Minister overrules

The Minister of Aviation and Aerospace Development, Festus Keyamo’s quick intervention in the hike in en-route navigation charges was very timely as it provided the Nigerian Airspace Management Agency (NAMA) the opportunity to look at it once again.

The Managing Director of NAMA, Umar Ahmed Farouk, had penultimate week announced the increase in en-route navigational charges from N6,000 to N18,000 and N54,000 per flight just as the airspace agency equally increased the extension of hours of service to airlines from N50,000 to 450,000 per extension to enable the agency to recover the cost of diesel and other logistics during the period of extension.

The Minister, a few days after the announcement, directed the agency to suspend its earlier announced increase in navigational charges. This decision follows the Minister’s recognition of the current economic challenges faced by Nigerians.

The Minister emphasised the need for further consultation before implementing any changes, highlighting the importance of being sensitive to the plight of Nigerians amidst these economic challenges.

The directive from the Minister and the subsequent suspension of the planned increase, he said underscored the government’s commitment to addressing the concerns of Nigerian citizens and stakeholders in the aviation sector.

Right decision, wrong timing

While the introduction of a hike in navigational charges may have come at the wrong time when airlines and service providers are groaning, the truth is that NAMA is greatly challenged. The agency is battling to survive because of the Federal Government’s deduction of its revenue from source by 50 per cent.

Recall that NAMA and the Nigerian Civil Aviation Authority (NCAA) in January held a strategic meeting with some airline operators under the aegis of Airline Operators of Nigeria (AON) to review what has been described as the outdated N16,000 Terminal Enroute Navigational Charges (TNS).

One of the easiest ways is seek ways of survival and to provide efficient air navigation services without compromising on safety is to raise the charges that have been in existence when airlines have increased fares by over 1000 per cent in less than 10 years.

Following the Federal Government’s pronouncement mandating revenue-generating agencies to remit 50 per cent of their proceeds to federal coffers, many establishments have frowned at the order, saying it was operationally hurtful.

Cost recovery

A former Managing Director of NAMA, Emperor Onasanya, said: “Just a question please: Can NAMA IGR fund, for instance, the total radar coverage of Nigerian Airspace (TRACON)?

As a service provider and per ICAO best practices, NAMA does not make a profit. ICAO Doc 9082 recommends cost recovery for service provision to cater for the cost of equipment, personnel, training and other ancillary costs. This is what NAMA was set up to do.

For 2023, NAMA had an expenditure of about N21 billion in personnel costs alone. It spent over N12 billion in capital costs and over N10 billion in overhead costs.

All these were to be (and were) funded from fees (no FGN budgetary allocation). The safety of the Nigerian airspace is paramount, and the current financial model is unsustainable.

The 50% revenue deduction hinders the agency’s ability to maintain and upgrade critical infrastructure, such as obsolete surveillance systems, which are over a decade old and urgently need replacement.

Without adequate funding, NAMA would find it extremely difficult to meet the high costs of procuring and maintaining essential equipment or ensuring the continuous training of technical staff, which is vital for maintaining safety standards.

It is crucial to understand that NAMA operates on the principle of cost recovery, as recommended by the International Civil Aviation Organisation (ICAO).

This means all charges are solely meant to be for the recovery of equipment and other costs incurred in service provision.

The current revenue-sharing formula allocates only 22 per cent of the five per cent airfare, contract, charter, and cargo sales charges to NAMA, despite its significant capital investment needs.

Skewed formula

On the other hand, the Nigeria Civil Aviation Authority (NCAA), with fewer responsibilities as it stands, currently is allocated 56 per cent, while NAMA, with all its responsibilities, gets 22 per cent.

This formula is skewed against NAMA despite the huge capital requirement of its investment, jeopardising our ability to meet both national and international obligations.

Restoring the full revenue allocation to NAMA is quite essential. Doing so will enable it to address the critical needs of infrastructure, enhance operational efficiency, and ensure the continuous training of safety-critical personnel.

With adequate funding, there is a general belief that it would be able to fulfil our mandate to provide safe and reliable air navigation services across Nigeria’s airspace.

By reversing the 50 per cent revenue deduction, Nigeria can significantly enhance air safety, and ensure that its skies remain safe and maintain high safety standards.

Farouk said: “We urge all stakeholders to support this necessary change for the future of our aviation sector and the safety of the flying public,’ he said, adding that he finds it expedient to remind political leaders, that the entire aviation system is about safety, as safety procedures and protocols must be prepared and strictly adhered to while on the ground.”

Stakeholders’ views

Several stakeholders have, at different fora, urged the Federal Government to exempt agencies like the NCAA and NAMA from the deduction, considering their responsibilities in ensuring the safety of Nigeria’s airspace.

The Director of Public Affairs and Consumer Protection in the NCAA, Michael Achimugu, recently, while justifying the push for the NCAA’s exemption, said the 50 per cent remittance was worrisomely affecting the agency’s ability to oversee the aviation industry effectively.

He said while the NCAA does not generate revenue, it must recover costs associated with services provided to airlines and other stakeholders and the recently imposed 50 per cent remittance requirement on recovered funds and Internally Generated Revenue significantly impacts the NCAA’s operations.

Unlike other agencies that keep half of their collected revenue, the NCAA must also share funds with other entities after remitting to the government and this leaves the agency with only 28 per cent of the recovered costs, hindering its ability to fulfil its critical role of safety oversight and regulation.

He urged the Federal Government to reconsider this policy and exempt the agency from the 50 per cent deduction to ensure it has sufficient resources to maintain safety standards within the Nigerian aviation industry.

Last line

In a sector like aviation, which is about safety and security, it can lead to catastrophic lapses. Aviation is a specialised industry that can’t be starved of funds.

The move has the potential of degrading a lot of services in the industry and urgently needs to be reviewed.