Chairman of AON, Dr Steve Mahonwu
Airline Operators of Nigeria (AON) has lauded the decision of the Federal Government to end Customs duties and related taxes on aircraft and spares as contained in the 2013 budget, saying that the action would go a long way in revitalising the airlines.
The Chairman of AON, Dr Steve Mahonwu, told THISDAY in a telephone interview that this was a great achievement, remarking that the airlines had been fighting for its removal for the past five years.
“We have got a breakthrough. We thank the President of Nigeria and the Minister of Aviation for making this possible. Some years ago we got a waiver from former President Olusegun Obasanjo. But when we took it to Customs they rejected it.
Four weeks ago THISDAY exclusively reported the planned waiver, which would save billions of naira for the airlines and also safe them time for clearing imported aircraft and spares.
THISDAY learnt that the inclusion of the waiver in the budget involved a lot of paper work from the Minister of Aviation, Stella Oduah who assiduously ensured that the quest by the airlines would be actualised this time.
“We are working on how to remove duties for the importation of aircraft and aircraft parts. Cape Town Convention classified aircraft parts as mobile equipment and government is working on that. The Minister of Aviation has written a lot of letters and another letter is going again that government should please remove duties on aircraft and spares. This is going to help the industry,” the Director General of the Nigeria Civil Aviation Authority, Dr Harold Demuren told THISDAY four weeks ago.
Airlines have for several years clamoured for the removal of such duties because the payment of Customs duties and high cost of aviation fuel, known as Jet A1, are the major reason why Nigerian airlines do not operate profitably.
Nigeria has been one of the few countries in the world that still impose Custom duties on importation of aircraft and spares for commercial operation.
The Managing Director of Aero Contractors, Mr. Akin George, painted a gory picture of high cost of operation due to duties and other taxes they pay to government agencies.
“If you buy an aircraft, you pay duty on it and the rates are quite high. This is what shuts up the fares. For example, we imported a VIP Helicopter earlier this year. The value of that helicopter is $4 million (N640, 000,000) we ended paying N143 million to clear it from Customs. When it was cleared it went for stamp duty and we paid a couple of millions of naira. For the inspection after the assembling, we paid NCAA another N1 million. We have not flown one hour on this helicopter but we have already spent N200 million. Now, you buy a ticket to travel by air, the airline is going to pay passenger service charge to Federal Airports Authority of Nigeria(FAAN), you are going to pay VAT from that ticket,” he said.
An industry experts and the Rector of International Aviation College, Illorin, Captain Fola Akinkuotu, told THISDAY that removing Custom duties and other charges was the only way government could help Nigerian airlines succeed.
“There is a lot of taxation. Government should give tax breaks. I give you an example. Customs duties on airplanes, on spares should be removed. For example, I am bringing in a spare engine that I am leasing and you expect me to pay Customs duty. You are expecting me to pay duty on a property that I don’t own. We have to look at a way on how to reduce all forms of taxation. Government has to give breaks. The airlines are paying for everything. I think government ought to have some kind of moratorium,” Akinkuotu said.