Airlines may again increase airfares following the decision by the Nigerian Airspace Management Agency (NAMA) to raise en-route navigation charges from N2000 and N6,000 to N18,000 and N54,000 per flight.
The increase in the navigation charges also comes with a rise in the extension of hours of service to airlines from N50,000 to 450,000, indicating an 800 per cent increase per extension. This will enable the agency to recover the cost of diesel and other logistics.
Umar Ahmed Farouk, the Managing Director of NAMA, disclosed on Friday at the League of Airports and Aviation Correspondent (LAAC) seminar theme, “Aviation Survivability amidst a Challenging Macro-Economic Environment,” held in Lagos. He noted that the industry requires very efficient pricing of products and services, stressing that it is a critical lever for enhancing affordability, driving competition, supporting infrastructural development, promoting sustainability, and improving operational efficiency.
He noted that the price for services must reflect the value of these services.
It would be recalled that NAMA and the Nigerian Civil Aviation Authority (NCAA) in January held a strategic meeting in Abuja with some airline operators under the aegis of Airline Operators of Nigeria (AON) to review what has been described as the outdated N16,000 Terminal Enroute Navigational Charges (TNS). The meeting was to get the buy-in of the airlines on the review of the rate which the airlines admitted needed to be reviewed.
He said, “The Nigerian Airspace Management Agency relies on statutory fees to manage the airspace (remember that aviation takes place only in the air). These funds are generated from services we provide to the flying community, without these funds NAMA can’t discharge its responsibility of ensuring the safety of our airspace effectively. We majorly generate these funds through the airline companies.”
In 2023, NAMA spent about N21 billion on personnel costs alone, over N12 billion in capital costs and over N10 billion in overhead costs, and all these were funded from fees as there were no FGN budgetary allocation.
The agency currently charges as low as N11,000 per flight when a one-way domestic ticket cost only N16,000 according to Farouk who says Airlines have raised ticket prices astronomically to as high as between N150,000 to N200,000 for a one-way economy ticket owing to the prevailing economic circumstances, while NAMA navigational charges have remained the same since June 2008.
“Currently, our unit rate for international flights charged for service provision is about $70, domestic flights are charged 6,000 Naira. While NAMA recognizes the difficult economic environment aviation operates in Nigeria, it is equally a part of the ecosystem. It goes to the same market to procure equipment and other services like training. If NAMA is to survive and continue to guarantee safety and efficiency in the airspace, it must breathe.
“Even though most costs in the economy have increased by more than 1,000 per cent, NAMA has proposed to increase its fees by 800 per cent. The new rates for en-route and terminal navigation charges are to be reviewed from 2,000 and 6,000 Naira to N18,000 and N54,000 per flight. Also, the extension of service hours is to be reviewed from N50,000 to N450,000 per extension to enable the agency to recover the cost of diesel and other logistics during the extension period”.
“The largest percentage of NAMA’s revenue comes from en-route navigation charges (domestic and international flights) and terminal navigation charges (domestic and international flights). While international flights pay in US dollars, domestic flights pay in the Nigerian currency.”
The NAMA MD said as a service provider and under ICAO best practices, the agency does not make a profit, stressing that ICAO Doc 9082 recommends cost recovery for service provision to cater for the cost of equipment, personnel, training and other ancillary costs. This is what NAMA tries to do.
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