ASRTI Proposes Fixed TSC Fee to End Nigeria Airline Dispute

ASRTI Proposes Structural Reform to TSC Dispute

The Aviation Safety Round Table Initiative (ASRTI) has intervened in the ongoing conflict between the Nigeria Civil Aviation Authority (NCAA) and the Airline Operators of Nigeria (AON) regarding the mandatory 5% Ticket Sales Charge (TSC). With domestic airlines reportedly owing the regulator over N20 billion in unremitted funds, the industry think-tank argues that the current percentage-based model is fundamentally flawed and requires a structural overhaul.

According to the NCAA official website, the TSC is a statutory requirement under the Civil Aviation Act, designed to fund safety oversight and air navigation services. However, ASRTI President Air Commodore Ademola Onitiju (Retd) asserts that the current ad valorem model effectively forces airlines to act as unpaid tax collectors. The report highlights that operators must absorb merchant transaction costs on funds that are not their own, creating significant financial strain in an industry already facing thin profit margins.

Operational Impacts and Revenue Leakage

The current system forces airlines to commingle regulatory collections with their own operational revenues. Industry data indicates that airlines, struggling with rising costs—including Jet A1 fuel prices that surged over 300% between February and April 2026—often face the temptation to deploy these funds for daily survival. This practice frequently leads to a cycle of mounting debts, regulatory sanctions, and the recurring "no-pay, no-service" confrontations that have disrupted domestic flight schedules.

Furthermore, the report notes that the percentage-based structure incentivizes airlines to manipulate ticket pricing. Operators often keep base fares artificially low while inflating ancillary fees, fuel surcharges, and currency adjustment levies, which are excluded from the 5% calculation. This strategy minimizes the regulator's earnings while complicating the financial transparency required by ICAO Doc. 9082, which mandates that user charges should be cost-related and transparent.

Automation as a Solution

To mitigate these systemic issues, ASRTI has proposed a transition from the variable 5% charge to a flat, fixed fee per domestic passenger segment, with a dollar-denominated equivalent for international flights. The group suggests that the integration of an automated split-payment engine at the point of sale would solve the core dispute. Under this framework, payment gateways would automatically sweep the fixed regulatory fee directly into the Treasury Single Account (TSA), while routing the base fare to the carrier's operating account in real time.

This proposed model mirrors the success of the Federal Airports Authority of Nigeria (FAAN) Passenger Service Charge automation in the early 2010s, which effectively removed airlines as intermediary debt-holders for regulatory fees. By eliminating the manual reconciliation process, the regulator would avoid the administrative burden of chasing historical debts, while airlines would be relieved of the liability and merchant fees associated with collecting government taxes.

Why the TSC Dispute Matters

For the NCAA, the current situation represents a significant revenue leakage that threatens the funding of critical safety infrastructure. For AON members, the dispute highlights the precarious nature of operating in an environment where cash-before-service demands for fuel and maintenance often clash with regulatory remittance obligations. The resolution of this standoff through a fixed-fee model would provide a predictable, automated revenue stream for the regulator and reduce the operational risk currently borne by domestic carriers.