied services for the overall benefits of all stakeholders’’.
But, the AON has called for the suspension of automation of revenue remittance by airlines to the Nigerian Civil Aviation Authority (NCAA) until the parameters that constitute the five per cent Ticket and Cargo Sales Charge are clearly and properly defined.
AON Chairman,Captain Nogie Meggison said : “AON has no problem with the authority going ahead to automate the collection and remittance of the said charges, but that the NCAA needs to give clarification on what constitutes the five per cent Ticket and Cargo sales Charge.
TSC, he said, is only applicable on basic fare in compliance with industry practice and as currently applicable to international carriers operating out of Nigeria.
AON members are currently remitting the five per cent TSC charges.
He said : ” Despite our members improved payment, infrastructure and service level continue to deteriorate across all facets of the industry under the same authority.
” AON also has issues with the immediate mandatory automation without first addressing the cost of integration while sadly at the same time not asking the foreign carriers operating in Nigeria to join the same automation platform and are charged on their base fares.
“This is wrong and discriminatory and also against International Civil Aviation Organisation (ICAO) Non-Discriminatory policy. This recommendation adopted by the ICAO Council, States are encouraged to incorporate the four key charging principles of non-discrimination, cost-relatedness, transparency and consultation with users into their national legislation, regulation or policies, as well as their future air services agreements.
“It is apparent that NCAA is preying on domestic airlines, which they see as an easy target, as a cash cow and for cheap publicity, over regulating domestic operators, and pushing domestic airlines to the edge of insolvency and bankruptcy. It is this kind of policy that has reduced the lifespan of Nigerian airlines and have consumed over 25 airlines in the last 30 years since deregulation began in 1982.
“While the same NCAA is weak and has turned blind eyes in enforcement of other sectors, runway quality, airport fencing, bird strike, navaids, fuel quality control by oil marketers, poor quality delivery by service providers, this agency is inflicting unauthorised and illegal billing on domestic carriers contrary to the provisions of the 2006 Civil Aviation Act.
” AON is tired and cannot continue to be the only soft target or easy prey. We appeal to the NCAA to rather focus their energy on being an enabler and to foster growth in the Nigerian aviation industry in line with their mission statement.
‘’ This is to provide aviation safety and economic regulation in the most efficient, effective, quality and technology driven manner to the satisfaction and benefit of all stakeholders’’.
He said, while other West African countries’ airlines operate 24 hours, Nigerian carriers are subjected to daylight operations due to poor airport facilities.
Meggison said despite the poor airport facilities, charges in Nigerian airports are the highest compared to the billing system in other West African countries.
He said : “ Sadly also Nigerian airlines are the only mode of transport paying Value Added Tax ( VAT) . Marine, road and rail transport don’t pay; and even the foreign airlines operating into Nigeria are exempted from paying VAT in Nigeria.”
The AON Chairman said during a meeting with the NCAA, the authority had agreed to look into the matter by considering using a flat rate that is tied to the United States dollar as a possible way of addressing the issue.
This , he said, is related to what FAAN does with the Passenger Service Charge (PSC) , and the normal method of billing in most parts of the world.’
Meggison said :”To this end therefore, the ultimatum issued by the NCAA to operators can’t be said to have been done in good faith, because the authority was yet to respond to the issues raised on the matter in previous meetings between NCAA and AON where both parties had agreed.
“The Nigerian Civil Aviation ACT 2006 prescribes the need to carry out periodic review of the Air Ticket and Cargo Sales charge in consultation with stakeholders. However, the one sided implementation of the law whereby stakeholders are not consulted before decisions are reached does not augur well for the growth of the industry.
He said there is need for the NCAA to be transparent with the process of reviewing the collection of the five per cent charge, as the AON would prefer the International Air Transport Association (IATA) to drive the implementation of the automation and collection of the charge for the authority.
Such methodology , he said is the global practice.
Meggison also raised concerns over the third party firm commissioned by NCAA to do the collection.
He said : “For over 10 years NCAA has operated the legislation on the collection of five ticket sales charge and has not deemed it fit for a review as provided for in the laws. Sadly however, in the last review of the Nigerian Civil Aviation Regulations ( NCAR ) 2006, the issue was not addressed in spite of calls then by airlines to review the charge.
“AON wishes to make it clear that we are not against automation. However, we seek clarity on these and other issues tabled before the director general during our meeting of which he agreed to look into our concerns and consider the option of charging a flat rate but tying it to the dollar to take care of fluctuations. This was a promise the director general made during the meeting with AON.
“Unfortunately, while we awaited the agreed implementation, we were surprised that to the contrary NCAA went ahead to issue a statement giving ultimatum and threatening to sanction airlines.”
He said the action of the NCAA was in gross violation of relevant sections of the civil aviation Act of 2006.
He said: “The Act prescribes that Air Ticket and Cargo Sales charge may be reviewed by the authority in consultation with the stakeholders from time to time.
“The direct consequence of this being that there is no mechanism for a review of the five per cent Charge and there has never been a review .
“AON therefore kindly requests that the automation of the collection of the five per cent charge by airlines be suspended until a mechanism is put in place to give effect to the 2006 Civil Aviation Act.
“ Airlines are always eager to be part of the required consultations before amendments are made but unfortunately this has so far not been the case, as our members are usually left in the dark while expected to only comply with changes or amendments with unfair deadlines.
“The Director General will agree with us that in costing our ticket fares, the criteria must be certain and known so that the general travelling public whom we are all in business to serve do not undergo undue disadvantage and NCAA also is not short changed.”
