AON Says Airlines Need VAT Removal, Forex Availability, Not Just Cash Bailout

• AON Says Airlines Need VAT Removal, Forex Availability, Not Just Cash Bailout

Airline Operators of Nigeria (AON) has finally stated how the federal government can help mitigate the impact of COVID-19 on the aviation sector.

According to Obi Mnabuzuo, the Operating Officer, Dana Air, Nigerian airlines are not necessarily seeking cash bailout but support to resume operation without having to lay off their staff or cut operations.

He also stated that the airline companies want a market price reflective aviation fuel now that crude oil price has dropped substantially, saying marketers are still selling fuel to them at old prices.

“We don’t know what nature of bailout government wants to give the aviation industry, but contrary to those speaking against the bailout, we are not really looking for cash. The last bailout was done with the banks; some airlines are still paying for it. AON has made its position clear in the request it made to the government.

“We are looking at the removal of VAT, we are requesting for availability of forex. There was an effort to remove VAT but it was not gazetted; they have removed duty on aircraft spares but you still pay Customs duty when you import aircraft.

“On the discussion that government should give airlines waivers, the agencies would say that it is their source of revenue but I think these things should be reviewed,” he said.

He explained that “For example, we pay en route and terminal charges to the Nigerian Airspace Management Agency (NAMA) but we do not utilise the service of NAMA en route; the airlines take care of that one because navigational aids do not work on the airways until you are on approach. The ground based navigational aids are not working. For example, there should be Voice Omnidirectional Radio Range (VOR) in Bida area but it is not working. Pilots rely on instrument onboard their aircraft. So we expect that there should be a review of those charges. They should remove enroute charges for domestic airlines.”

Mnabuzuo also urged the Federal Airport Authority of Nigeria (FAAN) to review its policy of charging domestic airlines in US dollars whenever they fly West Coast and other international services despite the fact that they sell tickets in local currency.

“The idea that once a local airline takes off to destination like Accra, Ghana it will be charged in dollars, $50 passenger service charge and $20 security charge is not good because we generate revenue in naira; so we expect that government should look into it,” Mbanuzuo added.

Last Week, the Asset Management Corporation of Nigeria (AMCON) called on the federal government to make bailout of the aviation sector a priority to protect jobs.

This was after Minister of Aviation, Hadi Siriki, said the nation’s airlines are losing around N17 billion to the lockdown brought about by COVID-19.

He, therefore, said unfortunately many airlines won’t come out of this.

He said “Certainly in civil aviation, we’re in very difficult moments like everyone else…but we are worst hit than any other sector. Some N17bn monthly is being lost by the Airlines to COVID-19.”

“This is the situation of civil aviation. It is really a pathetic one and I can guarantee you that several airlines won’t come out of this unfortunately.”

“To open up and start business as usual, there are safety issues and concerns. Those airplanes have been kept, and when we see going to bring them back into service, we will ensure their worthiness.

“For the flight crew, there are certain standards they must conform to, like ensuring they are up to date with their licensing. Their medical health and proficiency in order to conduct a very dare flight must be ascertained.”