Nigerian Civil Aviation Authority Urged to Diversify Revenue Sources
Industry stakeholders are pressing the Nigerian Civil Aviation Authority (NCAA) to seek additional revenue channels to strengthen its financial standing and avert potential crises.
Experts argue that an expanded revenue base would help stabilize the NCAA, particularly during periods when airlines encounter operational issues and struggle to meet their financial obligations.
As the aviation sector continues to expand, industry observers predict that the NCAA will face increased expenditure related to personnel compensation, technical training, and recruitment aimed at bolstering its regulatory functions.
Inflation and fluctuating exchange rates have negatively impacted airline profitability, leaving many carriers with limited operational funds and challenges in fulfilling their regulatory commitments.
Presently, airlines contribute a 5% fee on ticket and cargo sales to the NCAA, alongside various regulatory and administrative fees. However, these revenues remain insufficient, as the NCAA grapples with rising costs associated with staffing, training, and operational demands.
Notably, a spike in aviation fuel prices during the Middle East crisis—rising from pre-war prices of N900 per liter to as much as N3,500—has placed additional financial strain on airlines, exacerbating their inability to remit the 5% ticket and cargo sales fees and pushing the NCAA closer to financial jeopardy.
Concerns Over Revenue Sharing Changes
Further complicating the landscape, the National Assembly is currently evaluating a proposal to redistribute the ticket sales fee among five aviation agencies, potentially reducing the NCAA’s share from 56% to 40% while increasing that of the Nigerian Airspace Management Authority (NAMA) from 22% to 40%.
Industry analysts warn that such revenue reductions could hinder the NCAA from performing its regulatory duties effectively, thus raising concerns about compliance with safety standards.
Captain Ado Sanusi, CEO of an aviation consultancy, cautioned against the NCAA’s ongoing dependence on airline revenues, advocating for alternative funding mechanisms. Sanusi emphasized the need for structural reform, suggesting that a singular funding model has created persistent crises, including delayed payments to inspectors and legislative debates over revenue distribution.
Proposals for Structural Reform
Sanusi proposed modeling NAMA on NAV CANADA’s commercialized framework, which operates as a not-for-profit air navigation service provider funded solely by direct airline charges and overseen by a board including airline representatives.
He advocated for establishing the NCAA’s funding primarily through federal appropriations, supplemented by a fixed per-passenger safety oversight fee. This would enhance the agency’s capacity to attract and retain skilled personnel without competing with airlines for the same revenue pool.
Sanusi pointed out that international practices vary significantly in how aviation regulators are funded, with some nations relying heavily on government support while others derive substantial funding from the industry itself.
Debate on Funding Dynamics
Captain Musa Nuhu, a former executive director at the NCAA, highlighted that exploring alternative funding could contravene regulatory frameworks, as the NCAA is not structured like service providers such as NAMA. He expressed concerns that any reduction in the NCAA’s current revenue share would undermine the agency’s ability to maintain a knowledgeable and experienced workforce.
Nuhu also criticized NCAA’s remittances to the federal government, proposing that revenues should not be collected unless the NCAA operates on a fee-for-service basis. Instead, he called for direct government support through subsidies.
The need for increased funding is underscored by the growth in Nigeria’s aviation sector. According to Nuhu, compliance with International Civil Aviation Organization (ICAO) standards necessitates better compensation and enhanced training for NCAA personnel as the industry scales. This demand for resources is echoed by insiders at NAMA, who cite high operational costs associated with maintaining crucial airspace management infrastructure.
Officials note that NAMA is committed to providing essential navigational support, investing heavily in maintenance and training to ensure safe flight operations. Such commitments highlight the need for enhanced funding as the industry navigates its evolving challenges.
