FG Strips NCAA of Aviation Economic Regulations

Federal government is currently tinkering with the establishment of an autonomous body to be known as Nigerian Aviation Economic Regulatory Unit [NAERU] for economic regulation of the nation’s aviation industry

The latest developments are contained in the new Nigerian Civil Aviation Policy, 2013 released last weekend by Princess Stella Adaeze-Oduah, minister of Aviation, which implied that the Nigeria Civil Aviation Authority has been stripped of the duties.

NAERU is to regulate the economic, commercial and financial practice of the aviation service providers.

Tariff of aviation service providers are to be regulated by the Economic Regulator in accordance with ICAO policy and in consultation with interested stakeholders of the services.

According to the new policy, the new unit is being established so as to minimize the potential misuse of market power by aviation service providers and foster a competitive, efficient and fair commercial environment where passengers receive quality services at reasonable prices.

The autonomous Economic Regulatory Unit however will be supervised by the Minister of Aviation when established.

The objectives of the new unit as stated in the Aviation Policy are to, “Remove leakage and ensure transparency of all financial data required to determine the basis for charges Assess and encourage efficiency and efficacy in the operation of providers Monitor and encourage investments to meet future demand Ensure users views and interest are adequately taken into account.

“Ensure safety and security of operations, development and maintenance of infrastructure, promotion of competition and fair access of users to airport and air navigation services at rates and charges consistent with ICAO policies and guidelines and the NCAP.

The Unit will also “Ensure that all aviation tariffs and charges are in accordance with ICAO policy and guidelines.

Strategically, in pursuance of the above objectives, government will ensure the following: “Put in place necessary machinery to regulate the economics of respective airports and air navigation services and facilitate the establishment of an autonomous Aviation Economic Regulatory Unit”.

Revenues generated by the civil aviation sector are re-invested in this sector in accordance with ICAO’s policies on charges (Doc 9082). Aviation charges are only applied to services rendered and in accordance with ICAO policy and guidelines and international best practices.

Aviation tariffs and charges are to be reviewed from time to time in accordance with the realities in the industry and in consultation with interested stakeholders. All aeronautical charges are to be filed with the Nigerian Aviation

Nigerian Aviation Economic Regulatory Unit will oversee, intervene and mediate in case of predatory pricing/ practices in the interest of the traveling public.

It will also “Put in place adequate rules of competition in Air Transport services and dispute resolution mechanisms that cover third countries and companies whose activities could affect and or distort competition.

Increase market access and allow for competition with all international airports developed as economic hubs in line with the Aerotropolis concept.

Facilitate a single window clearing system for an efficient and quick transit of services.

However, the Nigerian Civil Aviation Authority [NCAA] will continue to charge statutory fees for inspections, certifications, registrations and issuance of Licenses, Certificates, Permits, and Approvals.

Government, according to the document, will continue to provide adequate subventions and budgetary allocations to the NCAA to further enhance its regulatory functions.

The Policy Statement also provided that Government is to encourage Public – Private Partnership in the financing and management of airports and air navigational infrastructural facilities.

This is aimed at providing adequate funding for the development of world- class airports, air navigation, meteorological and training infrastructure facilities that meet ICAO SARPs and all International best practices.

Nevertheless, in pursuit of this objective, the government will accomplish the following: “Encourage commercialization and privatization of airports and air navigation services.

“All Aviation Agencies shall implement innovative financing schemes to modernise their infrastructure and increase capacity.

“All Aviation Agencies to put in place effective cost and revenue accounting system, sound methodology for determining the cost basis for charges, internationally recognized cost recovery policies and effective mechanism for the collection of charges in order to attract private sector partnership and financing in the development and collection of aviation services revenues.

Then, Service Providers should be encouraged to consider the use of pre-funding fees as a means of financing long-term, large-scale investment provided there is effective and transparent economic oversight of user charges and the related provision of services, including performance auditing and benchmarking.