AON Seeks NCAA Approval on Fuel Surcharge to Cushion Effect on Aviation Fuel Hike

By Nosa Aituamen

In an attempt to save their business from collapse, the Airline Operators of Nigeria, AON wants the Nigerian Civil Aviation Authority, NCAA approval of Fuel Surcharge as an ameliorative measure to cushion the effect of the continuous increase in the exorbitant price of Jet A1 on airline operations in the country.

In a letter to the Director General, NCAA, Captain Musa Nuhu dated July 18, 2022 and signed by the AON President, Alhaji Abdulmunaf Yunusa says, with the intermittent shortages of aviation fuel and price which has risen from N200 per litre in February 2022 to over N780 today, their operational cost has increased to well over 130% coupled with unavailability of foreign exchange to conduct their operations.

In order to forestall a backlash and total shutdown of the system, the airlines are hoping to resort to an introduction of a Fuel Surcharge of between 25% – 40% of Neutral Unit of Calculation, NUC as a way of offsetting the additional burden brought about by increased fuel cost bearing in mind that jet fuel accounts for about 40% of total operational expenses.

They also appealed to the NCAA to immediately review its decision that requires airlines to obtain approval for an initial three (3) months before implementation of a fuel surcharge.

The other is waiver of the demand that airlines pay an additional 5% on the Fuel Surcharge entirely separate from the 5% Ticket Sales Charge (TSC).

“Unless this is done, it will mean in effect that whatever is collected by the airlines as Fuel Surcharge to cushion the effect of the high fuel price will be taken away once again by NCAA. This in effect will amount to double jeopardy as airlines will be unable to offset the additional cost which the Fuel Surcharge is meant to address in the first place”.

The AON therefore propose that taxes should be based on the portion of the fare due to airlines less the Fuel Surcharge which is specifically for the purpose of cushioning the effect of rising fuel price and not on the total paid for the ticket inclusive of the Fuel Surcharge meaning Fuel Surcharge should be exempted from TSC).

“We therefore request that you would favourably consider and kindly effect our proposal to help alleviate the sufferings of airlines in the country given the current scarcity and consistently rising cost of JetA1. This is standard practice all over the world; notably Britain, America and Singapore among others”.

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