Home Airlines AON on war path with NCAA over 5% TSC and CSC

AON on war path with NCAA over 5% TSC and CSC



Rising from an emergency meeting of Airline Chief Executives, the Airline Operators of Nigeria (AON) hereby state in very strong terms that AON does not owe the Nigerian Civil Aviation Authority (NCAA) N15bn as claimed by the Authority in a press statement issued to the media few days ago. We are still at loss as to why the NCAA make such a phantom claim publicly.

AON chairman, capt. Nogie Meggison

The recently published breakdown in the media of what airlines owe of each passenger is completely wrong and false. Airlines don’t pay monthly fixed rate. The rate is a percentage of the fare paid. Secondly, how can an airline like Arik Air with 27 airplanes have a fixed monthly remittance rate of N61,477,779.69 and Air Peace with an average of 5 airplanes to pay N109,862,633.84 monthly? At what rate were these figures calculated to get a fixed amount?

Even from the phantom breakdown mentioned 80% of the bills are from airlines that are either out of operation or in receivership with the government today. Moreover, a couple of the airlines that make up the phantom numbers are not Nigerian registered airlines such as Cronos and Africa World Airlines (AWA). It is obvious that the phantom numbers cannot ad up. We the airlines are working and struggling to stay afloat in a harsh terrain and made to bear the sin of others. NCAA should come out with a true picture of things.

AON therefore challenges the NCAA to come open with the breakdown of how it arrived at the phantom bill of N15bn and publish the details of the airlines and what they owe. Perhaps doing so will erase the negative impression being fed the public as it will reveal that the money they claim airlines owe are owed by airlines that have now either been taken over by government (AMCON) or is a historic debt owed majorly by airlines that have gone out of business over the years due to the harsh environment, unfriendly polices and the continued burden of multiple charges or falsified account that can’t stand the test of an external audit or a law court trial.

Airlines that currently exist do not owe a fraction of what is being claimed by NCAA if put to test by a world renowned and international audit firm. Moreover, businesses all over the world, including Nigeria as a country, do owe. Owing is not unprecedented anywhere in the world. What matters is that whatever is owed is being serviced. Most of the current and active 29 AOC operating airlines are servicing their debts as agreed between themselves and the relevant agencies after the usual reconciliations.

AON hereby further offers to pay for an independent Auditing firm at its own expense; such as KPMG, PricewaterhouseCoopers, or Deloitte and Touché, to audit NCAA as an organisation, and the N15bn NCAA claims airlines owe. We therefore encourage the NCAA to take advantage of this offer and open its books for this Audit to take place so the general public which we believe have been misinformed will get the true picture of the real situation. The exaggeration by NCAA is tarnishing to the good image of the airlines and as such, AON is unhappy with this unfortunate, damaging and misleading pronouncement by the NCAA.

With regard to the issue of automation, AON would like to once again state with all intents and purposes that we demand clarity of the process; who is behind the private third party being engaged by NCAA to do the automation, and why does NCAA need a private third party company to collect its money?” These cloudy issues need to be cleared first by the NCAA before talking about automation.

History has shown that this kind of shady scheme was attempted in the past between an Aviation Agency and a third party collection firm called Maevis Ltd that resulted in N25billion remittance getting missing and unresolved case in the law court. The Presidency had to wade into the matter and hand over the case to the EFCC. There is another N5billion court judgment awarded against the Agency for unlawful cancellation of the contract to the favour of Maevis Ltd.

When the dust settles Airlines and poor passengers would be forced indirectly to pay for such missing monies and court judgments by levies or below standard services due to diverted funds. AON would not like to find itself in a similar situation with NCAA and the third party company being engaged to collect funds on its behalf, when they can collect it themselves or through IATA; the norm worldwide.

May we state again that AON is not asking for the cancelation or suspension of the 5% of the passengers but asking for suspension of the automation till we have clarity of the cloudiness on what the 5% should be applied to. The NCAA should come clear and also inform the public that existing Airlines are currently paying the 5% TSC and not dodging or seeking for ways to avoid paying as wrongly speculated by certain uninformed individuals and hired public organizations.

In a press statement issued recently, the NCAA relied on Part 18.12.4 of the Nigeria Civil Aviation Regulations (Nig.CARs 2015) to state that “the 5% air ticket sales charge shall be based on the total cost of travel paid by passengers to the airline. This shall be the cost of ticket inclusive of fuel surcharge or any other charge added to the total cost of travel by the airline exclusive of government value added tax or any other tax that may be imposed by government from time to time.”

This is however contrary to the provisions of Part V.12.1. of the Civil Aviation ACT 2006 (which actually supersedes the Nig.CARs of 2015) that states that “There shall continue to be a 5% air ticket contract, charter and cargo sales charge to be collected by the airlines and paid over to the Authority.” There was no mention anywhere about what constitutes the 5% or that it includes fuel surcharge or any other charge whatsoever. It is important to point out that over the years; regulations are deliberately or ignorantly made ambiguous for other reasons than progress. The standard fair base (NUC) is what IATA and all other aviation agencies use across the world. Why should it be different in our ACT?

During the introduction of 5% TSC (which was based on the NUC) in 2001, many of the charges domestic carriers pay today were not in existence. The 5% TSC (NUC) was introduced and agreed to make the Authority not dependent on funds from government and autonomous, many other charges not exiting before have been introduced now and domestic airlines have been paying the 5% TSC as well as the other charges.

It is on record that domestic airlines now pay over 37 additional charges that come under the guise of statutory levies and taxes. These include; (i) 5% Ticket Sales Charge, (ii) 5% Cargo Sales Charge, (iii) 5% Value Added Tax (VAT), (iv) Passenger Service Charge, (v) Charter Sales Charge, (vi) Aircraft Inspection Fees, (vii) Simulator Inspection Fees, (viii) Landing Charges, (ix) Parking Charges, (x) Terminal Navigational Charge.

Others are (xi) Enroute Charge, (xii) Fuel Surcharge, (xiii) Airport Space Rent, (xiv) Electricity (xv) Charges, (xvi) Apron Pass, (xvii) ODC, (xviii) Registration Fee, (xix) Service Recovery Charge, (xx) Processing Fee, (xxi) Avio Bridge, (xxii) Aircraft Registration, (xxiii) Service Recovery Charge, (xxiv) Processing Fee. Yet other charges include; (xxv) Toll Gate Fee, (xxvi) VIP Lounge, (xxvii) Trolley Service, (xxviii) Clearance Fee, (xxix) Check-In Counter Charge, (xxx) Courier/Tarmac/Pre-Release, (xxxi) Import Charge (Dom), (xxxii) Export Charge (Dom), (xxxiii) Import Royalty, (xxxiv) Export Royalty, (xxxv) Ports Charge, (xxxvi) Exports Charge, (xxxvii) Transhipment, and (xxxviii) Concession Fee.

AON would like to state unequivocally that the airlines strongly objected in several documentary evidences to the inclusion of the above stated section of the Nig.CARs 2015 during the review process. However, NCAA cleverly went and manipulated the document to their benefit behind our back to get approval. By such an act, NCAA clearly went foul of the provisions of Part V.12.2 of the Civil Aviation ACT 2006, which clearly states that; “The Air Ticket and Cargo Sales charge may be reviewed by the Authority in consultation with the stakeholders from time to time.” What is the point of consultation if our views are always cleverly jettisoned or not even sought for in some cases before amendments are published and forced on domestic airlines only for compliance and leaving the foreign airlines out?

AON would like to state that as of 2006 ACT, the NCAA was charging 5% of the Base fare (NUC). Only now, in 2016 May 1st, and against the objections raised in writing by the airlines and without any form of consultation, NCAA amended the regulation to suit themselves at the expense of domestic airlines only that are the core investors in the aviation sector and went ahead to print the document. And this is in spite of the fact that the regulations are still subject to the 2006 ACT, as the ACT is superior to the regulation.

The Senate has equally set up a Panel to investigate these multiple charges being inflicted on airlines without consultation that is constantly threatening and has pushed Nigerian airlines to the brink of bankruptcy/insolvency and put 25 airlines out of business in 30 years. We will appreciate it therefore if the Senate first comes out with its findings before NCAA considers starting the automation.

The NCAA is a part of this ongoing Senate investigation process. The NCAA ought to allow these processes to be fully concluded and agreed to between both parties before any automation system. And even then, it should be done in accordance with standard and recommended practices; IATA BSP and not a private 3rd party company that will end up in yet another crisis as history has shown. As the Maevis story, and sadly again the airlines and the passengers being made to pay for cloudy deals indirectly at the end of the day.

We therefore urge NCAA to suspend the automation till there is clarity on its components, those behind the private third party being used and why the need to use such private third party in the interest of transparency and fairness and not collapsing the domestic airlines again and again.

AON would also like to state that those unrecognized bodies with uninformed notions and sponsored side talkers who go about calling AON names and referring to airlines with a libellous and defamatory word as “criminals,” would be hearing from our Lawyers very shortly.

AON is a responsible organization made up of big hearted and responsible investors that believe in Nigeria and put Nigeria First!!



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