- Operators refuse to register planes locally, evade taxes – Insiders
- How they render Nigerian pilots, engineers jobless
- Spend about N7.8bn annually on maintenance of expatriate pilots
- Experts kick, seek tougher regulations
Shady practices by some private jet operators are threatening Nigeria’s aviation earnings as they deprive the Federal Government treasury of much-needed funds, investigations by The Point have revealed.
Some private jet operators are alleged to be engaging in sundry shenanigans while the affluent owners relish their jet-set lifestyles.
Those in this category are top clergies, business moguls, banks and chief executive officers of oil firms.
According to aviation experts, this is as a result of the owners’ failure to register their jets locally and not possessing proper documentation to pay taxes to the Nigeria Customs Service, Nigerian Civil Aviation Authority and Nigerian Airspace Management Agency.
Going by the International Civil Aviation Organisation’s policy, Nigeria-registered pilots and engineers cannot fly or maintain foreign-registered aircraft.
The Comptroller General of Customs, Adewale Adeniyi, also lamented recently that data obtained from the NCAA revealed that though many private jets were operating in the country, only a few had paid customs duties.
According to the customs boss, the international aviation regulations show that private jets flying in the country are obliged to pay duty.
“If they are here for a brief period in the Nigerian airspace and return, they are not obliged to pay any duty; that is, if they are here on a temporary importation visit. But once they are here and are used within Nigeria, they are liable to pay duty,” Adeniyi said.
Operators spend about N7.8bn annually on maintenance of expatriate pilots
According to sources, private jet owners in Nigeria spend at least $52.3m (N7.845bn) annually on maintenance and expatriate pilots because pilots that are registered in Nigeria cannot operate the jets.
There are about 80 private jets in the country, but our correspondent gathered that about 80 percent of these private jets carry foreign registration, with most of them registered in South Africa, United States and some European countries.
According to industry experts, annual maintenance of a private jet costs an average of $550,000. This translates into about $45.1m for the estimated 80 foreign-registered aircraft.
They said an expatriate pilot also takes home an average of $8,000 monthly. This means that Nigeria loses at least $21.5m annually to expatriate pilots.
“I think the only way you can curb the menace or the powers of the billionaires is to allow your regulations to be firm and to support those who are to implement the regulations. In this case, the government must support the NCS, NCAA and NAMA. We need to do all that to ensure that our regulations are firm.”
According to aviation experts, these pilots are flown into the country every three weeks. Their return air tickets, as well as hotel and feeding costs, while in Nigeria, are borne by the owners of the private jets.
They, however, said minor maintenance, called A & B Checks in aviation parlance, was mostly done in Nigeria by expatriates from the countries where the private jets are registered.
Many private jet owners in the country have allegedly explored technical loopholes in the regulation to fraudulently obtain a Temporary Import Permit from the Nigeria Customs Service instead of paying the statutory import duty on their imported aircraft.
The TIP, which is valid for an initial period of 12 months, can be extended by six months twice, according to the regulations.
However, several operators of private jets in the country have continued to extend the TIP indefinitely, a development that prompted the NCS to effect past clampdowns on the jet owners.
The TIP has been described by some stakeholders as a fraudulent means of evading the mandatory import duty. Importers of private jets, especially foreign registered private jets, are expected to pay five percent of the value of the private jet as import duty.
However, due to the high cost of private jets, some owners often prefer not to pay the import, according to Customs officials.
Instead, the operators prefer to obtain a TIP under the guise that the aircraft is coming into the country for a temporary period, quoting the International Civil Aviation Organisation Convention Article 24 which focuses on Customs waiver for commercial aircraft operating in a country temporarily.
Experts kick, say private jet owners are untouchable, seek tougher regulations
The General Secretary of the Aviation Roundtable and Safety Initiative, Olumide Ohunayo, decried a situation whereby private jet owners fail to de-register their aircraft after bringing them into the country.
“The owners of the aircrafts want to keep their foreign numbers because immediately if you deregister from a foreign registered number to a Nigerian number your insurance increases and the value of the aircraft depreciates astronomically. It is just like when you register your car in Lagos but you are driving it in Ondo State. You will pay your taxes to Lagos State when you are renewing your vehicle documents.
“Some of them like to carry those foreign registered numbers pending when they dispose of the aircraft. That is why you see that we have many foreign registered aircraft in Nigeria than the Nigerian registered ones. It is for insurance purposes and for easy documentation and clearance when flying outside the country and to keep the value of the aircraft until when it is going to be disposed of.”
However, Ohunayo said there is an ICAO documentation that says that an aircraft that is foreign registered should be given clearance to land and take off without necessarily involving taxes and that it must be attached to one project or the other in Nigeria or attached to another offshore company.
“The Nigerian Customs Service has said that you must have it for a minimum of two years after which the aircraft must leave. But you find out that most of these aircrafts are still staying in Nigeria for six to seven years breaching the NCS rules of entry and that is why the NCS has risen up now to say they should pay those taxes.
“Under the rules of regulations of the country of registration, it is only pilots that have licences from their regulator that can fly or touch the aircraft under their registration. South Africa does not accept Nigeria licensed pilots but they accept those registered in South Africa, America or Europe. If you don’t have any of those licences you cannot touch any South African registered aircraft.
“Every country has its own regulation. Maybe we can also do our own regulation that if South Africa says we cannot touch their registered aircraft, they too should not touch our own registered aircraft. It is among the regulators to see how they can pass that into law. Again, it is another way of ensuring that such aircraft are deregistered. If an aircraft comes into the country and the rules of the country make it difficult for Nigerian pilots to touch those aircrafts, then we too should also make the rules tough for those aircraft to come in and have foreign registered pilots and engineers for a period longer than about six months.
“It is horrible enough to see that we are being cheated on taxes for bringing those aircrafts in and we cannot have our professionals operate those aircrafts. If some of them are attaching conditions for pilots and engineers from a particular country or regulatory body, then the duration of that aircraft in our country should also be reduced downwards for a total of six months or one year maximum. We cannot lose taxes and lose jobs,” Ohunayo told The Point.
However, the aviation expert noted that the Federal Government might find it difficult to win the battle against private jet owners in the country, because they are powerful and untouchable.
According to him, “Those who own private jets are billionaires and in all societies billionaires are influential, they are part of the decision making, they are part of the government, they are both in business, so when dealing with those owners you know you are dealing with those who are powerful in the society and you must have a strong regulation to hold them down because when you don’t have a strong regulation and you don’t have a protective measure in implementing the regulation you might have problems with them.
“I think the only way you can curb the menace or the powers of the billionaires is to allow your regulations to be firm and to support those who are to implement the regulations. In this case, the government must support the NCS, NCAA and NAMA. We need to do all that to ensure that our regulations are firm. We need more revenue because we are supposed to get revenue from civil aviation from these non-commercial operators and that should be our priority and we must not run away from what obtains in other countries.”
Also speaking with The Point, the President, National Association of Aircraft Pilots and Engineers, Isaac Balami, said it is unacceptable for Nigerian private jet owners to be spending such a huge amount on expatriates when competent local pilots and engineers are jobless.
He said, “Nigerian billionaires have refused to de-register their private jets from foreign countries. Are they more powerful than the government? Our people are losing jobs every day. We have people that can do the job, several local pilots and maintenance engineers. Even in Ghana, foreign private jets do not operate in the country for over two years without being de-registered. It does not happen.
“We have 100 percent local capacity to do this job. There are pilots and engineers for private jets. We have hangars for that. But because these jets are on foreign registration, the expatriates come in to do the job here.”
He added, “If the Federal Government refuses to compel these billionaires to de-register the airplanes as it is being done in other parts of the world, I doubt if we won‘t go the union way.”
Another aviation expert who does not want his name in print, told The Point that shady practices by private jet operators is an age-long problem in the industry.
“It has been a routine business with private jet operators to ferry cash across the country. That was the main reason, NAMA and NCAA under Madam Stella Oduah demanded a flight plan and manifest from these private jet operators.
“They don’t want to pay the mandatory charges ….passenger 5% charge and they don’t want concerned agencies to know they are running commercial flights as against being “a private” flight,” he said.
They are not above the law, says NCAA
In his defence, the Director, Public Affairs and Consumer Protection, NCAA, Michael Achimugu, told The Point that most of the aircraft that carry foreign registration are not on Air Operator’s Certificate but on Permits for Non-Commercial Flights.
“They are allowed in Nigeria for only six months before they leave. However, they can apply for extensions.
“Since these aircrafts are foreign-registered, the pilots are required to use licences from the country of registration.
“Also they use maintenance facilities mostly from their country of registration to abide by their host country regulations.
“We cannot force them to use our maintenance facilities which must be inspected and approved by their respective Authorities,” Achimugu said.
He debunked the claims that owners of jet are too influential to be dealt with, saying, “The Nigerian government is focused on doing its job, it is not involved in a power tussle with anybody. Nobody is more powerful than the government.”
He said the NCAA does not hire and fire pilots and engineers for private Jets, pointing out that the owners employ them directly, mostly using agencies.
Anxiety as NCS deadline approaches
The Point gathered that uneasy calm now hovers around the private jet owners over moves by the Federal Government to commence investigation into the operation of improper imported private jets into the country and a clampdown on operators.
The NCS had given a 30-day window period for the affected operators to regularise their documents.
Although no clear sanction has been issued, sources at the NCS headquarters disclosed that operators who failed to meet the 30-day deadline would have their aircraft grounded and their operational licences withdrawn.
A notice issued by the NCS stated that the special aircraft import verification exercise, which began on June 19, 2024, is expected to end on July 19, 2024.
According to the NCS, the exercise aims to identify imported aircraft without the necessary documentation, ensuring proper imports and maximum revenue collection.
Documents to be presented are the aircraft Certificate of Registration, Nigerian Civil Aviation Authority’s Flight Operation Compliance Certificate, Maintenance Compliance Certificate, Permit for Non-Commercial Flights, and Temporary Import Permit.
Presently, those affected by the move are jostling to beat the deadline, according to sources.
At least, 80 operators of private jets are expected to appear at the headquarters of the NCS in Abuja with their aircraft import documents.
Recall that 91 out of 147 identified owners and operators of private jets in the country failed the verification test conducted by the NCS in 2021.
“Although no clear sanction has been issued, sources at the NCS headquarters disclosed that operators who failed to meet the 30-day deadline would have their aircraft grounded and their operational licences withdrawn.”
Upon this discovery, the NCS had in June 2021 threatened to detain private aircraft whose owners were yet to validate their documentation in line with Federal Government’s revalidation policy.
It was reported in May 2022 that the NCS said it generated N2 billion from the revalidation of documents of private aircraft across the country.
The fresh directive is the second time in the last three years that such a threat would be issued by the government.
The Minister of Aviation and Aerospace Development, Festus Keyamo, had earlier in the year revealed plans to take firm action against private jet owners who illegally use their planes for commercial purposes, including grounding the jets and revoking their licenses.
The Federal Government through the NCS recently grounded a United States-registered Gulfstream G650ER jet belonging to a leading Nigerian bank, signaling the commencement of government clampdowns on private jet owners over unpaid import duty running into several billions of naira.
The luxury Gulfstream G650ER plane belonging to a tier-1 bank had been grounded at Lagos airport over unpaid import duties reportedly estimated at N1.9bn.
It was learnt that the NCS had written the NCAA and NAMA asking them to cancel the flight clearance approval given to the private aircraft.
The bank is reportedly owing about N1.9bn in unpaid import duties to the government on two formerly owned private jets (Gulfstream G450 and Gulfstream G550 aircraft), which were said to have since been taken out of the country.
It was also understood that the assessment of N1.9bn was based on a verification exercise carried out by the NCS in 2021.
It was learnt that going by the current exchange rate, the N1.9bn might be raised to about N6bn. Aircraft import duties are computed based on prevailing exchange rates.
The NCAA took a decisive action at the weekend by suspending 10 private jet operations due to their failure to initiate the mandatory recertification process.
In a statement released on Friday, Director of Public Affairs and Consumer Protection, Michael Achimugu, outlined the regulatory breach and subsequent enforcement measures.
The NCAA noted that, according to the Nigeria Civil Aviation Regulations 2023, Part 18.3.4, holders of Permits for Non-Commercial Flights are strictly prohibited from using their aircraft for the carriage of passengers, cargo, or mail for hire or rewards, which constitutes commercial operations or charter services.
Citing a blatant disregard for this rule, the NCAA had previously directed all PNCF holders to undergo a re-evaluation process, which was to be completed by April 19, 2024. Due to non-compliance, the following companies have had their PNCFs suspended:
Azikel Dredging Nigeria Ltd; Bli-Aviation Safety Services; Ferry Aviation Developments Ltd; Matrix Energy Ltd; Marietta Management Services Ltd; Worldwide Skypaths Services; Mattini Airline Services Ltd; Aero Lead Ltd; Sky Bird Air Ltd; and Ezuma Jets Ltd.
