Following the suspension of scheduled flight operations by Aero Contractors, the Airline Operators of Nigeria (AON), has alerted the Nigerian Civil Aviation Authority (NCAA) of the possible shutdown of the aviation sector over scarcity and increased cost of aviation fuel.
The association also cried out over the scarcity and high cost of the exchange rate which, as at end of business on Tuesday, July 18, 2022, stood at N630 to $1.
The airline operators are asking for the immediate removal of the recent imposition of a 5 percent fuel tax on them by the federal government indicating that there may be an increase in the base fare of airlines to meet operational costs.
In a letter dated July 18, 2022, and addressed to the NCAA, the airline operators also asked “immediate review of the decision that airlines are required to obtain approval for an initial three months before implementation of a fuel surcharge.”
The letter signed by AON President, Alhaji (Dr.) Abdulmunaf Yunusa Sarina, titled “Request for Removal of NCAA 5% on Fuel Surcharge and Call for Urgent Meeting with Domestic Airlines” reads:
“The Airline Operators of Nigeria hereby wish to seek your kind approval of Fuel Surcharge as an ameliorative measure to cushion the effect of the continuous increase in the exorbitant price of Jet A1 on airline operations in the country
“In addition to the crippling effect of the intermittent shortages of Jet-A1, the price has risen from N200 per litre in February 2022 to over N780 today. This has greatly increased the operational cost of airlines by well over 130%, yet airlines are unable to increase fares and as well as suffer from the unavailability of foreign exchange to conduct their operations.
“In order to forestall a backlash and total shutdown of the system, airlines are hoping to resort to an introduction of, a Fuel Surcharge of between 25% – 40% of NUC as a way of offsetting the additional burden brought about by increased fuel cost bearing In mind that jet fuel accounts for about 40% of total operational expenses.
“We, therefore, solicit your kind understanding and support by reconsidering and reviewing the following decisions taken by your organization in this regard:
1. Immediate review of the decision that airlines are required to obtain approval for an initial three (3) months before implementation of a fuel surcharge.
2. Waiver of the demand that airlines pay an additional 5% on the Fuel Surcharge entirely separate from the 5% Ticket Sales. Charge (TSC).
“Unless this is done, it will mean in effect that whatever is collected by the airlines as Fuel Surcharge to cushion the effect’ of the high fuel price will be taken away once again by NCAA. “This in effect will amount to double jeopardy as airlines will be unable to offset the additional cost which the Fuel Surcharge is meant to address in the first place.
“May we, therefore, propose that taxes should be based on the portion of the fare due to airlines less the Fuel Surcharge which is specifically for the purpose of cushioning the effect of rising fuel price and not on the total paid for the ticket inclusive of the Fuel Surcharge (i.e. Fuel Surcharge should be exempted from TSC).
“We, therefore, request that you would favourably consider and kindly affect our proposal to help alleviate the sufferings of airlines in the country given the current scarcity and consistently rising cost ofJetA1. This is standard practice all over the world; notably in Britain, America, and Singapore among others.
“In view of the pertinent and pressing nature of this issue, may we use this medium to kindly request an urgent meeting with airline CEOs to promptly address the matter.”
