The Centre for the Promotion of Private Enterprise (CPPE) has hailed President Bola Tinubu’s approval of a 30 per cent debt discount for Nigerian airlines, but warns that without urgent reforms to the sector’s high-cost structure, the relief may offer only temporary respite rather than a lasting solution.

In a statement released on 26 April and signed by its Chief Executive Officer, Muda Yusuf, an economist, the Centre described the debt relief as timely, given the financial burden airline operators continue to bear. However, it maintained that a debt discount alone is insufficient.

Recall that Mr Tinubu approved a 30 per cent discount on outstanding statutory fees owed by domestic airlines to aviation agencies. The measure is intended to ease operational pressures within Nigeria’s aviation sector amid a spike in the price of Jet A1 fuel, which has pushed several airlines to the brink of suspending operations.

The relief, according to the government, covers accumulated debts, including parking charges payable to the Federal Airports Authority of Nigeria, navigational charges owed to the Nigerian Airspace Management Agency, as well as other regulatory obligations.

The CPPE, in its statement, noted that while the debt discount offers short-term respite, it does not address the deeper structural cost challenges confronting the aviation sector.

Cost structure remains core problem

Mr Muda commended both the president and the minister of aviation and aerospace development, Festus Keyamo, describing his engagement with industry stakeholders as “impactful and commendable.”

However, he argued that the fundamental problem lies in the cost environment within which Nigerian airlines operate, a regime of multiple charges imposed by three key government agencies: the Nigerian Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN), and the Nigerian Airspace Management Agency (NAMA).

Industry estimates suggest that these charges account for as much as 35 per cent of airline revenues, a level he described as “clearly incompatible with the thin margins typical of the aviation business”.

Globally, aviation is a low-margin industry, with airlines in stable markets typically recording profit margins of between two and five per cent in favourable years. A charge structure that absorbs 35 per cent of revenue leaves operators with limited capacity to manage costs, invest in growth, or even remain viable.

Multiple charges weigh on domestic airlines

CPPE outlined what it described as a long and fragmented chain of levies that domestic airlines must contend with. These include ticket sales charges, cargo sales charges, passenger service charges, landing and parking fees, aircraft inspection charges, administrative and facility fees, boarding bridge charges, fuel-related charges, as well as import duties on aircraft and spare parts.

It characterised this array of levies as “overly burdensome, fragmented and detrimental to the sustainability of domestic airline operations”.

The CPPE boss noted that while each charge may appear manageable in isolation, their cumulative effect creates a continuous burden throughout an airline’s operations from landing and passenger boarding to cargo handling and the importation of essential aircraft components.

According to him, this cost environment constrains airlines’ ability to invest in modern aircraft, maintain service quality, and keep ticket prices affordable for the average passenger.

Aviation’s growing importance to economy and safety

The centre’s concerns extend beyond the airlines themselves. It situates the aviation challenge within a broader national context, noting that the sector is critical to economic connectivity, trade facilitation, investment flows, business mobility, and national integration.

As Africa’s most populous country and one of its largest economies, Nigeria relies heavily on the efficient movement of people and goods across its vast geography. This, the centre argued, is not optional but an economic necessity.

It further noted that road travel has become increasingly unsafe in many parts of the country, prompting more Nigerians to opt for air travel as a safer alternative for inter-city and inter-state journeys.

“The sector has also become even more critical because road travel has become increasingly unsafe in many parts of the country, compelling many Nigerians to opt for air travel as a safer alternative,” the statement said.

This shift, CPPE argued, elevates the issue beyond commercial viability to one of public welfare, stating that when airlines collapse or ticket prices become prohibitively high, the impact is felt not only by business travellers but also by ordinary Nigerians seeking safer travel options.

A history of failure

CPPE’s concerns are underscored by what it described as a “persistently high airline mortality rate” in Nigeria’s aviation sector. Airlines have entered and exited the market with troubling frequency, often leaving passengers, employees, and investors adversely affected.

It linked this pattern to the challenging cost environment, arguing that heavy charges, fragmented levies, and high fuel costs have made it extremely difficult to build sustainable domestic airline operations.

Without addressing these structural issues, CPPE warned that debt relief measures may merely delay, rather than prevent, future airline failures.

CPPE demands aviation cost rationalisation

The centre called for a comprehensive rationalisation of Nigeria’s aviation charge structure. This, it said, should involve not only reducing the size of individual levies but also streamlining the number of charges imposed on airlines.

It argued that a more efficient cost structure would enhance the viability and competitiveness of domestic airlines, improve service quality, and make air travel more affordable for the public.

CPPE also framed the issue as a matter of safety, warning that excessive financial pressure on operators could have unintended consequences.

“This is not only an economic imperative but also a safety consideration, as excessive financial pressure on operators could have unintended consequences for operational standards,” the statement said.