Stakeholders oppose re-introduction of Customs duties on aircraft, spare parts


…policies can only be reviewed, but cannot be banned or reversed, but it is unfortunate in Nigeria. We don’t have a single window in Nigeria where a part of an aircraft is manufactured
It is obvious that the country’s airlines are groaning under multiple taxations by the various Federal Government agencies and high insurance premiums charged them by insurance companies as a result of the poor rating of the nation’s airport environments. One of the major stakeholders in the sector at an event last week in Lagos, Mr. John Adebanjo in his statistics declared that the sector had produced 140 airlines in the spate of 40 years, which indicated that the carriers have very short lifespans.
One of the avenues the Federal Government in 2013 felt it could help reduce the financial burdens on the carriers and help increase their lifecycles was the introduction of customs duties waivers on aircraft acquisition and imported spare parts. The policy was approved and gazette after much lobbies, appeals and contributions from operators, government agencies and major stakeholders.
The Minister of Aviation then, Princess Stella Oduah who fought for the waiver policy said with the removal of the duties, safety would further be assured in the sector while operators could use money saved from the policy to grow their operations and train more technical staff for the industry. Within the two years period that the policy was in place, airline operators saved about N60 billion from payment of duties on aircraft and imported spare parts, but its re-introduction recently by the Nigeria Customs Service, NCS, is causing ripples in the airline sub-sector.
Stakeholders warned that this policy summersault may lead to return of air accidents in the sector as operators may result to cutting corners in order to operate profitably. A source close to Customs told our correspondent that the current management in the service, claimed that it did not receive any letter or directive from the past government on the waiver regime and so, decided to cancel the policy when President Muhammed Buhari came onboard, adding that the re-introduction of the policy would enhance revenue generation for the service.
The source said, “We don’t have powers to grant them waivers in the first instance. So, we cannot cancel what we did not give. So, we couldn’t have cancelled it if we did not give them in the first instance.” But, a strong source from one of the airlines who declined to comment publicly on the matter, debunked the claim of the customs on the policy.
The source who is a management staff of one of the airlines in the country insisted that the policy was gazette and the Ministry of Finance under Dr. Ngozi Oknjo-Iweala specifically wrote to the customs, notifying them of the approval of the new policy by the presidency and wondered why the policy was changed barely six months of Buhari-led administration. The airline source said, “I’ve been hearing that rumour, but we have not been written officially. The claim by the top hierarchy of customs that they were not informed of the policy was not true. There was a letter to it and I have seen the letter too, but I can’t remember if the letter said it was yearly or not, but I saw it and it was gazette.”
However, the Managing Director of Med- View Airline, Alhaji Muneer Bankole confirmed the re-introduction of the duties on aircraft and imported spare parts by Customs in an interview with journalists recently in London, United Kingdom. Bankole decried that government over the years had been inconsistent with its policies, a situation, he said prevented serious private investors to come into the sector, stressing that rather than cancel outrightly a policy that was gazette, what the government ought to have done was to review it.
Bankole lamented that the airline operators are not benefiting anything from government and that the waiver regime had helped the airline to shore up their operations and increase safety in the system. He said, “The right thing to do is that whenever a new government comes onboard, policies can only be reviewed, but cannot be banned or reversed, but it is unfortunate in Nigeria. We don’t have a single window in Nigeria where a part of an aircraft is manufactured. So, the last government after much deliberation gave us a window.
“We are talking about spare parts that would change the lives of people and it was gazette, I have a copy, when you gazette something, it becomes a policy and once another government comes in and it’s not comfortable with that policy, they need to sit down again to look into the policy, but somebody from nowhere just said they have not been given a letter on that waiver by the government and just cancelled it.
That’s why we are not moving forward.” The immediate past President of Aviation Round Table, ART, Capt. Dele Ore, described the development as unfortunate. Ore recalled that stakeholders and professionals in the sector agitated massively before the waiver could be granted the airline operators in 2013 by the government, maintaining that the airlines needed the waiver to cushion the effect of multiple taxations by government agencies.
He opined that rather than cancel the policy outrightly, what the government ought to do was to check the policy against abuse, warning that it could force the operators to engage in sharp practices in a bid to remain in business.
He said, “The government should have a rethink on this because if the airlines are not able to sustain their operations, every aspect of the industry would be affected; the airport authority and even the regulatory authority would be affected. Their revenues would not come in regularly anymore. So, we need to strength the airlines. This is one relief we can give to them. “If it is eventually removed, the tendency is that the regulatory authority must have to wake up because if they (airlines) cannot bring in spare parts freely, the tendency is that they would say ‘let’s manage this one’ or a part that needs to be changed is in the warehouse, but you cannot collect it because you are waiting for the duties to be established for you to be able to pay for it. Meanwhile, aircraft is required for service, one way or the other that aircraft sneaks into service, it portends danger for us.”
But, the Director, Research, Zenith Travels, Mr. Olumide Ohunayo backed the suspension of the waivers for restructuring.
Ohunayo noted that the policy as presently approved was for all kinds of operators like cargo and charter, rather than commercial air operators, insisting that cargo and charter operators must pay the duties.
He however decried policy summersaults and implementation in Nigeria, saying the policy was beneficial to the government, but to the rich in the sector.
“The essence is to help push 18 million Nigerians that represent 10 per cent of the population to start flying. Definitely, I’m in full support of the suspension of the policy. It was an all-comers affair and not restricted to the commercial airlines alone, it was abused. Every aircraft was benefiting from that policy. It should be strictly for commercial aircraft that are registered in Nigeria.” Also, the President, Airline Operators of Nigeria, Capt. Nogie Meggison who confirmed the development, expressed displeasure about the cancellation.
Meggison said the tariff was affecting the growth of the aviation industry in Nigeria and accused Customs of dumping the already gazette waiver on importation of aircraft spare parts into the country. He however said that the association had taken up the case with Customs, but said the association was not satisfied with the level of response given to it by the service.