Senate to probe aviation sector charges
Experts fault govt’s order to foreign airlines
THE House of Representatives yesterday ordered an investigation into allegations that the Stabilisation Fund was being subjected to abuses following alleged indiscriminate withdrawals from the account to the tune of N114 billion.
Adopting without debate a motion sponsored by Haruna Musa Fatah, the House directed its committees in charge of Appropriation and Finance “to investigate the issue and determine the amount of monies so far withdrawn and the legality or otherwise of the expenditure made and report back to the House within four weeks.”
But Speaker Aminu Waziri Tambuwal was quick in cautioning lawmakers from passing judgment in addressing the issue.
Accordingly, he refused to give room for a debate on the matter by simply putting it to question and the lawmakers unanimously agreed that an immediate investigation of the issue be launched.
Introducing the matter to the House, Fatah urged his colleagues to note the following:
• that the revenue sharing laws provide for the remittance of 0.5 per cent of funds accruing to the Federation Account being kept in the Stabilisation Fund;
• that the Stabilisation Account is meant to be used in funding deficits in the budget when the oil price is below the benchmark price;
• that this account being a buffer against oil price shock, spending from it should be guided by caution and great circumspection in order to maintain sound fiscal policy;
• that within a period of eight months, about N114 billion was withdrawn from this account by the Federal Government for some expenditure most of which should ordinarily be budgeted for; and
• that most of the indiscriminate withdrawals are gradually converting the account into a mere slush fund instead of its original mandate.
Meanwhile, disturbed by current developments in the aviation industry, the Senate yesterday accused some Nigerians of colluding with foreigners to rip off travellers going abroad.
Consequently, the Senate mandated its Committee on Aviation to launch an inquest into the matter, with a view to fishing out those behind the “unwholesome act.”
Moving a motion on the matter, Chairman, Senate Committee on Aviation, Hope Uzodinma, alleged that the conduct of British Airways (BA) and Virgin Atlantic (VA) both of the United Kingdom (UK) caused a huge loss of revenue to the Federal Government accruable from the Ticket Sales Charge (TSC).
Uzodinma put the loss at $235 million (about N3.7 billion), besides the heavy financial losses to travel agencies and Nigerian travellers.
He expressed concern over what he described as “arbitrary fees” charged by the foreign airlines, which he further alleged “are above the rates charged on routes of equal distance outside Nigeria.”
According to him, a London-New York return economy ticket is $624; London-Dallas $787; London-Florida $730; and London-Atlanta $772, while the cheapest Economy return ticket on the Abuja-London route is $1,200.
Uzodinma also stated that the First Class Lagos-London return fare is $10,816, while Abuja-London return flight is $10,144, stressing that the same booking for a passenger on the Accra-London route is $4,798.
He added that while Business Class Lagos-London return fare is $7,370, Accra-London route is $4,098.
The senator, therefore, called for an investigation into the operations of all foreign airlines, with a view to determining their level of compliance or otherwise with extant aviation laws in the country.
A visibly angry Senate President David Mark said the situation “has been on for a very long time and the Committee on Aviation should find out why.”
Mark continued: “The fares charged Nigerian travellers are completely out of reach. It is unreasonable; it is exploitative. Nobody should come here to exploit Nigerians; our regulatory agencies are colluding with them to exploit Nigerians.”
But some stakeholders in the aviation sector have faulted Aviation Minister, Stella Oduah-Ogiewonyi, over her recent directive to the foreign airlines to reduce their “discriminatory and restrictive fares” on the Lagos-London and Abuja-London routes.
However, Oduah-Ogiewonyi will today hold an interactive session with airline operators, with a view to proffering solutions to lingering problems in the nation’s aviation sector.
The minister has also constituted a committee to examine the adequacy or otherwise of existing requirements for registration of airlines and extant financial guidelines to ensure that airlines are financially healthy to continue in business.
The committee will also look into minimum regulatory threshold of serviceable aircraft that any licensed airline should meet before it is allowed to remain in active operations among several other issues.
The ministerial session comes up at the Accident Investigation Bureau office in Lagos.
Rising from a meeting that lasted several hours yesterday, the aviation stakeholders stated that airfares were not fixed by fiat but arrived at based on the dictates of market forces.
At the meeting were President, Aviation Round Table (ART), Capt. Dele Ore; Chairman, Airline Operators of Nigeria (AON), Dr. Steve Mahonwu and his Scribe, Mohammed Joji; President/Chief Executive Officer, Sabre Network, West Africa, a United States-based airline Global Distribution System, Mr. Gbenga Olowo and travel expert, Olumide Ohunayo.
According to them, demand and mark up factors as well as anti-trust competition rules, among others, are reasons fares are different on certain routes.
The stakeholders stated: “Any profit-driven organisation like British Airways, Air France, KLM, will attempt to maximise its gains in any market for that matter where its market share remains significant and this is slightly evident in the dollar per mile figure for First and Business classes en route Lagos-London but not so in regular economy”.
Stressing that “government cannot control what it does not have,” they described the minister’s directive as “an exercise in futility,” stressing that rather than reading the riot act to the foreign airlines, disturbing the operators, she should channel her energy to strengthening Nigerian airlines to give foreign airlines tough competition.
The stakeholders also took a swipe at the Federal Airports Authority of Nigeria (FAAN) for its alleged penchant for reneging on concession agreements.
The recent termination of a concession agreement with a firm, Maevis, and the way other concession agreement had been allegedly threatened by FAAN, they said, had sent “a dangerous signal to both foreign and local investors in the country.”
The aviation stakeholders urged the Federal Government to privatize FAAN, stressing that the agency as currently run “cannot provide the services needed by the nation’s aviation sector.”
Contributing to the debate at the Senate, Aittai Aidoko (Kogi East) said: “Foreign travels constitute a large chunk of our national budget and if the situation is redressed, our spending on recurrent expenditure would be drastically reduced.”
Chief Barnabas Gemade and Olubunmi Adekunle accused the country’s regulatory authorities for the crises in the aviation industry and asked the Federal Government to bar Nigerians from patronising all affected foreign airlines.
During a recent disagreement between British Airways and Arik Air over the denial of landing slots to the Nigerian carrier in London, the Ministry of Aviation took some steps to address the disparity in the fares.
In a related development, the Federal Ministry of Aviation has asked the National Assembly to enact a new law on passengers’ bill of rights to address the problem.
The bill seeks compensation for passengers in the event of flight delay or cancellation.