Aviation Agencies Face New TSA Shock As FG Requests 50% Of Revenue

Aviation Agencies Face New TSA Shock As FG Requests 50% Of Revenue....KINDLY READ THE FULL STORY HERE▶

LAGOS — The Federal Government’s decision to increase the Treasury Single Account (TSA) contributions from aviation agencies from 40% to 50% has caused significant alarm among industry operators…… CONTINUE READING

Previously, there had been considerable debate over the government’s decision to impose the TSA policy on cost-recovery agencies in the air transport sector, initially requiring a 25% deduction from their revenues, which later increased to 40%. The latest 25% increment in required contributions has intensified concerns within the industry.

Earlier this year, on December 28, 2023, Finance Minister Wale Edun directed parastatals classified as “super agencies” to remit 50% of their Internally Generated Revenues (IGR). This policy aims to enhance revenue generation, fiscal discipline, transparency, and prevent inefficiencies.

However, six months into this policy, there are growing fears that the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), and Nigerian Civil Aviation Authority (NCAA) may face severe financial strain, which could impact their operations.

The situation has led to unrest among industry unions, which plan to protest tomorrow.

FAAN Managing Director, Mrs. Olubunmi Kuku, expressed concerns about the agency’s ability to manage 22 airports nationwide, noting that 19 of these are financially unviable. The 50% revenue contribution is challenging FAAN’s operations, particularly for critical projects such as terminal upgrades and runway maintenance.

NAMA’s Managing Director, Engr Farouk Ahmed, has repeatedly requested a reversal of the 50% deduction, citing its adverse impact on maintaining and upgrading essential safety equipment and meeting international standards. He emphasized that the current financial model is unsustainable and hampers the agency’s ability to ensure airspace safety.

Although Acting Director General of NCAA, Captain Chris Najomo, has not directly addressed the issue, NCAA’s Director of Public Affairs and Consumer Protection, Mr. Michael Achimugu, has voiced concerns about how the 50% remittance is affecting the agency’s regulatory capabilities. The NCAA’s limited funds post-remittance are constraining its safety oversight functions.

Experts are worried about the damage to FAAN, NAMA, and NCAA due to the increased TSA contributions. ATSSSAN President Ahmadu Illitrus highlighted the operational and training difficulties arising from the financial strain. He argued that aviation agencies should be exempt from the TSA policy to ensure safe and efficient operations.

Sindy Foster, Principal Managing Partner at Avaero Capital Partners, criticized the practice as potentially damaging Nigeria’s aviation reputation. She noted that globally, aviation service providers operate on a cost-recovery basis, and such substantial deductions could lead to increased costs for airlines and passengers, ultimately harming the entire system.

Former Murtala Mohammed International Airport commandant, Group Captain John Ojikutu, ret., also criticized the 50% deduction, questioning its impact on the agencies’ ability to sustain operations.

In response, Mr. Tunde Moshood, Special Assistant on Media and Communications to the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo, assured that safety remains a top priority. He indicated that the minister is negotiating for an exemption for these agencies and exploring other measures to improve their financial stability.

For now, the aviation sector remains in a state of high alert as the government and industry stakeholders grapple with the implications of the TSA policy.

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