Waiver for Airlines

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The granting of a waiver on aircraft and spares importation by the federal government has often elicited argument between Nigerian airlines and the Nigeria Customs Service (NCS).

Recently the federal government shelved tariffs paid by airlines on imported aircraft parts but the Nigerian Customs had insisted that they it not see the notification from the government. Some months ago, the Minister of State for Aviation, Senator Hadi Sirika took members of the Airline Operators of Nigeria (AON) to the Comptroller-General of Customs, Col. Hameed Ibrahim Ali (Rtd) in Abuja, who confirmed the waiver given by the federal government that effectively instructed that tariffs should not be paid by airlines on importation of aircraft and spares. This was celebrated by the airlines because it would help them to save estimated N26. 5 billion annually, but the NCS, as usual, has been very reluctant to implementing the policy.

Industry observers noted that while the Nigeria Customs looks at the money it could have generate if the waiver is not implemented, it does not consider the fact that such high tariffs could force the airlines out of business. Air transport is a catalyst to economic development of any nation. In other countries airlines don’t pay tariffs on importation of such equipment and Nigeria’s case is because almost everything about the aircraft is imported. There have been cases where airlines would import parts for aircraft repairs and Customs would request for tariffs and when the parts are taking out to the maintenance facilities overseas where the repairs would be effected and after the maintenance and the aircraft is brought back Customs insist on collecting taxes. This has been the cycle over the years.

In 2013, the federal government endorsed policy waiver for airlines on imported aircraft and spares but by the end of 2014, the NCS said the policy had expired until recently when government enforced another one, which the Customs is reluctant to implement. Not only the insistence of the payment of tariffs, but airline operators also accuse Customs of delaying imported parts as long as they wish and as they delay the clearing of these parts, the aircraft which needs it would not be flying so that airline would be losing money. One of the operators noted that in other countries, the Customs officials understood that you cannot delay aircraft parts when it is imported because of the urgency needed to put aircraft back into the air. Unfortunately, one of them noted, Customs see aircraft and airline business as luxury; they do not realise that the economy “would be strangulated if there is no airline operation in Nigeria.”

One of the operators narrated his experience on how his spares were delayed by customs and despite the waiver policy by government, insisted that the airline should pay tariff of over N100 million on the parts imported.

“I imported two engines, these engines entered the country, but for one good month Customs kept my engines. This is a new airline that is less than two years old that needed the support of everybody both government agencies and everybody. Do you believe that a government agency refused to allow us to clear our engines and insisted that we pay over a N100 million as duties? I refused to pay because the government has told us that commercial aircraft spares should be free, no VAT, no duties. Customs claimed not to have gotten the papers.

“In fairness to the Minister of State for Aviation, Senator Hadi Sirika; he did all he could do, and I commend him for that. He went to the Minister of Finance; they said yes the spares should be free. He went to Comptroller General of Customs and they all agree that no duties should be paid. To implement waiver policy was another story and a Nigerian airline had to ground the operation of a particular aircraft for over one month. Those are resources lost, the country is losing a lot doing that; it is not only the airline that is losing. This is because when government agencies do some of these things they think they are hurting the individual or the owner of the company, no. You are hurting the economy of the country. That is why all over the world governments don’t joke with airlines or what they do,” the operator told THISDAY.

Before the recent waiver guaranteed by government, the Airline operators Association of Nigeria had expressed its displeasure over the cancellation of waivers given to commercial airline operators to import aircraft and its spare parts into the country by the Nigeria Customs Service (NCS) in 2013.

The Chairman of the association, Captain Nogie Meggison said airline operators were groaning under huge amount of tariff paid on the importation of the spare parts.

Megisson, who said the tariff was affecting the growth of the aviation industry in Nigeria accused Customs of dumping the already gazetted waiver on importation of aircraft spare parts into the country.
He said: “‎We had a waiver gazetted for duty free on our spare parts and importation of aircraft for commercial reason only but Customs have backdated that waiver and they are charging us for duty.
“It is not easy as an airline had to pay about N90 million to bring spare part to fix our aircraft. That is too heavy on us and we cannot pass that one on our passengers because we feel for Nigerians.”

So the airlines were happy when the waiver was reintroduced by the present government, but the Nigeria Customs Service is still foot dragging. When is Customs going to realise that they hurt the nation’s economy more by obstructing the activities of the airlines despite the huge revenue they could generate from payment of duties on aircraft and spares importation? This is a question only the Nigeria Customs Service can answer.