Airfares may rise as NAMA set to raise levy by 800%

• Published On: 26 July 2024 at 16:51

Following concerns from Nigerian airline operators over various taxation, the Federal Government has announced plans to increase its levies even further.

Umar Farouk, Managing Director of the Nigerian Airspace Management Agency, made the announcement on Friday at the League of Airports and Aviation Correspondents seminar, "Aviation Survivability amidst a Challenging Macro-Economic Environment," which was held in Ikeja, Lagos.

He said that the agency will increase its en-route navigational fees from N2,000 and N6,000 to N18,000 and N54,000 every trip. Similarly, the airspace agency boosted the number of service hours available to airlines from N50,000 to N450,000, signifying an 800% increase per extension to allow the agency to recuperate the cost of diesel and other logistics during the extended time.

This means that airfares might soar by 800 percent.

In January, NAMA and the Nigerian Civil Aviation Authority conducted a strategic discussion with some airline operators to evaluate the N16,000 terminal en-route navigational charges, which have been deemed as archaic.

He stated, "The Nigerian Airspace Management Agency relies on statutory fees to govern airspace (remember that aviation occurs exclusively in the air). These money are produced by the services we offer to the flying community. Without these funding, NAMA will be unable to efficiently perform its responsibilities for maintaining airspace safety. We mostly raise these funding through airline businesses."

Farouk further stated that in 2023, NAMA would spend around N21 billion on staff expenditures alone, over N12 billion on capital costs, and more than N10 billion on overhead costs, all of which would be paid without the Federal Government's financial contribution.

He claimed NAMA had been charging as little as N11,000 every flight although a one-way domestic ticket cost only N16,000.

He stated that, while ticket costs have risen dramatically to as high as N150,000 to N200,000 for a one-way economy ticket due to current economic conditions, NAMA navigational charges have remained constant since June 2008.

"Currently, our unit fee for international flights charged for service supply is approximately $70, while local flights are paid N6,000. While NAMA understands the tough economic climate in which aviation operates in Nigeria, it is still an integral part of the ecosystem.

"It uses the same market to acquire equipment and other services such as training. If NAMA is to live and continue to provide airspace safety and efficiency, it must breathe.

"Even though most costs in the economy have risen by more than 1,000 percent, NAMA has recommended an 800% increase in its fees. The revised prices for en-route and terminal navigation charges would be increased from N2,000 and N6,000 to N18,000 and N54,000 per aircraft.

"Also, the extension of service hours is to be reviewed from N50,000 to N450,000 per extension to enable the agency to recover the cost of diesel and other logistics during the period of extension" .

"NAMA's revenue is mostly derived from en-route navigation charges (domestic and international flights) and terminal navigation charges (domestic and international flights). International flights are paid in US dollars, whereas local flights are paid in Nigerian naira."