Expert backs local carriers as AON-NCAA dispute rages 

…Survey exposes gap between Nigeria, global air ticket tax rules

By Chinelo Obogo   

[email protected]

In recent days, a dispute has intensified between the Nigeria Civil Aviation Authority (NCAA) and domestic airlines over the remittance of the five per cent Ticket Service Charge (TSC), following a leaked internal memo proposing a no-pay-no-service directive. 

The proposal suggested that the regulator would withhold services from airlines that fail to remit the statutory charge collected from passengers and held in trust. Shortly after the memo leaked, NCAA Director General Capt Chris Najomo announced a temporary suspension of the directive while stressing the need for settlement of outstanding arrears. However the Airline Operators of Nigeria (AON) rejected the claims insisting that all regulatory services are prepaid under a cash-before-service arrangement and that no TSC debt exists. Industry experts have backed AON position arguing that the dispute reflects deeper inconsistencies in Nigeria aviation revenue framework. 

A recent survey further indicates that Nigeria’s air ticket taxation system differs significantly from global standards raising questions about efficiency and transparency. 

This ongoing standoff highlights tensions between regulators and operators as stakeholders call for clearer guidelines, harmonised fee structures and improved accountability in Nigeria’s aviation sector to prevent further disputes and ensure sustainable industry growth going forward and restore investor confidence across the aviation value chain in the long term policy environment. 

The airline body said that no domestic airline in Nigeria receives NCAA regulatory services without first making the full payment of invoices issued to it, describing suggestions domestic operators are indebted to the NCAA for regulatory services are factually inaccurate.

It said that what the NCAA refers to as ‘outstanding charges’ relates solely to the TSC and then urged the Federal Government to urgently amend the Civil Aviation Act to empower the NCAA to collect whatever appropriate fees and charges are due it directly from passengers or whoever else, without routing such through the domestic airlines from June 1, 2026. It said doing this will relieve domestic airlines of the financial burden of acting as collection agents for the NCAA, since airlines currently bear banking transfer charges and other transaction costs in the process of transmitting funds to the NCAA. The airline body reiterated its position that the NCAA is a regulator, not a revenue-generating agency and that it does not fund any aspect of the airline businesses or render any direct service to passengers.

Reacting to the dispute, an aviation expert, Amos Akpan, told Daily Sun that collection of money for the agencies is not the core business of an airline and is not stipulated in the manuals or in their operations specification. He said an airline cannot be assessed or audited on that item. It is not their responsibility.

He explained that it was wrong from the foundation to ask the airlines to insert that 5% in their ticket fare and lump it in their bank with their sales because it involves financial management and payment of bank charges to separate and transfer the 5% to NCAA and the airline bear that cost.

He said: Airlines are not established as financial transaction institutions. Airlines themselves employ the services of financial organisations to handle their financial collections and allocations. I therefore understand their reasons for wanting the 5% TSC removed from their portfolio. Let the government agencies employ collectors of their 5% directly from customers. FAAN had this issue with their airport services charges PSC. They devised methods of collection directly from the passengers. Deduction of 5% from sales is cumbersome when there are priority contending expenses like fuel and maintenance bills to be drawn from the same account.

“The agencies should consider the cost associated with collection and disbursement of the 5% for the airlines. After all, they would pay whichever organisation they employ to do the collection for them. The federal government should release from the single treasury account 80% of earnings from aviation agencies back to them. The current 50% they are receiving is not sufficient to maintain and upgrade their systems and facilities. They are supposed to be cost recovery, not revenue generating institutions.”

An industry insider told Daily Sun that there are legacy debts in the books of the NCAA, from all the other defunct airlines including Nigeria Airways, Okada, Bellview, etc. “All of them still have debts. Even all the other international airlines that were coming and going and stopped coming, still have debts. Never in the history of any aviation industry has it been that the regulator will stop offering service especially at this critical time when aviation is shrinking. What should be the mandate of the NCCA is how to support the industry that it regulates,” the insider said.

What other countries pay

While many countries across the globe charge flat rates per passenger fees, Nigeria’s civil aviation authority charges 5 percent directly from every ticket sold. This five percent of the gross ticket value on every single sale that is made either by domestic or international airlines is legally mandated by Nigeria’s Civil Aviation Act 2006 to be paid to the Nigerian Civil Aviation Authority (NCAA), which then distributes to other state agencies including NAMA, NIMET, NCAT, and the NSIB.

Daily Sun surveyed more than a dozen countries and found out the usual practice is that a flat fee is charged per passenger which is a fixed amount attached to a ticket, regardless of how cheap or expensive the fare. Nigeria is one of the very few countries where the regulator directly collects a percentage-based ticket sales charge from airline revenue as most other countries levy a flat per-passenger fee either through their treasury department, airports, or border agencies.

In the United Kingdom, the Air Passenger Duty (APD) which is the highest aviation charge is a flat rate ranging up to the equivalent of over $200 per passenger on long-haul premium class journeys, set by the Revenue and Customs, not the aviation regulator. In Australia, the Passenger Movement Charge (PMC) is $70 per departing passenger and it is collected by the Department of Home Affairs. In Norway, the aviation levy is €5.42 for European flights and €31.12 for long-haul and is not tied to fare value.

In the United States, a 7.5% excise tax is charged to domestic ticket value, but this goes to the Airport and Airway Trust Fund and not to the Federal Aviation Administration as a regulatory revenue source. The FAA funds itself through appropriation made by the congress and not from a cut of ticket revenue.

In Ghana, the Civil Aviation Authority (GCAA) collects a passenger safety/security charge, but it is a flat per-passenger amount, while Kenya’s Civil Aviation Authority equivalent charges $50 per departing international passenger and this cost is fixed regardless of the fare, while the Philippines’ CAAP collects domestic passenger service charges as a flat fee.

Besides the TSC, Nigerian passengers also pay Passenger Service Charge by the Federal Airports Authority of Nigeria (FAAN). At its Focus Africa Conference in Addis Ababa, IATA said that Nigeria, Angola, the Democratic Republic of Congo, Ghana, and Kenya are some of the countries where aviation charges are high above global norms. The airline body noted that aviation charges across Africa are 15% higher than the global average and that Nigeria is among the major drivers.