Aviation costs unsustainable despite debt relief, CPPE warns

The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that the high cost of doing business in Nigeria’s aviation sector remains unsustainable, despite the Federal Government’s recent approval of a 30 per cent discount on outstanding debts owed by domestic airlines.

In a statement issued on Sunday, Muda Yusuf, Chief Executive Officer of CPPE, welcomed the debt relief initiative approved by President Bola Ahmed Tinubu, describing it as a timely intervention for operators struggling with rising and unsustainable operating costs.

He also acknowledged the role of Festus Keyamo, Minister of Aviation and Aerospace Development, commending his engagement with industry stakeholders and efforts to stabilise the sector.

However, Yusuf stressed that while the debt discount offers short-term relief, it does little to address the deeper structural challenges confronting airline operators.

According to him, the burden of multiple taxes, fees and levies imposed by key aviation agencies, including the Nigerian Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA), remains excessively high.

“The Centre for the Promotion of Private Enterprise (CPPE) commends President Bola Ahmed Tinubu for approving a 30 per cent discount on outstanding debts owed by Nigerian airlines.

“However, while the debt discount offers short-term respite, it does not address the deeper structural cost challenges confronting the aviation sector.

“The burden of multiple taxes, fees and levies imposed by key agencies remains excessively high. Industry estimates suggest that these charges collectively account for as much as 35 per cent of airline revenues, a level that is clearly incompatible with the thin margins typical of the aviation business,” Yusuf said.

He noted that such charges account for as much as 35 per cent of airline revenues, a situation he described as incompatible with the thin profit margins typical of the aviation industry.

Yusuf emphasised that Nigeria’s aviation sector plays a strategic role in economic connectivity, trade facilitation, investment flows and national integration, warning that persistent cost pressures could undermine its sustainability.

He further pointed out that growing insecurity on major highways has made air travel a preferred option for many Nigerians, thereby increasing the sector’s importance.

Despite this, he said the industry continues to witness a high mortality rate among domestic airlines, largely due to the challenging operating environment.

The CPPE therefore urged the Federal Government to undertake a comprehensive rationalisation of aviation charges, describing the current regime as overly burdensome and fragmented.

The organisation listed several charges affecting operators, including ticket and cargo sales charges, passenger service charges, landing and parking fees, aircraft inspection fees, administrative and facility charges, boarding bridge fees, fuel-related costs and import duties on aircraft and spare parts.

Yusuf argued that reducing both the multiplicity and magnitude of these charges would significantly enhance the viability, competitiveness and resilience of domestic airlines.

He added that beyond economic implications, excessive financial pressure on operators could pose risks to operational standards and safety.

The CPPE maintained that government support for the aviation sector must go beyond debt relief, calling for comprehensive reforms to create a more enabling cost environment, improve service delivery, moderate ticket prices and ensure the long-term sustainability of the industry.

“Government support for the aviation sector must therefore go beyond debt relief. What is needed is a comprehensive reform of the aviation cost environment to ensure that domestic airlines are not overburdened by charges that undermine investment, weaken service quality, raise ticket prices and threaten the long-term sustainability of the sector,” he added.