5% TSC: Airlines Were Paying NCAA Until Labour Dispute Disrupted Agreement, Says Okonkwo

The Executive Chairman of United Nigeria Airlines (UNA), Prof. Okonkwo, has rejected allegations that Nigerian airlines deliberately defaulted on their statutory five per cent Ticket Sales Charge (TSC) obligations to the Nigeria Civil Aviation Authority (NCAA), saying operators had been making payments under an agreed repayment plan until the recent labour dispute disrupted the process.

Okonkwo, who is also a spokesperson for the Airline Operators of Nigeria (AON), spoke on Thursday at the 30th Annual Conference of the League of Airport and Aviation Correspondents (LAAC) in Lagos.

The conference, which focused on “Towards a Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth,” provided a platform for operators, regulators and other aviation stakeholders to examine the growing financial pressures on Nigeria’s airline industry.

The UNA chairman said the current controversy over unpaid regulatory charges should be viewed against the backdrop of the severe financial difficulties faced by domestic airlines, particularly the sharp increase in aviation fuel prices.

He maintained that airlines had been meeting their financial obligations to government before the financial crisis intensified in February this year.

“Before February this year, there were no payment problems. All airlines were paying. The AON issue only became a problem because of the Gulf crisis,” Okonkwo said.

He explained that the AON had approached President Bola Tinubu after the rising cost of aviation fuel and other operational expenses made it increasingly difficult for airlines to continue meeting all their financial obligations without relief.

According to him, the association wrote to the President, requesting either a suspension of regulatory charges or temporary relief to enable airlines survive the crisis.

“AON was the first to cry out. We wrote to the President, explaining that we could no longer pay these charges. We requested either a complete suspension of charges or temporary relief during the aviation crisis, and the request was granted. The President agreed and waived 30 per cent,” he said.

Following the presidential intervention, Okonkwo said representatives of the airlines held several meetings with the NCAA and the Ministry of Aviation and Aerospace Development to establish a mechanism for settling outstanding obligations.

He said the discussions culminated in an arrangement requiring operators to make an initial payment of 10 per cent of their legacy debts, with the remaining balance to be settled through instalments.

According to him, the NCAA’s Director of Finance subsequently met individual airline operators in Lagos and Abuja to work out payment schedules.

“The airlines complied with this directive. The airlines did this. The director met with operators in Lagos and Abuja, and we developed a payment plan,” he said.

He argued that having outstanding debt under an agreed repayment schedule should not be interpreted as a refusal by airlines to pay.

“This plan was in place. When you have a payment plan in place, it does not mean you will default. We were making regular payments according to the agreement we had with the NCAA until we heard about the labour union problem,” he added.

Okonkwo disclosed that United Nigeria Airlines went a step further by establishing a payment arrangement designed to give the NCAA direct access to funds.

“At United Nigeria, to ensure no issues, we opened joint accounts with NCAA at Nigerian banks. The account was structured so NCAA could withdraw funds directly without asking us,” he explained.

The arrangement, according to him, was intended to demonstrate that the airline was committed to meeting its obligations and to eliminate potential delays in the remittance process.

He therefore questioned the continued description of domestic operators as non-compliant, arguing that the focus on outstanding obligations often ignored the substantial sums airlines had already paid.

“When people discuss money not remitted or paid by operators, they fail to mention how much operators do pay,” he said. “When they talk about unpaid money, I ask: what have you done with all that we have already paid? That is the proof, and that is my concern.”

The AON spokesperson also broadened his criticism to the overall structure of aviation charges, arguing that airlines were being required to make several payments without receiving commensurate value.

He questioned the justification for taking five per cent of airlines’ ticket revenues when operators already incur substantial expenses in accessing regulatory services.

“Beyond what we pay, we do not receive adequate value. When different stakeholders and agencies are asked to explain this, they simply say the government takes a large chunk of this money. The question is: for what?” he asked.

He cited aircraft inspections conducted outside Nigeria as an example of services for which airlines are required to bear additional costs.

According to him, when an airline asks the NCAA to inspect an aircraft in countries such as the United Kingdom or the United States, the airline pays the associated expenses in advance.

“Most of you here know that money charged is supposed to provide recovery. When we request NCAA to inspect our aircraft in London or America, they come, and we pay them. We do all this 100 per cent in advance. But when you speak of a five per cent charge, it remains unclear,” he said.

Okonkwo argued that the five per cent TSC was particularly burdensome because it was imposed on airlines operating businesses that require significant capital investment and carry substantial financial risks.

“When you take five per cent of any business, a business I borrowed money to run, a business that costs me sleepless nights, that is too much for anyone to extract from it. And this is on top of taxes we already pay,” he said.

He consequently urged stakeholders to sustain the campaign for the removal or review of the TSC, warning that its continued application could undermine the financial sustainability of domestic airlines.

“The call for removal of this five per cent must not stop. It must continue until we remove it. We would not be able to have smooth operations until this is resolved,” he stated.

The UNA chairman also criticised the recent confrontation between aviation unions and airline operators, although he acknowledged that unions had a legitimate responsibility to advocate for the welfare of aviation workers.

He, however, maintained that airlines should not be portrayed as employers that do not care about their workers, arguing that the aviation industry remains one of the better-paying sectors of the Nigerian economy.

His comments came against the backdrop of the industrial dispute that has further strained relations between airline operators and organised labour.

“That shameful display at the airport by unions would have brought us to our lowest point if not for the reactions and condemnation from so many gathered here,” Okonkwo said.

He praised the Aviation Round Table leadership for publicly condemning the incident, saying the organisation’s response helped prevent further damage to the image of the industry.

“I especially commend the Aviation Roundtable President whose loud voice was heard worldwide,” he said.

He also commended aviation journalists for what he described as balanced coverage of the dispute.

“I also commend aviation reporters who reported fairly, but we expected condemnation from quarters that should have known better but that did not come and we remain concerned,” he added.

The controversy over the five per cent TSC has increasingly become part of a wider debate about the sustainability of Nigeria’s aviation industry.

Airline operators argue that the sector is already weighed down by numerous taxes, charges and levies imposed by government agencies, while regulators maintain that statutory charges are necessary to fund regulatory and operational responsibilities.

For operators, however, the issue goes beyond the payment of a single charge. They contend that the cumulative burden of regulatory fees, taxes, foreign exchange pressures, aviation fuel costs, aircraft maintenance and other operating expenses is putting domestic airlines under severe financial pressure.

Okonkwo’s intervention at the LAAC conference therefore sought to challenge the narrative that airlines simply stopped paying their obligations to the NCAA.

Instead, he presented a picture of operators that had entered into a structured repayment arrangement with the regulator and continued making payments, while simultaneously asking government to reconsider charges that they believe are undermining the viability of the industry.

He maintained that the sustainability of aviation ultimately depends on finding a balance between government’s need for revenue and airlines’ ability to remain financially viable.

According to him, extracting more revenue from airlines without addressing the underlying cost pressures could eventually weaken the sector and reduce the government’s long-term revenue base.

The AON spokesperson’s position also adds another dimension to the ongoing TSC debate, as the industry continues to seek a resolution that would allow airlines to meet their obligations while retaining sufficient resources to maintain safe and sustainable operations.