…Vows to stop VAT remittances
…Accuses govt. of exempting Arik, Aero from NAV charges
Domestic carriers under the aegis of the Airline Operators of Nigeria (AON) on Thursday faulted the modalities being adopted by government in setting up the proposed national carrier.
The indigenous airlines’ body said using tax payers’ money to set up the national carrier scheduled to commence operations on December 24, 2018 is not only counterproductive, but inimical to the overall interest of the present corp of private entrepreneurs who have invested their hard earned money, time and effort to float their airlines.
Rising from a meeting of airline chief executives in Lagos on Wednesday, they said the proposed national carrier will only result in a huge distortion of the current market and further create an unlevel playing field to the detriment of the industry.
At a media briefing in Lagos, AON Chairman, Captain Nogie Meggison said its members (domestic airlines) have resolved to stop Value Added Tax ( VAT) remittances collected from passengers to the Nigerian Civil Aviation Authority ( NCAA).
He said the VAT collection is unfair and debilitating to Nigerian passengers and the industry.
Meggison said the AON’s decision to stop remittance is predicated on the fact in that domestic air travel is the only mode of transportation subjected to VAT in Nigeria.
He said VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international airlines are not subjected to it.
Besides creating distortion in the air travel market, Meggison said the imposition of VAT is resulting in airlines not being able to optimize their aircraft.
He said domestic carriers will shut operations if government refuses their decision to stop VAT remittances.
The AON accused government of giving cover to two carriers: Aero and Arik under receivership by the Asset Management Corporation of Nigeria (AMCON).
He said the two carriers are exempted from paying prescribed navigational and airport charges.
The AON said the continuous running of Arik and Aero with tax payers money is creating distortion in the sector as the two carriers engage in price war to the detriment of other private sector managed airlines.
With such cover, he wondered how other carriers will compete with Arik and Aero, which are currently charging low fares.
The AON challenged Minister of State, Aviation, Hadi Sirika to be transparent in his bid to deliver the national carrier by being consistent with the promise that it will be private sector led.
The AON queried:” If Sirika promised that it will be a private sector led national carrier, why are heads of government agencies members of the committee to fast track the setting up of the airline.
“What is the business of the civil aviation authority in the setting up of a national carrier, which is it supposed to scrutinize?
“What then is the responsibility of the transaction advisers, if Sirika has gone ahead to set up a committee to deliver the national carrier. Why did he not invite private airlines to indicate interest?
“There are a lot of questions bordering on clarity and transparency that Sirika has to answer on the national carrier.
“Moreover, the model of national carrier is no longer fashionable worldwide as countries now designate flag carriers.”
On multiple entry points for foreign carriers, the AON called on government to restrict them to two points even as it urged foreign carriers to explore interline options with domestic carriers .
The AON said unless government addresses issues bordering on customs duty waiver for commercial aircraft ; unhindered availability of aviation fuel from reliable sources at competitive prices; and multiple charges by aviation agencies the growth of domestic airlines will remain a mirage.
It said:” In view of the above , the AON is calling on government to review its policies on these matters and address our concerns as enunciated in the position paper presented to the Presidential Task Force on Aviation by AON.”