Nigeria: NCAA Clarifies On 5% Remittances By Airlines

By Chinedu Eze

The Director General of the Nigerian Civil Aviation Authority (NCAA), Captain Muhtar Usman has explained that the five percent ticket and cargo sales charges (TSC), must be paid by domestic airlines from their ticket sales after value added tax (VAT) was deducted.

The regulatory authority and the airlines have been at loggerheads over the charges following the NCAA’s insistence that airlines must automate their payment system to ensure transparency in the payment of the charges.

The airlines are insisting that the charges must be taken from their base fare and not from their overall ticket cost, noting that international airlines are charged by the International Air Transport Association (IATA) through the Billing and Settlement Plan (BSP).

But the Director General of NCAA, while shedding more light on the issue in an exclusive interview with THISDAY, said that after VAT deductions, the five percentage charge should be taken from the cost of the ticket.

He explained that the charge is not tax, but payment stipulated by the Civil Aviation Act to sustain the operations of aviation agencies, which NCAA, the Nigerian Airspace Management Agency (NAMA), the Nigeria Meteorological Agency NIMET), the Accident Investigation Bureau (AIB) and the Nigerian College of Aviation Technology (NCAT) benefit from.

Usman also dismissed the threat of the airlines to shut down operation over disagreement on the charges, insisting the charge is not arbitrary payment at the whim of the airlines, but a payment stipulated by law, which the airlines ought to abide by.

NCAA had earlier explained that in order to ensure transparency and to stop the piling up of the debts owed the agencies by the airlines; the payment system should be automated so as to deduct the five percent charge from ticket sales.

The airlines also hinged their protest on the fact that they operate in a harsh environment with obsolete airport facilities, prompting many of them to operate for limited period.

But the Director General urged the airlines to dovetail their operations to the period each airport is open for activities.

“Lack of facilities or inadequate facilities at airports does not have anything to do with five percent charge to NCAA by the airlines. Every airport has opening and closing time and it is subject to equipment and manpower. The airlines should plan their flight schedule to suit the operational period of each airport. This is straight forward because everybody knows the operational hours of every airport.

“The five percent charge is clear as stated in the 2006 Civil Aviation Regulation. It stated the percentage of the ticket sales, not what the airline decides to pay. It is what is actually charged, minus tax. So the five percent is charged on whatever is the cost of the ticket, minus tax. This is because airlines pay value added tax (VAT), which they are not supposed to pay because other modes of transport don’t pay VAT. So when you remove VAT from the ticket, every other thing is chargeable. The airlines ought to know that the TSC is a charge; it is not a tax and it is meant to support the operations of the aviation agencies,” Usman explained.

The Director General said the NCAA and the airlines would continue to talk until they reach amicable resolution over the matter.

“We keep talking. Nobody is threatening anybody. It is far from it. We don’t contemplate that. We work together. Without regulation flight operations will be difficult and there will be no regulation if there are no airlines to operate. I don’t know why they are resorting to threat to shut down operation. We have been discussing and we will continue to discuss to seek the way forward. It is not about grounding anybody. The first priority is safety; it is only on that we can ground an airline. We can look at economic activities and whatever action we take must be within the law,” he said.

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