AM EDITORIAL: Sourcing Resources For Government’s Investment In Nigeria’s Aviation Industry
Aviation is the gateway to the development of Nigeria’s economy. The critical nature of the sector makes it expedient for government to prioritize investment in the sector and create a conducive environment for private sector participation and investment.
Nigeria has its share of the current state of the global economy which is impacting significantly on the aviation industry. So, in the midst of desperate need for airports infrastructure upgrade, modernization of navigational facilities, high MRO costs, access to jet fuel and modern aircraft for acquisition, there is challenge of access to forex and double digit interest rate and many taxes that airline operators say is discouraging to airline investors.
Nigeria’s airline operators have called for a review of taxes they pay to enable them thrive. According to the Chairman of United Nigeria Airlines (UNA), Prof. Obiora Okonkwo, the airlines are overburdened by multiple taxation and the forex regime 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, adding that “for every ticket that we sell, we have about 20 to 22 deductions. Some are even repetitions.”
The truth is that government is by mandate, expected to source resources in whichever way it can, to reinvest in the sector and improve it. The modern way this is done is for government to create the enabling environment for private sector investments and operations so as to generate revenues enough to first, recover costs and then re-invest into the sector.
The current administration led by President Bola Tinubu under the supervision of Mr. Festus Keyamo (SAN) is expanding revenue drive with the intention to hopefully, reinvest part of the revenue in the growth and development of the aviation sector. In doing this however, there are some international best practices that should be noted.
IATA strongly opposes any form of tax or fee where the resulting revenue is not reinvested in the aviation industry and is merely meant to increase general government revenues.
ICAO Document 9082 permits the imposition of charges only for services provided and functions performed for civil aviation operations.
African Union in its policy document on air transport development says “Member States should ensure that revenues generated by the civil aviation sector are re-invested in this sector in accordance with ICAO’s policies on charges (Doc 9082).”
Government in Nigeria is currently challenged with a high demand for fixing several aspects of the industry and resources are required to do this. The first step towards solution is an internal review of revenue sourcing and utilization in line with international standards. There already exists the Ticket Sales Charge (TSC), overflight charges, landing and parking fees, cargo tarrifs, charges and some other revenue sources which are consistently yielding revenues for government and its agencies. There has to be a deliberate reinvestment plan to fix the infrastructure challenges and the many other constraints to the industry’s progress, alongside expansion of revenue nets.
Approach to government’s plans to concession some airports in the country should be transparent, strategic and well thought out so as to achieve the objective of sourcing of resources for the industry’s development.
There have to be deliberate measures to ensure the survival and growth of private airlines. Such measures would include easing access to single digit capital, review of charges and taxes that impact negatively on airline investment and removal of all factors that drive ticket prices to destructive heights in order to encourage more people to travel by air.
The aviation sector is one sector that guarantees government an income from every ticket sold. In other words, 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.
Government’s investment of all needful measures to grow Nigeria’s aviation sector is not negotiable if the sector is to attain its rightful place in the global aviation market. AM
