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NCAA may go bankrupt over poor service charge payments from airlines

By BusinessNews Staff on March 29, 2014

There are indications that the Nigerian Civil Aviation Authority (NCAA) may become financially insolvent because of the failure of airlines to pay their Passenger Service Charge (PSC) and the tendency for the operators to allegedly shortchange the regulatory body.

PSC is the five per cent deduction from the traveller’s fare, which is the major source of income for the regulatory body, which is meant to be autonomous and therefore cannot depend on government for funding.

THISDAY gathered that NCAA is already finding it difficult to effectively carry out its financial obligations as it could not pay the staff going for training on departure; neither could it pay allowances of the workers because as its funds continues to deplete as the airlines fail to pay the obligatory charges.

The major challenge NCAA is facing now is that it was alleged that some of the airlines have reduced the amount from which the PSC is to be deducted from by introducing fuel surcharge in their deductions, thus reducing the actual fares paid by passengers.

This is in addition to the huge debts owed the regulatory body by the airlines, which an official of NCAA said was started by the big airlines, now followed by the upcoming and smaller airlines.

“The airlines owe us huge money which is affecting our operations. They fail to recongise that the PSC is not their money; it is our money built into the tickets and when they fail to remit it in time, they begin to feel it is part of their revenue and later find it difficult to remit the money to us,” the NCAA official told THISDAY.

The official remarked that the unfavourable habit of not paying the PSC was started by two major carriers “and now other airlines have followed because we did not do anything to the first ones that started owing us. One of them owe us almost N4 billion.”

Another official of NCAA described the alleged action of the airlines, reducing the actual fares paid by passengers and diverting it to fuel surcharge so that less amount should be taxed, as fraudulent.

“The low fares which the PSC is taxed have reduced our income and it is affecting our operations. For long now our revenue has been depleting because the airlines introduced what they call fuel surcharge, where they transfer some of the money paid by passengers as fares and deduct the PSC from the balance. Some times what remains as balance can be as little as N3000, so what is five per cent of N3000?” another official of NCAA asked.

The official said that NCAA had taken the case to the Senate which advised that the regulatory body should go and resolve the matter with the airlines.

But the airlines said that there was nothing fraudulent about their transaction because everything is computerised and accessible to everyone.

A senior executive of one of the major airlines said that there was nothing to hide about the PSC deductions and dismissed the claim of indebtedness to NCAA, saying that the regulatory body and other aviation agencies have a penchant for bandying figures about.

[This Day]

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