LAAC 30th Conference: Panel Warns High Charges Could Hurt Aviation Growth

Experts demand review of taxes, fees and charges as government revenue drive collides with aviation growth

A high-level panel of aviation stakeholders has warned that Nigeria’s drive to increase government revenue from the aviation sector must not be allowed to undermine the industry’s ability to grow, attract investment and create jobs.
The experts made the submission during a panel session at the 30th League of Airport and Aviation Correspondents (LAAC) Conference, where the industry’s sustainability was examined against the backdrop of rising taxes, fees, charges, operating costs and infrastructure demands.
The session, themed around balancing government revenue generation with the growth potential of the aviation sector, brought together representatives of the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN), airline operators and the public-private partnership community.
The central message emerging from the discussion was that government should look beyond aviation as a convenient source of immediate revenue and instead treat the sector as an economic multiplier capable of generating substantially higher returns across the wider economy.
The Balancing Act
Opening the panel discussion, the moderator said the objective was not necessarily for stakeholders to agree on every issue but to create a platform where government agencies, airlines, investors and other industry players could disagree constructively and find common ground.
He said sustainable aviation development required a careful balancing of government revenue expectations with the industry’s capacity to expand.
According to him, the industry could not achieve meaningful growth if fiscal policies were designed without adequate consultation with those operating within the sector.
NCAA: Revenue Must Not Come Before Safety
Representing the Director-General of the NCAA, Capt. Chris Najomo, Mrs. Esther Ajitola explained that government charges within aviation generally fall into two broad categories: taxes and charges.
She said charges imposed by aviation agencies were, in principle, expected to support cost recovery for infrastructure and services, while taxes were designed to contribute to broader national development.
She, however, stressed that revenue generation could never be allowed to take precedence over aviation safety, security and passenger satisfaction.
“Aviation is a business,” she said, stressing that civil aviation is highly capital-intensive and requires substantial investment in infrastructure, technology and highly skilled human resources.
She noted that airlines already faced significant operating challenges and that every additional cost ultimately had implications for the price of air travel and the sustainability of operators.
Clarifying the 5% TSC
Ajitola also sought to clarify the application of the 5 per cent Ticket Sales Charge (TSC), explaining that it is calculated on the relevant ticket components rather than on every cost associated with operating an airline.
She gave an example of a domestic air ticket to demonstrate how different taxes and charges are applied, distinguishing the NCAA’s statutory charge from other costs imposed by different entities within the aviation value chain.
The clarification, however, did little to end the broader debate over whether Nigeria’s aviation fiscal structure has become too complicated and costly for operators.
Airline Operators: 54 Lines of Taxes, Fees and Charges Are Unsustainable
One of the strongest interventions came from the airline-operator perspective, with the panel arguing that the industry is burdened by an excessive number of taxes, fees and charges.
The speaker challenged the argument that all aviation charges could automatically be justified as cost-recovery mechanisms.
According to him, different agencies have introduced separate charges over time, creating a cumulative burden for airlines.
He argued that the original philosophy of cost recovery had increasingly been diluted by the expansion of charges imposed across the aviation ecosystem.
The NAMA Example
Using the Nigerian Airspace Management Agency (NAMA) as an example, he recalled that the agency had about 1,200 employees two decades ago, with recurrent expenditure already consuming a substantial proportion of its budget.
He argued that the situation raised questions about whether aviation agencies could continue to depend largely on industry-generated charges to finance growing personnel and operational costs.
He also raised concerns about staffing levels across government aviation agencies, arguing that inefficiencies and bloated personnel structures could ultimately translate into higher charges imposed on industry players.
The Treasury Single Account (TSA) system, he added, had further complicated the financial structure of government agencies.
Fuel Costs: Nigeria’s Airlines Face a Unique Burden
The panel also highlighted aviation fuel as one of the biggest threats to airline sustainability.
Fuel typically represents a substantial portion of an airline’s direct operating expenses. The speaker argued that the dramatic increase in aviation fuel prices in Nigeria had placed local carriers under enormous financial pressure.
He contrasted Nigeria’s experience with fuel-price increases in other African markets, arguing that the scale of the increase experienced by Nigerian operators had been particularly severe.
The implication, he said, was that airlines could already be operating under significant financial pressure before accounting for maintenance, aircraft leasing, insurance, manpower, navigation, airport and other regulatory costs.
Industry Growth and Barriers to Entry
Another major concern raised was the regulatory environment governing entry into Nigeria’s airline market.
The panel questioned the policy requiring new airlines to maintain a minimum fleet of five aircraft, arguing that such requirements could increase the barrier to entry and reduce competition.
The argument was that while regulators must ensure operational reliability and passenger protection, regulations should not unnecessarily prevent new operators from entering the market.
According to the speaker, greater competition could encourage airlines to develop innovative products, improve service quality and expand connectivity.
He therefore called for a more comprehensive review of policies before their implementation to ensure that regulations designed to protect the industry do not inadvertently suppress its growth.
FAAN: Government Must Invest to Earn More
Representing FAAN, the panelist acknowledged the concerns raised by airlines but argued that the government also had a legitimate responsibility to maintain and develop airport infrastructure.
FAAN, he noted, occupies a unique position because it operates at the intersection of infrastructure provision and revenue generation.
His argument was straightforward:
If government wants aviation to generate more revenue, it must first invest more in aviation.
He pointed to improvements in airport and aviation revenues in the post-COVID period but noted that much of the recovery has been driven by international traffic rather than a corresponding expansion of domestic passenger traffic.
That, he suggested, demonstrates the need to strengthen the domestic aviation market rather than relying excessively on international traffic for revenue growth.
FAAN Calls for Comprehensive Review
The FAAN representative supported the idea of a broader review of taxes, levies and charges affecting aviation.
Importantly, he said such a review should not focus exclusively on airlines.
It should examine the entire aviation ecosystem, including:
Airlines
Airport operators
Government aviation agencies
Ground-handling companies
Service providers
Passengers and other industry stakeholders.
He also stressed the importance of data and transparency.
For a meaningful review to take place, he argued, stakeholders — including government agencies — should be prepared to make relevant financial and operational information available.
Such information, he said, would allow policymakers and industry players to determine whether particular charges genuinely reflect the cost of services provided.
PPP Expert: Stop Treating Aviation Simply as a Revenue Centre
The public-private partnership perspective introduced perhaps the strongest economic argument of the session.
The PPP expert urged government to stop viewing aviation principally as a revenue-generating line and instead recognise it as an economic multiplier.
His argument was based on scale.
Rather than imposing very high charges on a relatively small number of industry participants, government could potentially generate greater overall revenue by encouraging substantially higher passenger volumes, investment and economic activity.
In simple terms, he argued that government could be better off taking a smaller percentage from a much larger and rapidly expanding economic base than extracting a larger percentage from a shrinking or financially constrained industry.
The Airport Multiplier Effect
He illustrated the argument with activity at Murtala Muhammed Airport, Lagos, noting that the airport ecosystem serves tens of thousands of people and supports activities far beyond ticket sales.
Every additional passenger, he explained, has the potential to generate economic activity across multiple segments, including:
Ground handling
Cargo
Travel agencies
Hotels
Transportation
Retail
Catering
Aviation services
Employment
Tourism
Logistics and other ancillary businesses.
The wider the aviation market grows, the larger the taxable and commercial ecosystem around it becomes.
That, according to the panel, is where government stands to gain significantly in the long term.
The Ameh News Analysis: Revenue or Growth?
The debate at the LAAC conference exposed a fundamental policy dilemma confronting Nigerian aviation.
Government needs revenue to maintain infrastructure, pay for public services and fund national development.
Airlines and other aviation businesses, however, need sufficient financial space to survive, invest, expand fleets, employ workers and offer affordable services.
The danger is that excessive taxation and charges can become self-defeating.
If airlines increase fares to absorb higher costs, passenger demand may weaken. If demand falls, airlines reduce capacity. Reduced capacity can affect connectivity, tourism, trade and investment. Ultimately, the government may collect more per transaction but less from a shrinking economic base.
Conversely, a competitive and expanding aviation industry creates a much broader revenue ecosystem.
More passengers mean more flights. More flights create demand for aircraft, maintenance, fuel, airport services, ground handling, hospitality, logistics and tourism.
The result is greater employment, investment and tax revenue across the economy.
What Needs to Change?
The discussions suggest that Nigeria’s aviation fiscal regime may require a comprehensive, evidence-based review rather than isolated adjustments to individual charges.
Such a review should answer several fundamental questions:
What is genuinely a tax?
What is genuinely a cost-recovery charge?
What charge duplicates another charge?
How much does each aviation agency actually spend providing the service for which it charges the industry?
How much revenue is generated from each charge, and where does the money go?
Does the charge encourage or discourage investment?
What is the impact of each charge on passenger fares and airline profitability?
These questions, if properly answered, could provide the basis for a more sustainable aviation fiscal framework.
The Bigger Picture
The panel’s debate ultimately moved beyond taxes and charges to the fundamental question of what Nigeria wants its aviation industry to become.
If aviation is treated primarily as a source of immediate government revenue, policymakers may continue to focus on increasing charges.
But if aviation is treated as an economic multiplier, the policy objective changes.
Government would focus more aggressively on increasing passenger volumes, attracting investment, developing airport infrastructure, expanding connectivity, encouraging competition and reducing unnecessary barriers to entry.
The resulting economic activity could potentially produce greater government revenue than a narrow focus on taxes and charges.
The Ameh News View
Nigeria does not have to choose between aviation growth and government revenue. The smarter policy is to make aviation growth the engine that produces sustainable government revenue.
The challenge for policymakers is therefore not simply how much to collect from aviation today, but how to create an aviation ecosystem capable of generating substantially more economic value tomorrow.
That, ultimately, is the balancing act the industry must confront.
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