The Federal Government's recent reduction of aviation agencies' contributions to the Treasury Single Account (TSA) from 50 per cent to 30 per cent is a welcome development, but Nigeria remains far from complying with International Civil Aviation Organisation (ICAO) recommended practices, reports OLUSEGUN KOIKI.
Background of TSA Deductions
For about six years, Nigeria's aviation industry has been locked in a recurring battle with the Federal Government over revenue deductions from aviation agencies into the TSA. The government under late President Muhammadu Buhari, through the Office of the Accountant-General of the Federation, introduced automatic deductions in 2020 from operating surpluses and inflows of government agencies under the TSA framework. Initially set at 25 per cent of revenue generated by all agencies, including aviation parastatals, the policy aimed to improve transparency, reduce leakages, and centralize government revenues. Some parastatals were designated as “super agencies” due to their significant revenue generation, requiring appropriate monitoring. This categorization became one of the most contentious issues in the aviation sector, pitting regulators, unions, and experts against the government.
The deduction rate was later raised to 40 per cent under Buhari, and President Bola Tinubu increased it to 50 per cent upon assuming office in 2023. After numerous agitations, protests, negotiations, and appeals from aviation stakeholders, the Federal Government recently reduced the deduction to 30 per cent from the contentious 50 per cent rate that had sparked widespread outrage. Although the six affected agencies—Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigeria Civil Aviation Authority (NCAA), Nigerian Safety Investigation Bureau (NSIB), Nigerian Meteorological Agency (NiMet), and Nigerian College of Aviation Technology (NCAT)—remained silent, a source close to one agency told The Guardian that the reduction was implemented in the last quarter of 2025.
Stakeholder Concerns
While the deduction reduction is seen as positive, many stakeholders insist the fundamental issue remains unresolved. They question whether aviation agencies should be subject to such deductions at all, especially when international standards recommend that revenues generated within the aviation industry be reinvested in the sector for development and facility upgrades. ICAO document 8632 on 'Policies Taxation in the Field of International Air Transport' urges member states to eliminate taxes on the sale and use of international air transport and ensure that any levies from aviation are directed back into the industry for aviation purposes. ICAO also states that charges imposed on airlines and operators must directly relate to the costs of providing airport or air navigation services and should not exceed those costs. Revenues from aviation-specific charges or levies should be used strictly for civil aviation infrastructure, operations, or related safety and security, and charges should not unjustly discriminate against international civil aviation relative to other transport modes.
Industry experts have consistently argued that aviation agencies are not traditional revenue-generating entities but institutions engaged primarily in cost recovery to fund safety oversight, infrastructure maintenance, personnel training, and service delivery. They warned of a looming collapse of critical services if deductions continued.
Expert Opinions
Former Director-General of Civil Aviation (DGCA) Musa Nuhu told The Guardian that deductions from earnings of government agencies, especially NCAA, are unnecessary. He explained that NCAA is not revenue-generating and should not remit funds to the government, aligning with ICAO recommendations, though member states can develop their own policies. He added: “However, this is contrary to the ICAO recommendation. But the government must have its own reason for doing what it did. We, as industry experts, do not agree with it. NCAA does not charge for profit in the services it provides, and cost recovery is not enough to run the agency. Cost recovery earnings are not enough for the agency to pay its over 1,500 staff, and when you compare what the NCAA charges to what the Ghana Civil Aviation Authority (GCAA) charges, it is like day and night. GCAA charges very highly, and they also charge in dollars.” On the 20 per cent reduction, Nuhu described it as a positive development showing government sensitivity to industry issues, but noted that the industry is not where it should be.
Aviation analyst Charles Amokwu said aviation agencies are not traditional revenue-generating entities but parastatals engaged primarily in cost recovery. He queried the initial 50 per cent deduction, which he said contradicted ICAO principles. He added that Nigeria's aviation agencies depend heavily on internally generated revenues, and removing any percentage will affect safety oversight, infrastructure maintenance, and human capacity development. He lauded the reduction to 30 per cent but said reverting to zero per cent deductions would lead to ICAO compliance.
Aviation expert Samuel Caulcrick described Nigeria's aviation funding model as fundamentally flawed, noting that diversion of aviation-generated revenues into the general treasury undermines the purpose of those funds. Charges like the 5 per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) are specifically imposed to support safety oversight and development. He said: “The financing and budgeting model for Nigeria's aviation agencies is systemically flawed – viewed any other way is detrimental to air safety. It violates ICAO standards. ICAO is clear: 'all revenue generated within the aviation industry should be reinvested directly back into the industry.' This principle exists to maintain safety standards, fund oversight and develop critical infrastructure. It is not discretionary. It is therefore wrong for the government to demand a 50 per cent deduction from the 5 per cent TSC and CSC. Their purpose is air travel safety, not to be hijacked for general revenue.” He argued that the government could legitimately seek cost recovery where it funds infrastructure 100 per cent.
Aviation consultant Adebayo Adesanya said aviation's unique technical and safety-sensitive nature makes it unsuitable for blanket fiscal policies. He warned that continued diversion of aviation revenues could lead to deterioration in safety, security, and passenger comfort, and advocated for greater operational autonomy for aviation agencies.
President of Aviation Round Table Initiative (ART) Ademola Onitiju said aviation should be viewed as a catalyst for national development, stimulating trade, tourism, investment, and job creation. He advocated Public-Private Partnership (PPP) models for financing aviation infrastructure, with private capital attracted to airport development and air navigation projects, provided the operating environment remains predictable and investor-friendly. He added that certain sovereign obligations, such as navigational services and safety infrastructure, should continue to receive public funding.
While the decrease from 50 per cent to 30 per cent may ease some financial pressure, stakeholders argue that deductions should either be eliminated entirely or substantially reviewed to align with global best practices, as aviation agencies still face significant funding challenges affecting their competitiveness.
