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Airlines groaning under multiple taxation – Okonkwo

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Amidst ongoing developments in Nigerian aviation, United Nigeria Airlines Chairman/CEO and Airline Operators of Nigeria spokesperson, Obiora Okonkwo, has provided insights into sector policies, infrastructure gaps, and the significant impact of multiple taxation on local operators, in this interview with OLASUNKANMI AKINLOTAN, which also covered industry realities and prospects for regional development.

What distinguishes your airline on the newly launched Accra route, and what is your plan to ensure long-term viability in this competitive market?

Passengers can only buy tickets from airlines that are available. We have not been available in the market, so we could not have competed. Now, we are in the market; our first strategy is promotion, letting people know that we are here with an exceptional service to offer. Our CRJ-900 for that route is a beautiful aircraft. The aircraft is superb; the configuration is great, the interior is marvellous, it is very suitable for this kind of operational flight, and it has a passenger capacity of 90. So, if we have an adequate and a reasonable number of passengers to fly there, that aircraft will be dedicated to that route. We also have the ERJ-145 to compete. Pretty much, we are offering the passengers not just an apple-for-apple comparison but something bigger and better than an apple. That is one way to tell you that we are ready and we are prepared. In terms of the saturation of the market, at least from available data, out of the whole region of West Africa, traffic from Nigeria to Accra is more than all the other regional flights. I mean the whole traffic from Nigeria to other regions. 50 per cent of the traffic is between Nigeria and Accra. So, it is still a place to compete. In other words, we have to be as reasonable and fair as possible with our pricing and costing. Above all that, we will do more than the passengers’ expectations. Every passenger will want to have a convenient schedule and then, with that convenient schedule, will want to get there on time. If you look at our records at United Nigeria, our on-time departure is almost 98 per cent, if not more. There is no record that is better than that. Those things we have developed out of our experiences in the domestic market, we will take them to the regional level.

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Given the heavy burden of charges, including an $80 FAAN fee, a $20 NCAA security levy, and a separate 5% ticket sales tax, which are pricing many passengers out of air travel, how can you possibly sustain your new Ghana route amidst such high costs and intense competition?

This should be the industry’s concern. This should be a national concern because it is not to the government’s credit that Nigerian airlines that start operations in the region would close shop shortly after. All the airlines that operate primarily are private companies, and they can only operate on a route if it is sustainable. The maximum you can fly is three to six months, unless you have some support. Nigeria has a reputation for taxing more than any other country, and that is not good for aviation. It is not good for the passengers. Every passenger taking off from Nigeria to Ghana is already paying $100, and then returning from Ghana to Nigeria is $60. If you have to go that route from Abuja to Ghana, you buy a ticket for as much as N300,000, and when you factor in tax and fuel, you would find out that the ticket yields zero profit for the operator. Such things are killing us and suffocating us. If the taxes are so high and Nigerian operators cannot remain competitive on that route, these other carriers coming in, whatever ticket you pay for, represent a capital flight from Nigeria. It is a capital flight because those foreign airlines, even if you buy their ticket in Nigeria, have to convert that money and send it back to their own country. There is no obligation that they must leave the money here. Imagine if Nigerian airlines were competitive and not suffocated by all those charges. For instance, if they had access to single-digit loans, they could acquire more aircraft, and the business could be taken away from the international carriers.

In such a case, the companies that would be closing shop would not be Nigerian companies; it would be all those carriers who have been exploiting these routes.

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Despite the current administration’s efforts to develop the aviation sector, airlines still face significant hurdles like high taxes and an inability to secure single-digit loans. What is the concrete impact of these financial burdens on your operations?

When we talk about single-digit loans, we are bearing in mind that aviation is a worldwide industry and the competition can be very high. In Nigeria, we are competing in the same market with other large carriers and legacy carriers such as British Airways, American Airlines, Lufthansa, and Qatar, just to name a few. In their countries, they have loans at two to three per cent, not even through a special window loan. Compared with our market, we have to take loans in Naira and convert them into forex at the existing commercial rate, which is already over 30 per cent. It is a spillover effect.

One way or another, all these things are factored into our costing. When all these things are done, our ticket is the major product. For instance, a trader, businessperson, or manufacturer who has a product has to factor in everything that went into the product before arriving at the cost. The components must be able to cover the cost before a tiny margin is added. Automatically, if somebody in another country is getting interest loans at five per cent and we are getting it at 35 per cent, my ticket cost is already 30 per cent more than it should be in that country. However, if you do not price accordingly, you will deprive yourself of other benefits. When you fail to do that, you find yourself at a level where you cannot make enough margin to grow, expand, and strengthen your business. Businesses must be able to remain sustainable. It must be viable to attract financing because airlines are capital intensive. The business owners can only scale up with huge finances. These finances are mostly available with the banks or other financial institutions. For them to do business with an operator, the operator’s books must be very attractive to show a good business plan. We are asking the government to treat aviation as an essential business. It should not be seen as a business of one individual because where there is strong aviation, it is a catalyst; it is an enabler to other economic growth. If you do not make it available for people to fly from Abuja to Lagos comfortably, it will affect their business. The point we are trying to make to the Nigerian government, the policymakers and even the general public is that, for instance, there are incentives attached to agriculture. Yes, feeding is good, but it is just as essential as aviation. There is no government economy that will grow if focused only on the lower-income elements. For any nation to grow, they have to put in place a policy that is good enough to build the middle class and even the upper class. I do not think that any country can achieve all its economic growth from tax. You cannot tax yourself, you cannot tax your country, and you cannot tax your citizens to greatness. I strongly believe that tax is necessary, but it has to be a tax that will enable other things to grow. We still have certain things that have been considered in this new review for the aviation industry that are a killer. It will erode all the good intentions this government has for this industry.

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Lagos enforces 5% tax on gaming winnings

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The Lagos State Government has begun enforcing a five per cent withholding tax on gaming winnings from licensed gaming platforms operating within the state.

The Chief Executive Officer of the Lagos State Lotteries and Gaming Authority, Are Bashir, made this known in a public notice issued on Friday.

He stated that the policy, which takes immediate effect, applies to players’ net winnings and is to be deducted at the point of payout.

Bashir directed all licensed gaming operators in the state to comply immediately with the new tax framework in line with existing Nigerian tax laws and regulatory directives governing the gaming industry.

According to the notice, the five per cent deduction will be automatically withheld before winnings are paid to players and remitted to the Lagos State Internal Revenue Service as the statutory tax authority.

Bashir said the initiative is part of the state’s wider efforts to improve tax compliance, transparency and accountability in the fast-growing gaming sector.

“The measure forms part of Lagos’ broader drive to strengthen tax compliance, transparency, and accountability in the rapidly expanding gaming sector,” the notice read.

He said under the new arrangement, players are required to provide their National Identification Number (NIN) in line with Know Your Customer (KYC) regulations.

Bashir clarified that all deductions and remittances will be handled strictly by licensed gaming operators in accordance with regulatory requirements, adding that players will receive their winnings net of the statutory deduction, with proper records maintained to ensure transparency.

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He further noted that the withholding tax deducted will serve as a tax credit to the player.

“All licensed gaming operators in Lagos State have now been formally directed to commence the deductions with immediate effect,” the notice said.

Bashir reiterated that the policy is aimed at ensuring effective regulation of the gaming industry while aligning both operators and players with existing tax obligations in the state.

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Customs hand over seized N40.7m petrol to NMDPRA

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The Comptroller-General of Customs, Adewale Adeniyi, on Friday handed over 1,650 jerrycans of Premium Motor Spirit, worth N40.7 million, to the Nigerian Midstream and Downstream Petroleum Regulatory Authority for further investigation.

Addressing journalists at the handover ceremony held at the Customs Training College in Ikeja, Adeniyi said the seized fuel was intercepted at various locations, including Badagry, Owode, Seme, and other axes within Lagos State.

Represented by the National Coordinator of Operation Whirlwind, Deputy Comptroller-General Abubakar Aliyu, Adeniyi said the contraband was intercepted over the past nine weeks.

“In the space of nine weeks, our operatives intensified surveillance and enforcement across critical border communities. A total of 1,650 jerrycans of 25 litres each were seized along notorious smuggling routes, including Adodo, Seme, Owode Apa, Ajilete, Idjaun, Ilaro, Badagry, Idiroko, and Imeko. The total duty-paid value of the PMS is N40.7 million,” Adeniyi said.

He added that three tankers used to transport the fuel were carrying 60,000, 45,000, and 49,000 litres respectively, totalling 154,000 litres of PMS.

According to Adeniyi, the interception was the result of intelligence-driven operations and the vigilance of Operation Whirlwind in safeguarding Nigeria’s economy and energy security.

He explained that the transportation and movement of petroleum products are governed by regulatory frameworks and standard operating procedures designed to prevent diversion, smuggling, hoarding, and economic sabotage.

“These items contravened the established Standard Operating Procedures of Operation Whirlwind,” Adeniyi said, emphasising that such violations undermine government policy, distort market stability, and deprive the nation of critical revenue.

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He warned that border corridors such as Owode, Seme, and Badagry remain sensitive economic arteries. “These routes have historically been exploited for illegal cross-border petroleum movement. Under our watch, there will be no safe haven for economic sabotage,” he said.

Adeniyi said the handover to NMDPRA reflects inter-agency collaboration. “While Customs enforces border control and anti-smuggling mandates, NMDPRA regulates distribution and ensures compliance with downstream laws. This collaboration ensures due process, transparency, and regulatory integrity,” he said.

Representing NMDPRA, Mrs. Grace Dauda said the agency ensures that petroleum products produced in Nigeria are consumed domestically. “It is unfortunate that some businessmen attempt to smuggle the product out of the country. The public must work together to stop economic sabotage,” she said.

Operation Whirlwind is a special tactical enforcement operation launched by the Nigeria Customs Service in 2024 to combat cross-border smuggling of petroleum products, particularly PMS, and other contraband that threaten Nigeria’s economic security. It was established in response to a surge in illegal fuel diversion across the country.

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Stocks drop, oil rises after Trump Iran threat

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Most Asia equities fell and oil prices rose on Friday after Donald Trump ratcheted up Middle East tensions by hinting at possible military strikes on Iran if it did not make a “meaningful deal” in nuclear talks.

The remarks fanned geopolitical concerns and cast a pall over a tentative rebound in markets following an AI-fuelled sell-off this month.

Traders are also looking ahead to the release of US data later in the day that will provide a fresh snapshot of the world’s top economy.

A slew of forecast-beating figures over the past few days have lifted optimism about the outlook but tempered expectations for more interest rate cuts.

The US president told the inaugural meeting of the “Board of Peace”, his initiative to secure stability in Gaza, that Tehran should make a deal.

“It’s proven to be over the years not easy to make a meaningful deal with Iran. We have to make a meaningful deal otherwise bad things happen,” he said, as he deployed warships, fighter jets and other military hardware to the region.

He warned that Washington “may have to take it a step further” without any agreement, adding: “You’re going to be finding out over the next probably 10 days.”

Israeli Prime Minister Benjamin Netanyahu earlier warned: “If the ayatollahs make a mistake and attack us, they will receive a response they cannot even imagine.”

The threats come days after the United States and Iran held a second round of Omani-mediated talks in Geneva as Washington looks to prevent the country from getting a nuclear bomb, which Tehran says it is not pursuing.

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The prospect of a conflict in the crude-rich Middle East has sent oil prices surging this week, and they extended the gains Friday to sit at their highest levels since June.

Equity traders were also spooked.

Hong Kong fell as it reopened from a three-day break, while Tokyo, Sydney, Wellington and Bangkok were also down. However, Seoul continued to rally to a fresh record thanks to more tech buying, with Singapore, Manila and Mumbai also up.

City Index market analyst Matt Simpson said a strike was not certain.

“At its core, this looks like pressure and leverage rather than a prelude to invasion,” he wrote.

“The US is pairing military readiness with stalled nuclear negotiations, signalling it has credible strike options if talks fail. That doesn’t automatically translate into boots on the ground or a regime-change campaign.

“While military assets dominate headlines, diplomacy is still in motion. The fact talks are continuing at all suggests both sides are still probing for a diplomatic off-ramp before tensions harden further.”

Shares in Jakarta slipped even after Trump and Indonesian President Prabowo Subianto reached a trade deal after months of wrangling.

The accord sets a 19 percent tariff on Indonesian goods entering the United States. The Southeast Asian country had been threatened with a potential 32 percent levy before the pact.

Jakarta also agreed to $33 billion in purchases of US energy commodities, agricultural products and aviation-related goods, including Boeing aircraft.

– Key figures at around 0700 GMT –

Tokyo – Nikkei 225: DOWN 1.1 percent at 56,825.70 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 26,508.98

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Shanghai – Composite: Closed for holiday

West Texas Intermediate: UP 0.9 percent at $67.05 per barrel

Brent North Sea Crude: UP 0.9 percent at $72.27 per barrel

Euro/dollar: DOWN at $1.1756 from $1.1767 on Thursday

Pound/dollar: DOWN at $1.3448 from $1.3458

Euro/pound: DOWN at 87.42 pence from 87.43 pence

Dollar/yen: UP at 155.17 yen from 155.07 yen

New York – Dow: DOWN 0.5 percent at 49,395.16 (close)

London – FTSE 100: DOWN 0.6 percent at 10,627.04 (close)

AFP

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