‎AON denies owing cost recovery charges to NCAA

• ‎Wants regulator to commence direct collection of TSC from June 1, 2026

• ‎Says body shouldn’t function as revenue generating agency

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‎By Chinelo Obogo
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‎‎The Airline Operators of Nigeria (AON) has denied owing cost recovery charges to the Nigeria Civil Aviation Authority (NCAA), insisting that all services rendered by the regulator to domestic airline operators are paid for fully in advance on a cash-before-service basis.
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‎In a statement from the airline body, it
‎said that no domestic airline in Nigeria receives NCAA regulatory services without first making the full payment of invoices issued to it by the NCAA, describing suggestions domestic operators are indebted to the NCAA for regulatory services are factually inaccurate.
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‎It said that what the NCAA refers to as ‘outstanding charges’ relates solely to the five percent (5%) Ticket Sales Charge (TSC), a tax imposed by NCAA on passengers which it said is not in consonance with the dictates of international aviation.
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‎The AON then urged the Federal Government to urgently amend the Civil Aviation Act to empower the NCAA to collect whatever appropriate fees and charges are due it directly from passengers or whoever else, without routing such through the domestic airlines from June 1, 2026.
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‎It said doing this will relieve domestic airlines of the financial burden of acting as collection agents for the NCAA, since airlines currently bear banking transfer charges and other transaction costs in the process of transmitting funds to the NCAA.
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‎The airline body reiterated its position that the NCAA is a regulator, not a revenue-generating agency and that it does not fund any aspect of the airline businesses or render any direct service to passengers. The AON said every service the NCAA provides to airline operators are fully paid for in advance before such is rendered.

‎The statement read: “The AON notes that several member airlines maintain dedicated accounts, from which the NCAA draws down its monthly remittances, until the force majure caused by the Iran -Isreal/USA conflict, that had put a lot of financial pressures on airlines worldwide.

‎”Notwithstanding this arrangement, the AON had formally appealed to the Federal Government through the office of Honourable Minister of Aviation and Aerospace Development, to suspend the payment of all statutory charges temporarily, as an interim measure to assist airlines in managing their cash flows during the current period of severe financial stress caused by the increase in the cost of Jet Al.
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‎”As an interim response, President Bola Tinubu graciously granted a 30% concession, while waiting for the government decision on the other aspects of the AON intervention request. While the AON acknowledges and appreciates this gesture, we had appealed for a meeting with Mr. President to discuss further reliefs, a request that is yet to be granted,” the AON said.
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‎Speaking further on reports by that airlines owe billions in debt to the NCAA, the AON said the 5% Ticket Service Charge in question was introduced over 45 years ago under the Government of General Gowon by the then Federal Civil Aviation Authority (FCAA) and its continued relevance has not been reviewed ever since.

‎It said the FCAA was at the time an arm of the Civil Aviation Department (CAD), housed in Marina under the Ministry of Transportation. As the CAD was not a ministry-level aviation unit, it had limited budgetary resources.

‎”The Gowon regime of the 1970s had built airports in all 12 States of the federation and these airports required maintenance and operational budgets that were not provided for in the sector’s budget hence the introduction of the 5% TSC.

‎”Notably, Nigeria Airways, the only domestic airline operating at the time, did NOT pay the 5% TSC. Only foreign Airline carriers were required to pay. Importantly and worthy of note is the fact that the FCAA has since over time evolved into the NCAA, NAA, and NIMET. The NAA in turn evolved into the present-day FAAN and NAMA.

‎”Meanwhile, the aviation industry was deregulated in 1982, allowing for indigenous entrepreneurs to compete in the market, resulting in the new entrant private airlines that have remained the mainstay of the industry and the backbone of the Nigerian economic renaissance.

‎”With the creation of each of these agencies, separate taxes, fees, charges, and levies were introduced for the Nigerian Airline operators to cover their respective services. Meanwhile, the 5% TSC, which was originally a policy instrument was surreptitiously introduced into the legislation by the NCAA, despite the vehement opposition from the AON and other industry stakeholders,” AON said.

‎It further stated that domestic airlines, in addition to this 5% TSC, still pay separately ànd directly for services provided by the various industry agencies, including the NCAA itself.

‎AON said that the 5% TSC is an ad valorem tax applied to an airline’s gross earnings, not profits and that the global aviation industry operates at a profit margin of between 1.5% and 2.5% at best.
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‎”International standard and best practice provides that aviation should be a cost-recovery sector of strategic importance. In Nigeria, however, the industry is being subjected to unsustainable financial pressures, in the guise of imposed taxes, fees, charges and levies.

‎”The AON uses this occasion to once again draw the attention of the Federal Government to the unsustainable burden of these multiple taxes, fees, charges and levies arbitrarily imposed on domestic airline operators. We make payments to the Nigerian Airspace Management Agency (NAMA), the Federal Airports Authority of Nigeria (FAAN), and several other service providers and statutory bodies.

‎”The financial impact of these taxes, fees, charges and levies is adverse, burdensome and excruciating, especially at this precarious period, when the entire world has been exposed to the exogenous shocks of the Iran – Israel / USA crisis. The aviation sector is crucial to the economy as a catalyst and enabler for economic growth, the survival of the sector therefore demands urgent and deliberate policy action.

‎”The AON remains committed to constructive engagement with the government and all stakeholders to achieve a growth-oriented sector, designed to enable the accelerated growth of key sectors of the economy and the improvement and sustenance of a healthy quality of life for the citizenry,” it said.