….Calls For Urgent Cost Reforms In Sector
The Centre for the Promotion of Private Enterprise (CPPE) has commended President Bola Tinubu for approving a 30% discount on outstanding debts owed by Nigerian airlines, describing the fiscal measure as a timely relief to operators now grappling with escalating and unsustainable operating costs.
The organized private sector advocacy group in a Brief Note issued on Sunday by its Director/Chief Executive Officer, Dr. Muda Yusuf, also acknowledged the proactive support of the Minister of Aviation and Aerospace Development, Festus Keyamo, whose consistent engagements with industry stakeholders have been impactful and commendable.
However, the Centre noted that while the debt discount offered short-term respite, it did not address the deeper structural cost challenges confronting the aviation sector, particularly the burden of multiple taxes, fees and levies imposed on the airlines by key agencies, including the Nigerian Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN), and the Nigerian Airspace Management Agency (NAMA).
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Citing industry data to justify its stance, the OPS advocacy group noted that the estimates suggested that these charges collectively accounted for as much as 35% of airline revenues, a level that is clearly incompatible with the thin margins typical of the aviation business.
According to the CPPE, Nigeria’s aviation sector is too strategic to be weighed down by such cost pressures. It is central to economic connectivity, trade facilitation, investment flows, business mobility and national integration.
It maintained that the sector had also become even more critical because road travel has become increasingly unsafe in many parts of the country, compelling many Nigerians to opt for air travel as a safer alternative.
The Centre rued that despite criticality of the sector to the nation’s economic growth, it continued to suffer from a persistently high airline mortality rate, largely reflecting the difficult and hostile operating environment.
As a way of removing the fiscal burden of the airlines, the CPPE urged the Federal Government “to undertake a comprehensive rationalisation of aviation charges.
“The current regime—spanning ticket sales charges, cargo sales charges, passenger service charges, landing and parking fees, aircraft inspection charges, administrative and facility fees, boarding bridge charges, fuel-related charges, and import duties on aircraft and spare parts—is overly burdensome, fragmented and detrimental to the sustainability of domestic airline operations.
“A streamlined and moderated cost structure is imperative. Reducing both the multiplicity and magnitude of these charges will significantly enhance the viability, competitiveness and resilience of domestic airlines. This is not only an economic imperative but also a safety consideration, as excessive financial pressure on operators could have unintended consequences for operational standards.
“Government support for the aviation sector must therefore go beyond debt relief. What is needed is a comprehensive reform of the aviation cost environment to ensure that domestic airlines are not overburdened by charges that undermine investment, weaken service quality, raise ticket prices and threaten the long-term sustainability of the sector”, the OPS advocacy group added.
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Citing industry data to justify its stance, the OPS advocacy group noted that the estimates suggested that these charges collectively accounted for as much as 35% of airline revenues, a level that is clearly incompatible with the thin margins typical of the aviation business.
According to the CPPE, Nigeria’s aviation sector is too strategic to be weighed down by such cost pressures. It is central to economic connectivity, trade facilitation, investment flows, business mobility and national integration.
It maintained that the sector had also become even more critical because road travel has become increasingly unsafe in many parts of the country, compelling many Nigerians to opt for air travel as a safer alternative.
The Centre rued that despite criticality of the sector to the nation’s economic growth, it continued to suffer from a persistently high airline mortality rate, largely reflecting the difficult and hostile operating environment.
As a way of removing the fiscal burden of the airlines, the CPPE urged the Federal Government “to undertake a comprehensive rationalisation of aviation charges.
“The current regime—spanning ticket sales charges, cargo sales charges, passenger service charges, landing and parking fees, aircraft inspection charges, administrative and facility fees, boarding bridge charges, fuel-related charges, and import duties on aircraft and spare parts—is overly burdensome, fragmented and detrimental to the sustainability of domestic airline operations.
“A streamlined and moderated cost structure is imperative. Reducing both the multiplicity and magnitude of these charges will significantly enhance the viability, competitiveness and resilience of domestic airlines. This is not only an economic imperative but also a safety consideration, as excessive financial pressure on operators could have unintended consequences for operational standards.
“Government support for the aviation sector must therefore go beyond debt relief. What is needed is a comprehensive reform of the aviation cost environment to ensure that domestic airlines are not overburdened by charges that undermine investment, weaken service quality, raise ticket prices and threaten the long-term sustainability of the sector”, the OPS advocacy group added.
