Nigeria’s aviation sector is embroiled in a dispute over the five per cent Ticket Sales Charge, as airlines and regulators clash over funding, compliance, and the cost of sustaining industry oversight, writes OLASUNKANMI AKINLOTAN
The five per cent Ticket Sales Charge, a statutory levy collected on every airline ticket sold in Nigeria, has reopened a longstanding debate over who should bear the burden of funding aviation regulation and infrastructure.
For the Nigerian Civil Aviation Authority, the charge is a legal obligation established under the Civil Aviation Act and remains critical to sustaining safety oversight and the operations of key aviation agencies. For domestic airlines, however, the levy has become a symbol of the crushing financial pressures.
The dispute came into the open after the NCAA issued a “No Pay, No Service” order targeting 11 airlines over alleged unpaid charges.
The affected carriers included Air Peace, Ibom Air, Arik Air, United Nigeria Airlines, Umza Air, NG Eagle, Max Air, Caverton Helicopters, Overland Airways, Rano Air and ValueJet.
The regulator’s action sent shockwaves across the industry. Although the NCAA suspended the directive less than 24 hours later, it made it clear that the suspension was temporary and did not amount to debt forgiveness.
In response, the Airline Operators of Nigeria mounted a defence, rejecting claims that its members were indebted to the authority for regulatory services.
According to the operators, airlines pay for every service rendered by the NCAA before such services are provided.
The association said, “The AON wishes to set the record straight in response to recent media publications credited to the NCAA, which portrayed member airlines as being indebted to the regulatory agency for services rendered to operators.
“These publications are not only misleading but represent a worrisome and unacceptable attempt to use the media to regulate operators outside the established regulatory framework. The AON condemns this in the strongest possible terms.”
The operators argued that the real issue is not unpaid regulatory fees but the controversial Ticket Sales Charge.
The AON further stressed that airlines receive invoices for licence validations, aircraft inspections, certification renewals and other regulatory services and are required to pay in full before approvals are granted.
“For clarity, the NCAA issues an invoice for every regulatory service it provides. Operators are then required to settle all such invoices in advance, and compliance is strictly observed before the NCAA renders any regulatory service.
“In practice, no domestic airline in Nigeria receives NCAA regulatory services without first making the full payment of invoices issued to it by the NCAA. Consequently, suggestions that domestic airline operators are indebted to the NCAA for regulatory services are factually inaccurate,” the association stated.
The airlines insist that the five per cent charge is fundamentally different from payments made for services rendered, insisting that the levy is imposed on passengers, yet airlines are compelled to serve as collection agents.
“What the NCAA refers to as ‘outstanding charges’ relates solely to the five per cent Ticket Sales Charge, a tax imposed by NCAA on passengers for no services rendered to passengers and not in consonance with the dictates of international aviation. This is entirely different from regulatory service fees,” the group argued.
The controversy comes at a particularly difficult time for domestic operators. In recent months, airlines have battled rising costs driven by escalating Jet A1 prices, exchange rate instability and dwindling passenger traffic. Earlier this year, operators warned of a possible shutdown of operations if the worsening fuel crisis was not addressed.
However, The PUNCH gathered that aviation fuel remains the single largest cost component for most airlines, accounting for as much as 40 per cent of operating expenses.
Amidst the mounting financial pressure, the airlines approached the Federal Government through the Minister of Aviation and Aerospace Development, Festus Keyamo, seeking relief from statutory charges. Their appeal eventually resulted in a temporary concession from the Presidency.
Following the airlines’ outcry, the Federal Government through the Ministry of Aviation conceded 30 per cent of the airlines’ debt to the regulator.
Following AON’s clarification, the debt under dispute relates to accumulated Ticket Sales Charges.
Despite welcoming the concession, airline operators maintain that deeper reforms are required, arguing that the NCAA’s role should be limited to regulation rather than revenue generation.
They accused the NCAA of acting more as a revenue collector than a regulator. The association is also pushing for changes to the Civil Aviation Act to enable the NCAA to collect passenger charges directly from travellers instead of channeling them through airlines.
To strengthen its case, the AON traced the origin of the levy to more than four decades ago when Nigeria’s aviation sector was dominated by government-owned enterprises. They recalled that the charge was introduced during a period when aviation authorities had limited funding and the industry structure was significantly different from what exists today.
“The five per cent TSC was originally a policy instrument introduced when the Federal Civil Aviation Authority had limited budgetary resources. Notably, Nigeria Airways, the only domestic airline operating at the time, did not pay the charge. Only foreign airline carriers were required to pay,” the association stated.
On the other side of the divide, regulators insisted that the Ticket Sales Charge remains a critical source of funding for the aviation ecosystem.
NCAA demands payment
NCAA spokesperson Michael Achimugu, speaking by phone, said airlines are legally required to remit the funds to the authority and can only seek amendment of the law after settling all outstanding amounts already collected on behalf of the agency.
He also reminded the operators of other agencies, including accident investigation and safety oversight institutions that underpin the industry’s regulatory framework.
Achimugu said, “It is the provision of the CAA act and they will pay the TSC, it shouldn’t even be a discussion for anyone. This money is not for the NCAA alone; it is shared among other aviation agencies that also see to the smooth operation of the industry.
“Should they want the law repealed, they will first pay the debt as appropriate and afterwards they can move for repealing the law.”