12 April 2012

Nigeria: High Tax Claim - NCAA Carpets British Airways

Accusations by foreign airlines that fares from Nigeria are higher than other countries with the same equidistant because of high taxes has been debunked by the Nigerian Civil Aviation Authority (NCAA), saying some of the taxes in Britain are even higher than what obtains in Nigeria.

For instance, business class seats on the route cost significantly higher from Lagos compared to other equidistant locations. Airlines attribute this to the huge taxes paid to operate in Nigeria, claiming total taxes are over 50 per cent of the airfares.

"Ticket costs are much lower but the taxes have remained high", a report by Financial Derivatives Company (FDC) Limited quoted the airlines.

According to Bismarck Rewane, Chief Executive of FDC, airfare on Iberia Airline from Lagos to London is $4,111, while from Accra to London is $5,064 for a two-stop flight. Emirates airfare is $4,052 from Lagos and $5,123 from Accra on a one- stop flight. Arik airfare from Lagos to London is $3,061 while from Accra it is $3,753 on a non-stop flight.

On the other hand, while British Airways airfare from Lagos to London is $3,492, its airfare from Accra is $2,970 on a non-stop flight. Virgin Airline's airfare from Lagos to London is $4,213, but $2,089 from Accra on a non-stop flight.

While the airlines claim that the high air fare charged by foreign airlines for flights emanating from Nigeria to destinations outside the country were due to high tariffs charged by Nigerian aviation authorities, investigations showed that this might not be totally true because airlines in some cases pay more in tariff in some countries than they do in Nigeria.

For instance, while Passenger Service Charge (PSC) is $50 in Nigeria it is $86 in the United Kingdom. In the same vein, the Ticket Service Charge (TSC) in Nigeria is $147; it is $205 in the UK and $100 in Ghana.

Though the rational behind the high air fares charged by airlines in Nigeria has yet to be ascertained as foreign airlines charge up to 30 per cent more for flights emanating from Nigeria than from other countries in the region especially Ghana. Experts have attributed the high airfares to market forces of demand and supply.

According to an industry analyst who did not want to be named, what British Airways charges Nigerian travellers on fuel surcharge alone is much more than what goes into the pocket of government as tax. He however said it makes sense for airlines to make money from premium class (Business and First Class), which are said to be preferred by Nigerian travellers.

According to the Nigeria Civil Aviation Authority (NCAA) Director General, Dr. Harold Demuren, whose agency has conducted an analysis of the air fare imbalance in the region, Nigerian travellers in most cases do not have option.

"NCAA records which consist of the tariffs routinely filed by the airlines and the coupons of every single ticket sold demonstrate that the lower fares the airlines filed with the NCAA were rarely ever available for sale even though they misled NCAA to believe those were reasonable fares to expect the Nigerian consumers to pay", said Demuren.

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