Aviation Debt Dispute: What Airlines’ Repayment Deal and Labour Truce Mean

By Cynthia Okere

Nigeria’s long-running aviation debt dispute has entered a new phase, with domestic airlines beginning repayment of outstanding statutory charges under an instalment arrangement with the Nigeria Civil Aviation Authority (NCAA), even as tensions with aviation workers’ unions remain a concern.

At the centre of the disagreement is the five per cent Ticket Sales Charge (TSC), a statutory charge paid by passengers as part of airline tickets and collected by airlines for remittance to the NCAA.

The money is subsequently distributed among aviation agencies to support regulatory oversight and other functions within the industry.

The dispute has moved through several stages this year — from regulatory enforcement threats and negotiations to labour ultimatums and, most recently, disruption of airline operations.

What Exactly Do the Airlines Owe?

The controversy largely concerns outstanding TSC remittances accumulated by domestic airlines.

Under the Civil Aviation Act 2022, airlines are required to remit the five per cent charge collected from passengers within the stipulated period.

The NCAA has consistently maintained that the TSC does not constitute airline operating revenue because the money is collected from passengers on behalf of the aviation system.

Reports in May put the accumulated outstanding obligations at about N12 billion, although the NCAA has not publicly provided a current airline-by-airline breakdown of the outstanding balance.

The Airline Operators of Nigeria (AON), however, has challenged the way the debt controversy has been presented.

The association maintains that domestic airlines pay separately for regulatory services rendered by the NCAA and that the outstanding obligations in contention relate specifically to the TSC rather than unpaid regulatory service fees.

That distinction is important because the dispute is not simply about airlines refusing to pay for services received from the regulator. It concerns the remittance of statutory passenger charges collected by airlines.

How the Repayment Arrangement Works

The latest development indicates that the NCAA and affected airlines have agreed on a structured approach to settling the historical debts.

NCAA Director of Public Affairs and Consumer Protection, Michael Achimugu, confirmed that airlines had reached an agreement with the regulator to pay the outstanding debts by instalments.

Under the arrangement, airlines made an initial payment equivalent to 10 per cent of the old debts, with the outstanding balance to be settled according to agreed schedules.

The Federal Government had earlier approved a 30 per cent concession on outstanding fees owed by domestic airlines to aviation agencies.

The NCAA has stressed that the concession and repayment arrangement do not amount to cancellation of the airlines’ obligations.

Why Did the NCAA Not Simply Ground the Airlines?

The regulator initially took a tougher approach.

In May, the NCAA placed 11 domestic operators under a “No Pay, No Service” arrangement over outstanding statutory obligations. The affected operators included Air Peace, Ibom Air, Arik Air, United Nigeria Airlines, NG Eagle, Max Air, Overland Airways, Rano Air and ValueJet, among others.

The measure could have prevented affected airlines from accessing some regulatory and administrative services.

But the NCAA subsequently suspended enforcement.

The regulator said the decision followed consultations and consideration of difficult operating conditions, particularly the rising cost of aviation fuel.

Instead of immediately applying sanctions capable of disrupting airline operations, the authority opted for structured engagements aimed at recovering the outstanding money while keeping airlines operational.

Why Did Aviation Unions Become Involved?

The issue became more contentious when the National Union of Air Transport Employees (NUATE) and the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) demanded payment of the outstanding TSC.

The unions argued that failure to remit the money was depriving aviation agencies of funds required for their operations and affecting workers.

After an earlier 14-day ultimatum expired, the unions issued another seven-day notice in late July, threatening action against defaulting operators.

Airline operators pushed back, arguing that the unions were not the statutory debt-collection agents of the NCAA and should not disrupt flight operations over a financial dispute already being handled between the regulator and operators.

From Threat to Actual Flight Disruption

The dispute eventually affected passengers.

On August 11, union action disrupted operations at major airports, particularly affecting Air Peace. Access to airline facilities was obstructed in Lagos and Abuja, while Air Peace and United Nigeria Airlines suspended operations amid the disruption.

Flights resumed after the unions temporarily suspended the industrial action following several hours of disruption.

The incident demonstrated why the debt dispute has consequences beyond the relationship between airlines and the NCAA. Once industrial action interferes with airport access or airline operations, passengers face cancellations, delays and disrupted travel plans.

Air Peace subsequently questioned why it had been singled out when the TSC dispute involved the wider domestic airline industry.

The airline also called for an investigation into the disruption.

What Brought the Temporary Truce?

According to the NCAA, intervention by Minister of Aviation and Aerospace Development Festus Keyamo and NCAA Director-General Capt. Chris Najomo played a role in preventing further escalation.

Achimugu said the regulator informed the unions that airlines had started paying their historical debts under the agreed arrangement and urged labour to suspend its action.

The development effectively created breathing space for the regulator and airlines to continue implementing the repayment programme without further immediate disruption.

But describing the situation as completely resolved would be premature.

The old debts still have to be repaid according to the agreed schedules, and disagreements remain over the structure of the TSC itself.

Why Is the 5% TSC So Important?

The TSC is one of the most important funding mechanisms in Nigerian aviation.

Under the current statutory sharing formula, the NCAA receives 56 per cent, the Nigerian Airspace Management Agency (NAMA) 22 per cent, the Nigerian Meteorological Agency (NiMet) nine per cent, the Nigerian College of Aviation Technology (NCAT) seven per cent and the Nigerian Safety Investigation Bureau (NSIB) six per cent.

For the NCAA in particular, the charge is critical because the regulator operates largely on a cost-recovery basis.

The NCAA has warned that inadequate funding could affect its ability to recruit and retain technical personnel, conduct inspections and surveillance, provide recurrent training and meet Nigeria’s international aviation safety obligations.

That argument has become particularly significant following recent discussions at the National Assembly over proposals to alter the sharing formula.

Why Airlines Want the System Changed

Domestic airlines are not only contesting accumulated debts. They are also questioning why airlines should continue acting as collection agents for government aviation agencies.

AON has argued that technological changes now make it possible for the government to develop a system through which statutory passenger charges can be collected directly rather than passing through airline accounts.

Operators also complain that Nigeria’s airlines face numerous taxes, charges and high operating costs, including aviation fuel, aircraft maintenance, insurance and foreign-exchange-related expenses.

This means the immediate repayment agreement may settle historical obligations without resolving the underlying disagreement over how the TSC should be collected in future.

What Happens Next?

Three issues will determine whether the present calm lasts.

First is whether airlines comply with the agreed instalment schedules for the outstanding debts.

Second is whether aviation unions accept the NCAA-led repayment process and avoid further actions that could disrupt passengers.

Third is the broader legislative debate over the five per cent TSC — including how it should be collected and how the proceeds should be distributed among aviation agencies.

For passengers, the immediate significance is that operations have returned to normal following the disruption.

For the aviation industry, however, the deeper argument remains unresolved.

The repayment arrangement addresses the accumulated debt. It does not yet settle the larger question of whether Nigeria’s decades-old system of requiring airlines to collect statutory aviation charges from passengers remains the most efficient model for funding aviation regulation and services.