The Chairman of Air Peace and Vice-Chairman of Airline Operators of Nigeria (AON), Allen Onyema has said that domestic operators may be forced to shut down service due to high duties charged them by the Nigerian Customs Service (NCS).
Onyema said President Muhammadu Bubari in his magnanimity granted the airlines waivers on Customs duties on aircraft and spares through executive order last year but Customs has refused to implement the policy.
He said that the Buhari administration signed the waiver policy to enable airlines survive the devastating effect of the coronavirus pandemic on airlines, but Customs still charges duties between 10-35 per cent of the cost of aircraft and aircraft, which the airlines must pay before they receive their equipment.
He said that while waiting for the duties to be paid Customs could hold on to these imported equipment for months, thus denying the airlines the chance to use their aircraft.
Onyema made this known on Thursday during the arrival of its second brand new aircraft, E195-E2 from Embraer factory in Brazil, which landed at the Nnamdi Azikiwe International Airport, Abuja.
He noted that the federal government had since 2016 been granting airlines duty waivers but Customs had continued to repudiate the policy, prompting the Buhari administration to sign executive order on zero-duty for all imported aircraft and spares in 2020.
Onyema said instead of managing the aircraft without spares, which may give rise to safety breach, the airlines might consider shutting down operations until Customs begin to implement the federal government’s zero-duty policy and release the spares held down in their facilities.
“I want to thank the Minister of Aviation, Senator Hadi Sirika for the revolution he has brought in the industry. I want to thank President Muhammadu Buhari for removing VAT from the importation of aircraft, for removing custom duties from the importation of aircraft and removing VAT from ticket fares. This President has done very well for the aviation industry by signing into law these demands that we presented to him. He didn’t waste time. It shows that the President is desirous and ready to support indigenous investments in this country. This is something that we are very proud of.
“But I plead with the federal government to talk to the Customs to try and feel the pulse of the President of this country and his regime. We must always do things that will reduce the name calling or bad-mouthing of a particular regime. The Customs know very well that waivers have been signed into law yet I have an aircraft on ground for over one month because the engine which was imported is with the Customs because of duties. I paid over $1 million insurance on the aircraft. This is a company with a staff strength of over 3,000 people, our spare parts and engines will come into this country and Customs will keep them and giving us all manner of reasons,” Onyema said.
On the second brand new aircraft that was received, the Air Peace Chairman explained that the airline decided to go for Embraer 195-E2 after meticulously studying it.
“We became the first in Africa to pay for 13 brand new planes and we would be acquiring 17 more to make it 30. These planes shall be deployed to domestic and regional routes. These jets are the best. If all the powers shut down while about 30 feet above sea level, equipment deploys automatically and the plane lands effortlessly. The aircraft speaks to the pilot and the pilot speaks to it. By the time we get everything, we would be providing 8000 jobs to Nigerians,” he said.
It could be recalled that in June 2016, the federal government reaffirmed its zero duty policy and Value Added Tax (VAT) waiver on the importation of commercial airplanes of commercial airplanes and its spare parts into the country.
The clarification on the zero duty and VAT was contained in a letter dated June 20, 2016 and signed by the Nigeria Customs Service. The NCS’s communication to the airline operators stated, “I am directed to inform you that by virtue of the Federal Government 2013 Fiscal Policy measures, Ref No. BD.12237/S.1008/T/11 dated 15th January, 2013, all commercial aircraft and its spare parts imported for use in Nigeria shall attract import duty rate of zero per cent (0%) and zero per cent (0%) VAT respectively.
“I am further directed to inform you that the Honourable Minister of Finance letter Ref. No. BD/FP/TT/50/1/113 dated 20th March 2015. Approval for the implementation of the ECOWAS Common External Tariff (CET) 2015 – 2019 and 2015 Fiscal Policy measures (National List) confirmed the extension of the 2013 Fiscal Policy measures.”
