Domestic airlines have reported 10 per cent improvement on bottom-line, following the removal of tariffs on imported aircraft spare parts.
But the airlines are also urging the Federal Government to ensure full implementation of the zero tariff regime on aircraft parts and engines, lamenting that delay by the Customs Service makes nonsense of the zero tariff regime.
The Chief Operating Officer and Accountable Manager of Dana Air, Obi Mbanuzuo, told The Point in an interview that the zero tariff regime boosted the airline’s finances by around 10 per cent on the bottom-line, but insisted that the government needed to do a lot more in the area of policy formation for domestic airlines, including removal of the Value Added Tax from the airlines’ burdens.
He said, “Well, yes, that goes straight to the bottom-line. I can say, that has given us about 10 per cent improvement to our bottom line, but there is a lot of work to be done. We really expect a lot of policy changes and policy improvements from government. We are not asking the government for funds but for good policies. Airlines don’t pay VAT anywhere else in the world, but Nigerian airlines do. If you buy ticket for international flights you don’t see VAT, but our local flights are charged VAT.
“VAT is a big issue we are fighting against in the industry. The airline is one of the modes of transportation, but other modes do not pay VAT. Water transport operators don’t pay; road transport lines are not paying VAT and the railway is not paying. Why is it that only airlines are paying?”
Also, a source close to Medview Airline confirmed that the airline had hooked up to zero tariff regime and had “close to 10 per cent improvement on the airline’s gross earnings.
“Actually, we are happy that we now have the tariff on parts removed, but the delay we experience in the hands of the Nigeria Customs Service, while trying to clear these parts reduces the essence of the regime. For airlines, time is everything,” the source, who preferred anonymity, said.
The Chairman, Airline Operators of Nigeria, Captain Nogie Meggison, however, said the Federal Government had yet to fully implement the zero tariff regime on airplane parts.
He said, “The Government has provided for zero Customs duty on commercial aircraft, spares and engines. Unfortunately, in 2018, the industry has yet to fully benefit from this provision.
“This has resulted in airlines having some of their aircraft fleet grounded for days in some cases, thereby resulting in cancelled flights, which in event results in chaos at our airports to the displeasure of our esteemed customers. This situation is unacceptable and should be reversed forthwith.”
He lamented that the imposition of VAT on domestic airlines created a suppression of domestic airline travel demand, therefore resulting in airlines not being able to optimally utilise their aircraft assets and create a market distortion.
“Moreover, a situation whereby some airlines are paying VAT while some other privileged airlines are not paying VAT and the VAT, which we pay is being used to subsidise our competitors against those that are making payment is unfair,” he
maintained.
