Airline Operators Push NCAA to Collect Ticket Charges Directly from Passengers as Debt Hits N20bn

The Airline Operators of Nigeria (AON) has called on the Nigeria Civil Aviation Authority (NCAA) to develop a framework for collecting its 5 per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) directly from travellers, rather than through the airlines, as a way to break the recurring cycle of indebtedness that has now ballooned to over N20 billion.

The NCAA has recently lamented severe fiscal constraints, including an inability to fund staff allowances for its more than 1,500 workers and execute critical projects, blaming the situation on unremitted TSC and CSC accruals from domestic carriers. But the operators, while acknowledging the debts, argue that the root of the problem lies in the collection model, which forces airlines to deduct the charges from their own revenues and remit to the regulator.

The AON is pointing to a template already adopted by the Federal Airports Authority of Nigeria (FAAN), which resolved a similar long-running controversy by collecting its Passenger Service Charge (PSC) directly from passengers. Under the FAAN system, airlines purchase security stickers upfront and affix them to every boarding pass, a mechanism that removes the carriers from the revenue chain.

In a telephone interview, NCAA’s Director of Public Affairs and Consumer Protection, Michael Achimugu, did not rule out the possibility of a direct collection model but stressed that the current Civil Aviation Act requires airlines to collect the charges on the regulator’s behalf. “Anything is possible in a situation like this. Protocols have the right to evolve, but this is in the Civil Aviation Act. Airlines will continue to collect the charges pending when the law is changed,” Achimugu said.

He insisted that even if a direct collection system were to be adopted in the future, the airlines must first clear their existing liabilities. “The time to argue about cost recovery is not when the airlines still owe the agency. Everything is possible with the right discussion. So, with technology everything is possible but the law has to be amended before such change can take place,” he added.

Indications that a compromise may be in the works emerged on Tuesday when Minister of Aviation and Aerospace Development, Festus Keyamo; NCAA Director General, Captain Chris Najomo; and AON executives held a closed-door meeting over the matter.

However, airline operators maintain that the 5 per cent charge is fundamentally different from a fee paid by passengers. A senior AON member who spoke anonymously explained that the TSC is a deduction from an airline’s ticket revenue, not an amount added on top of the fare as a flat levy. “Five per cent is removed from the cost of the ticket. It is depleting our capacity to charge passengers the right fares. NCAA must devise a way to collect the charges directly from passengers,” the operator said.

The source noted that airlines already pay NCAA and other agencies for every service rendered, such as licence renewals and inspections—which is classified as cost recovery. “In addition to that, they still collect five per cent passenger service charge, which is revenue generation different from cost recovery. This is not in tandem with ICAO recommendation and standard practices. Agencies are not supposed to be taxing airlines in addition to our obligatory payments for the services they render to us,” he said.

The financial strain on carriers has been severely compounded by the surge in aviation fuel prices, a situation operators blame on the fallout from conflicts in the Middle East. One source disclosed that a major airline had borrowed N48 billion over a seven-week period just to sustain operations. “We are borrowing at 30 per cent interest rate and we buy fuel at N2,500 to N3,300. Airlines are no more making money. Every airline in Nigeria owes marketers,” the source said, adding that the current environment makes it nearly impossible for carriers to remit the 5 per cent charges.

On its part, the AON is proposing a flat-rate charge collected directly by the NCAA, mirroring the FAAN sticker model. “Let them have a flat rate charge and collect the money by themselves. FAAN is doing it; they can do it. We the airlines purchase the stickers from FAAN. We can also do it that way from NCAA,” the operator argued.

Industry figures have weighed in on the dispute. Amos Akpan, Managing Director of Flight and Logistic Solutions Limited, noted that regardless of who collects the charge, there are costs associated with its management and transfer, and the key question is who bears that cost. “If NCAA collects direct, they will hire services and pay for the associated charges. If airlines continue to collect on their behalf, they will continue to pay financial managers and bank charges associated with it. Both parties cannot continue to ignore this point and hope to reach a resolution,” he said.

Olu Fidel Ohunayo, Executive Secretary of the Aviation Round Table (ART), clarified that the so-called outstanding charges relate solely to the 5 per cent TSC, which he described as “a tax imposed by the NCAA on passengers for no services rendered to passengers and not in consonance with the dictates of international aviation.” He explained that many carriers had operated dedicated accounts from which the NCAA drew monthly remittances until the force majeure triggered by the Iran-Israel/US conflict sent aviation fuel costs spiralling. “This means that the debt built up after the outrageous spike in the cost of aviation fuel due to the war,” Ohunayo said.

As the standoff continues, all eyes are on the outcome of the high-level discussions and whether legislative amendments will pave the way for a new collection framework that both settles outstanding obligations and puts the airline-regulator relationship on a more sustainable footing.