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…AON Says 5% TSC Has ‘Outlived Its Usefulness’
The House of Representatives, on Thursday, commenced a public hearing on proposed amendments to Nigeria’s aviation laws amid competing demands by key stakeholders over the sharing formula for the statutory five percent Ticket, Charter and Cargo Sales Charge (TSC), with the Nigerian Airspace Management Agency (NAMA) seeking a 56 percent allocation, the Nigeria Civil Aviation Authority (NCAA) calling for the restoration of its 65 percent share, and the African Aviation and Aerospace University (AAAU) requesting recognition as a statutory beneficiary with a 10 percent allocation.
The hearing, organised by the House Committee on Aviation, focused on the proposed amendments to the Civil Aviation Act and the Nigerian Airspace Management Agency (Establishment) Act, which seek to revise the revenue- sharing formula among aviation agencies, automate the remittance of statutory charges and strengthen the institutional framework of the aviation sector.
Declaring the hearing open, Speaker of the House of Representatives, Rt. Hon. Tajudeen Abbas, said the proposed amendments were intended to modernise the financial architecture of the aviation industry while improving transparency, efficiency and accountability.
According to the speaker, the bills seek to provide for the automated remittance of statutory funds accruing to aviation agencies, revise the existing revenue- sharing formula, reflect the transition from the Accident Investigation Bureau (AIB) to the Nigerian Safety Investigation Bureau (NSIB), and strengthen the funding framework for agencies responsible for safeguarding Nigeria’s airspace.
He said the proposals were ultimately designed to improve aviation safety, enhance investor confidence and ensure better service delivery for the travelling public.
“As a House, we are committed to ensuring that our aviation laws remain aligned with global best practices, guarantee sustainable funding for vital agencies and promote the growth of aviation as a driver of commerce, tourism and national development,” Abbas said.
The speaker urged stakeholders to make practical and solution-oriented submissions that would assist lawmakers in producing legislation capable of addressing both current and future challenges facing the aviation sector.
Earlier in his welcome address, Chairman of the House Committee on Aviation, Rt. Hon. Abdullahi Idris Garba, assured stakeholders that every memorandum and presentation would receive objective consideration before the committee submits its report to the House.
He noted that the two bills have significant implications for aviation safety, transparency and service delivery, adding that the committee remained committed to producing recommendations that reflect the collective interests of the industry.
The most far-reaching proposal came from the Managing Director and Chief Executive Officer of NAMA, Engr. Farouk Ahmed Umar, who urged lawmakers to increase the agency’s share of the five percent ticket, charter and cargo sales charge from 22 percent to 56 percent.
Presenting the agency’s position paper, Umar maintained that the current allocation no longer reflects the enormous financial burden associated with maintaining Nigeria’s air navigation infrastructure.
“I appear before you with respect for every institution supported by the five percent ticket, charter and cargo sales charge.
The regulator must be strong. Meteorological services must be dependable. Accident investigation must remain independent. Aviation training must be excellent.
Our submission does not diminish any of these truths. It only asks that the law recognises, in a practical and sustainable way, the scale of responsibility placed upon NAMA,” he said.
He explained that NAMA provides critical services round the clock, including air traffic control, surveillance, communications, navigation, aeronautical information management and power support, all of which are indispensable to safe flight operations.
Umar argued that although passengers currently contribute five percent of ticket, charter and cargo sales as statutory charges, NAMA receives only 22 percent of that pool—equivalent to about N11 out of every N50 generated.
According to him, increasing the allocation to 56 percent would raise NAMA’s share to N28 from the same N50 without increasing the statutory levy paid by passengers.
“The five percent charge itself will not increase. Passengers will not pay more.
The amendment simply proposes a fairer distribution of the existing revenue pool to the infrastructure that safely guides aircraft across Nigerian airspace,” he stated.
He further submitted that the agency’s operational expenditure exceeded N43 billion in 2023, while its navigation charge of N11,000 per flight has remained unchanged since June 2008 despite rising inflation, foreign exchange pressures, energy costs and technological requirements.
Umar also highlighted the need to replace ageing Total Radar Coverage of Nigeria (TRACON) infrastructure and advocated statutory recognition of NAMA’s technical role in obstacle evaluation and aviation height clearance assessments.
He proposed a 90:10 sharing formula in favour of NAMA for obstacle evaluation charges, arguing that while the NCAA should retain its regulatory certification role, NAMA should receive direct payment for technical services such as WGS-84 survey validation, obstacle assessment and flight procedure analysis.
“The amendment before this committee is not merely about dividing revenue. It is about ensuring that the institution entrusted with guiding aircraft has the stable resources required to maintain today’s services and build tomorrow’s infrastructure.
Give us the means and hold us accountable for the results,” he said. However, the proposal was strongly opposed by the Nigeria Civil Aviation Authority (NCAA), which warned that reducing its statutory allocation could weaken Nigeria’s aviation safety oversight system and undermine the country’s international obligations.
Director-General of the NCAA, Capt. Chris Najomo, told lawmakers that the authority’s role differs fundamentally from that of operational agencies because it serves as Nigeria’s independent aviation safety regulator.
He explained that the NCAA oversees airlines, airports, maintenance organisations, air navigation service providers and aviation personnel while also funding Nigeria’s statutory contributions to international organisations such as the International Civil Aviation Organization (ICAO), the Banjul Accord Group Aviation Safety and Security Oversight Organisation (BAGASOO) and the African Civil Aviation Commission (AFCAC).
Najomo disclosed that although Nigeria recently achieved an Effective Implementation score of 91.3 percent during ICAO’s Coordinated Validation Mission, the country scored only 50 percent in the area of financial resources available for safety oversight.
He maintained that reducing the NCAA’s principal source of statutory funding would worsen a deficiency already identified by ICAO.
“Against this background, Nigeria’s own score of only 50 percent in this critical area clearly demonstrates that the financial capacity of the NCAA requires strengthening rather than further reduction,” he said.
The NCAA boss further argued that while the five percent ticket sales charge contributes about 83 percent of the authority’s total revenue, the same charge accounts for only about 25 percent of NAMA’s income, with the airspace agency generating approximately 75 percent of its earnings from 16 other commercial revenue streams.
He therefore appealed to lawmakers to restore the NCAA’s allocation of the ticket sales charge to 65 percent, insisting that sustainable funding of the country’s safety regulator remains essential to maintaining compliance with ICAO standards.
Also making a case before the committee, the African Aviation and Aerospace University (AAAU), Abuja, urged the National Assembly to amend the Civil Aviation Act to recognise the institution as a statutory beneficiary of the ticket sales charge and allocate not less than 10 percent of the revenue to support aviation education, research and manpower development.
Presenting the university’s position paper, the Acting Vice-Chancellor, Dr Mustapha Sheikh Abdullahi, argued that AAAU occupies a unique place within Nigeria’s aviation ecosystem as the country’s only specialised federal university dedicated to aviation, aerospace and allied disciplines.
“Unlike conventional universities, AAAU exists solely to serve the aviation sector,” he said.
The university maintained that human capital development remains the foundation of aviation safety, noting that agencies such as the NCAA, NAMA, NiMet, FAAN, NSIB and NCAT all depend on highly trained professionals produced through specialised aviation education.
The Acting Vice-Chancellor further submitted that the transfer of the Nigerian Safety Investigation Bureau from the supervision of the Federal Ministry of Aviation and Aerospace Development to the presidency provides an opportunity to review the existing revenue-sharing framework and accommodate AAAU as a strategic institution for aviation manpower development.
He explained that additional funding would enable the university to establish internationally accredited aviation laboratories, expand aerospace engineering facilities, strengthen aviation research and innovation, train professionals locally instead of abroad and reduce Nigeria’s dependence on foreign aviation institutions.
“Investment in aviation education is therefore not expenditure but a strategic national investment,” he stated.
The House Committee on Aviation is expected to review memoranda submitted by stakeholders before presenting its report to the House of Representatives for consideration of the proposed amendments.
AON Says 5% TSC Has ‘Outlived Its Usefulness’
Meanwhile, the Airline Operators of Nigeria (AON) has called for a comprehensive overhaul of Nigeria’s aviation funding model, arguing that the long-running controversy over the 5 percent Ticket Sales Charge (TSC) cannot be resolved without addressing broader structural and legislative flaws that have weighed on the industry for decades.
The position was presented by former Managing Director of the Nigerian Airspace Management Agency (NAMA), Capt. Roland Iyayi, who represented the AON at the House of Representatives public hearing on the proposed amendment to the revenue-sharing formula of the Ticket Sales Charge.
Addressing lawmakers, Iyayi traced the origin of the controversial charge to the era of the defunct Federal Civil Aviation Authority (FCAA), explaining that the aviation industry’s financing model has evolved piecemeal as agencies emerged from the former unified authority. According to him, “I’m going to talk about how this 5% came about.
The 5% was introduced when we had the FCAA, the Federal Civil Aviation Authority. The Federal Civil Aviation Authority at the time comprised the elements of today’s NCAA, NAMA, NiMet and FAAN.
“At some point, FAAN emerged as NAA, which combined both NAMA and FAAN of today. Every single time an agency was established out of the FCAA, charges were introduced. NAMA introduced charges, NCAA introduced charges, and FAAN introduced charges.”
He recalled that when NAMA was established as a separate agency in 2006, circumstances forced the agency to adopt alternative funding mechanisms after legal challenges prevented it from collecting certain international navigation charges.
“NCAA was the first agency to introduce the passenger service charge.
That passenger service charge has since been taken on by FAAN. When NAMA was established in 2006, the European Union went to court to insist that NAMA would not charge overflight charges.
“I was then made the MD of NAMA. Rather than fight the matter, we introduced the terminal navigation charge simply to ensure that NAMA was adequately funded.”
Iyayi argued that the current funding arrangement has become outdated and no longer reflects the realities confronting Nigerian airlines.
“The 5% service charge has outlived its usefulness. It has become a burden on domestic airlines. We have made a submission on this.
We have been proactive. As the AON, we have actually produced a document addressing institutional reform for the entire funding policy of the industry. So, essentially, what I am here to say, in a nutshell, is this: there are issues for consideration.”
The former NAMA chief also alleged that the Nigerian Civil Aviation Authority Act contains conflicting provisions that undermine the agency’s declared cost-rerecovery mandate.
“In the NCAA Act of 2022, there are contradictions. It is important to note that we are complaining about not having adequate funding, yet the NCAA is the fourth-highest contributor to the Consolidated Revenue Fund.
“In 2023, the NCAA contributed N500 million at a 25% deduction rate. By my estimation, the NCAA’s gross revenue at that point was around N2 billion. I am not sure any domestic airline was able to earn such an income.”
He argued that if the NCAA is expected to operate strictly on a cost-recovery basis, surplus revenues should not be transferred to the Federal Government’s Consolidated Revenue Fund.
“The same Act, Part 5, Section 21, addresses the cost-recovery basis for all services provided by the NCAA. By the way, the NCAA charges airlines for every service provided, aside from the 5% charge.
“Part 5, Section 21, however, contradicts itself. It also discusses the allocation of two-thirds of operating funds to the Consolidated Revenue Fund. If an agency operates on a cost-recovery basis, it should never have such a system.
This means the entire aviation ecosystem is overburdened by surplus charges and any earnings or funds that go unrequited amount to a tax.”
