Ex-NAMA MD faults 5% ticket charge, proposes Aviation Development Fund

Roland Iyayi, former Managing Director of the Nigerian Airspace Management Agency (NAMA), has criticized the current 5% Ticket Sales Charge (TSC) levied on airline passengers, deeming it unsustainable for Nigeria's domestic carriers. Iyayi, now a trustee for the Airline Operators of Nigeria (AON), advocates for a complete overhaul of the existing TSC structure.

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The structure of that TSC should be changed completely, and that is what we are advocating.

He proposes channeling the proceeds into a dedicated Aviation Development Fund, insulated from general government revenue accounts. This fund, he argues, would accelerate the development of Nigeria's aviation sector by focusing on infrastructure projects. Iyayi believes the country's aviation industry lacks the necessary profit margins and market maturity to support an ad valorem system of charges, which he describes as a "sham" that has deviated from its original purpose of infrastructure development.

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The airline industry is not five percent profitable anywhere in the world.

"The airline industry is not five percent profitable anywhere in the world," Iyayi stated, emphasizing that Nigeria is an underdeveloped market, unlike mature markets where such charges might be more appropriate. He pointed to recent challenges, such as airlines borrowing money to purchase fuel, which constitutes about 40% of an airline's operating costs, as evidence of the industry's fragility.

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Nigeria is not a mature market. So, when you introduce that, you introduce distortions.

Iyayi traced the introduction of the TSC back over four decades, noting its surreptitious inclusion in the 2006 act. He advocates for renaming the charge the "Aviation Development Fund" and ensuring its funds are exclusively tied to infrastructure development programs. Such a dedicated fund, he suggests, could ensure adequate infrastructure for industry growth over the next decade, reducing the government's burden of budgetary allocations.

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It will ensure that over the next maybe 10 years, the industry gets infrastructure that are adequate for its growth, so that government doesn’t have to be worried about providing budgetary allocations.