Operators in the aviation industry have over the years argued that air travel is seen in different parts of the world as elitist indulgence. So when the government is thinking of meeting critical needs for its citizenry, it considers providing social amenities such as schools, health institutions, transport system, which include roads, train and possibly waterways.
Many governments, especially in third world countries don’t see air transport as essential need for the citizens. It is supposed that those who travel by air are the comfortable in the society. So government slams the air transport sub-sector with high taxes, high charges and most often does not see the priority in making aviation fuel available as it does kerosene and petrol.
The International Air Transport Association (IATA) said this has been the bane of air transport development in Africa, South America and parts of Asia. But it is obvious that air travel is a catalyst to economic development, it creates massive jobs and boosts the GDP of any nation that invests in it.
Air transport is also the wing that buoys tourism and has turned around the fortunes of such countries like Singapore, United Arab Emirates and many others. It led to the rapid advancement of Europe and North America.
During the IATA Aviation Day held in Abuja on May 23, 2016, the international organisation
urged African governments to tackle the excessive surcharges on fuel, which could make fuel purchases on the continent up to 20 percent more expensive than the global average.
“Airlines operating to Ethiopia, Gabon, Ghana and Kenya are particularly affected by above market fuel costs. These surcharges increase airlines’ cost burden when they are already operating in a challenging environment. They also hinder growth in an industry that delivers extensive socio-economic benefits,” IATA said.
Industry experts in Nigeria said the sector has failed to employ massively because government policies stymie its growth. While government has enhanced the participation of the private sector in the industry by liberalising the airline business, it has failed to create incentives for people to invest and recoup their invest by running profitable airlines.
The problem, experts said, has been exacerbated by the present government, which insists that the aviation agencies that generate revenues must pay into the coffers of government and this has led to the over taxation of the airlines, which are passed to the passengers and ultimately increase air fares and limit the number of people that travel by air. In Nigeria of about 170 million people, less than one percent travel by air.
Airlines pay huge taxes including landing fees, terminal charges, 5 percent charges to the regulatory authority, passenger service charge and Value Added Tax (VAT) and the airports charge extra and exorbitant fees for late landing of flights, which was the latest introduction.
The challenge, however, is that the government desperate to generate revenues from these aviation agencies does not allow them to use the resources so earned to provide the needed infrastructure to enhance flight operations.
Critically, the Nigerian Airspace Management Agency (NAMA) has not upgraded its Instrument Landing System (ILS) in most airports. It has not provided effective pilot-controller communication in every part of the nation’s airspace and its service to most airports in the country ends by 6:00 pm. This effectively makes many airports in Nigeria provide only daylight service and curbs operational time for the airlines.
It is worse with the Federal Airports Authority of Nigeria (FAAN). The agency has failed to provide airfield lighting at most of the airports so these airports are daylight operation airports, including those that are busy and have the potential to operate several hours after 6:00 pm, like Benin, Owerri, Calabar and Enugu airports.
Airline operators have suggested that government should review downwards most of these taxes and give these agencies subvention, ensure the supply of aviation fuel so that air fares would become cheap and enable more Nigerians to travel by air. This will create thousands of jobs, make airports enterprising rendezvous and boost non-aeronautical revenue earnings that would quadruple whatever government could have been generating from aeronautical revenues.
The Chairman of Air Peace, Chief Allen Onyema said government should scrap most of these taxes or drastically review them downwards so that airline business could become profitable and airlines in Nigeria could exist for very long time; unlike the present average of 10 years life span, which made the industry very unstable.
During the aforementioned IATA Day in Abuja, the international organisation observed, “We see that many countries in Africa are doing a great job; yet others are using aviation as a cash cow in terms of high taxes and high charges to the passengers. We still believe that the charges and taxes in Africa are one of the highest in the world on average”.
In a recent interview with THISDAY, the Director-General and CEO of IATA, Alexander de Juniac, noted that high taxes are killing airline business in Africa.
“What we try to do in IATA is to convince governments that putting the tax of one dollar, one euro per ticket is a severe hit on the profitability of the airline when an airline earns 7.54 dollar per ticket. But it is difficult to make governments understand such a simple thing, first of all. Secondly, on the contrary, if they reduce charges and taxes it brings much more prosperity, jobs, trade that over compensates the reduction in charges. But it is difficult to understand that from any government, especially African government.
He noted that many governments view air transport as elitist.
“I think we need to advocate that we are not anymore an elitist transportation,” De Juniac said.