Airlines Demand Direct Passenger Collection as NCAA’s N20bn Ticket Charge Debt Mounts

The Airline Operators of Nigeria (AON) has urged the Nigeria Civil Aviation Authority (NCAA) to devise a system to collect its 5 per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) directly from travellers, in a move operators say would end the recurring cycle of airline indebtedness now estimated at over N20 billion.

The demand comes as the NCAA grapples with severe fiscal strain, acknowledging that unpaid charges have hampered its ability to pay staff allowances and carry out critical projects. The regulator says the debt has accumulated because many domestic airlines have failed to remit the charges, which by law they are required to collect on the NCAA’s behalf.

In a stakeholders’ engagement, the AON pointed to the model adopted by the Federal Airports Authority of Nigeria (FAAN), which collects its Passenger Service Charge (PSC) directly from passengers through pre-purchased stickers attached to boarding passes. The operators argue that a similar mechanism for the TSC and CSC would remove the financial burden from carriers and guarantee the NCAA steady revenue.

The Director of Public Affairs and Consumer Protection at the NCAA, Michael Achimugu, told THISDAY that while technology could make direct collection feasible, the current legal framework bars such a shift.

“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. 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,” Achimugu said.

He indicated that any conversation about altering the collection mechanism must be preceded by airlines settling their outstanding debts. Achimugu also disclosed that a closed-door meeting involving the Minister of Aviation and Aerospace Development, Festus Keyamo; the NCAA Director General, Captain Chris Najomo; and the AON executive had taken place on Tuesday in an effort to broker a compromise.

Airline operators, however, insist the 5 per cent TSC is not a passenger-borne levy but a direct deduction from their ticket revenues—a charge they describe as an unsustainable tax layered on top of mandatory cost-recovery fees they already pay for regulatory services such as licence renewals and inspections.

“The five per cent Ticket Sales Charge is depleting our capacity to charge passengers the right fares. The Nigeria Civil Aviation Authority must devise a way to collect the charges directly from passengers,” one senior AON member told THISDAY. “We pay the aviation agencies all the financial commitments for the services they render to us. That is what is called 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 service they render to us.”

The operators say their financial position has been ravaged by the surge in aviation fuel prices, which they attribute largely to geopolitical instability in the Middle East. Many carriers are now funding operations through high-interest loans, with jet fuel selling for between N2,500 and N3,300 per litre. One major airline is reported to have borrowed N48 billion within seven weeks to stay airborne.

“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,” a source said, adding that the TSC is effectively a revenue cut that further weakens carriers’ ability to set sustainable fares. “Government will have to review the five per cent PSC. It is either NCAA devices a framework to collect the money from passengers or it has a flat rate of charges as FAAN has done. We the airlines purchase the stickers from FAAN. We can also do it that way from NCAA. The money should be a flat rate.”

Industry analyst and Managing Director of Flight and Logistic Solutions Limited, Amos Akpan, cautioned that any collection model, whether by airlines or the NCAA, carries administrative costs that must be assigned clearly.

“The 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 the key point and hope to reach a resolution on this matter,” Akpan said.

The Executive Secretary of Aviation Round Table (ART), Olu Fidel Ohunayo, clarified that the disputed debt relates exclusively to the 5 per cent TSC, which he labelled a tax on passengers without corresponding services, contrary to international aviation norms. He noted that many airlines had previously maintained dedicated accounts from which the NCAA drew monthly remittances without friction.

“This means that the debt built up after the outrageous spike in the cost of aviation fuel due to the war in Iran,” Ohunayo said, referring to the force majeure conditions triggered by the Iran-Israel/USA conflict that placed severe financial pressure on carriers worldwide.