Airlines get only 40% of the ticket value, Air Peace laments

Oluwatoyin Olajide, the chief operating officer of Air Peace, says there is a need to look into issues of multiple taxation and charges in the aviation sector to avoid crippling the business.

Olajide told NAN in an interview that domestic airlines in the country get only 40% of the total value of tickets sold, a situation that she said affects the profitability of airlines.

“There are issues of multiple taxation and charges. These multiple charges on the ticket sold reduced the percentage that goes to the airline to less than 40% of the ticket value,” she said.

“How then does one expect the airline to pay its bills, fulfil all its obligations and ensure the aeroplanes go for scheduled maintenance as at when due?

“This is a huge burden on the airlines and the government needs to look into this.”

She said another problem is poor airport infrastructure, a situation that she says limits the profit margin for airlines.

“Some of the airports in Nigeria don’t have facilities for night flights,” Olajide explained.

“This ultimately limits the number of hours the aeroplane can fly in a day. The profit margin in airline operation is very slim,” she said.

Olajide said the government’s intervention on the industry would have multiplier effects on the economy especially in terms of job creation.

“This is already a huge contribution to the economy and therefore, should be supported by the government by giving the airlines a chance to find their feet in the first few years before they are slammed with all these multiple charges and taxation,” she said.

“A cursory look at the regulatory agencies will reveal that most of the taxes collected by each of the bodies are essentially the same.

“There is also the challenge of high import duties on spare parts even though there is a government waiver on import duties on aircraft parts.

“Some aircraft parts are still classified as dutiable with customs duties as high as 20 per cent to be paid by the airline.

“These duties are crippling and they contribute to making the operating environment harsh and largely unprofitable.”

Olajide also identified other challenges as the high cost of aviation fuel, fixed costs and lack of maintenance facilities.