In a follow-up to the editorial comment on Monday regarding Nigeria, it is with sadness that we see the Nigerian Senate yesterday urging the Economic and Financial Crimes Commission, EFCC, to begin at once the investigation of KLM-Air France, British Airways and Virgin Atlantic Airways over alleged financial fraud and tax evasion.
The Nigerian Senate has directed all foreign airlines operating in the country to immediately refund 5% of Passenger Fuel Surcharge, PFS, to the Federal Government. The Senate also noted that the PFS, being paid by Nigerian passengers on the two British airlines, was not only fraudulent, discriminatory and against aviation regulations, but also a criminal act. Speaking on the second day of the three-day public hearing on the violation of aviation laws and practice by foreign airlines in Nigeria and lapses by regulatory agencies related to the same, the Senate Committee on Aviation stressed that failure on the part of British Airways and Virgin Atlantic to remit 5% of the PFS charged London-bound Nigerian passengers as tax to the Federal Government was illegal and criminal.
According to the committee, the payment of the PFS by Nigerian air travellers was an economic crime perpetrated by "the two foreign airlines". "It is the opinion of this committee that the government is entitled to the five per cent of the PSF charged by the foreign airlines.”
Both BA and Virgin Atlantic admit to not paying the 5% from all sales under PFS for the sheer fact that they did not know of any law requiring that the PFS be counted as revenues accruing to them from ticket sales. In his reaction, General Manager of Air France-KLM Nigeria, Christian Herpi, said if an extant Nigerian law required the airline to pay five per cent from the PFS, it was ready to comply, adding that it had been a practice by airlines worldwide. He said the action was not carried out only by airlines flying from Nigeria. Country Manager of British Airways, Mr. Kolawole Olayinka, said his airline was prepared to comply with the directive immediately, if it was clearly spelt out in the statute books. Olayinka recommended that more frequencies be allocated to airlines flying the routes concerned.
Nigeria needs to sort itself out and establish a low cost flag carrier connecting the home nation to the rest of Africa and stop hitting airlines that are in all reality powering its economy forward.
Meanwhile in India: Captain Gopinath, the founder of Air Deccan and arguably the man who brought air travel to the Indian masses, has secured a no-objection certificate (NOC) from the Indian Ministry of Civil Aviation for a low-cost airline. He has also submitted a proposal to the Ministry for permission to lease a fleet of Airbus and ATR aircraft.
Kingfisher bought a stake in Air Deccan in 2003 and took over the whole company five years ago. With the end of a five-year no compete clause in sight, Gopinath is once again seeking to re-enter the crowded low-cost carrier market. He does not do it with a clean slate either, he is in debt to the tune of Rs 500 crore to banks for his failed cargo venture Deccan 360, which was grounded last year. The debt has led many to ask how he will fund the proposed low-cost venture. Foreign investment perhaps? Emirates disclosed yesterday that it was open to opportunities in India – with his background and reputation, such a partnership could prove to be a heady mix and win adherents in India.
In the US, the markets laughed when the news emerged that Delta was bidding for the ConocoPhillips Trainer refinery but the move is gaining ground, according to industry sources. The bid has been endorsed by the airline’s board of directors and it is alleged that Delta is the favourite. Bidding closes on May 2
Deutsche Bank Securities airline analyst Michael Linenberg has described the bid as "a very bold move” since each penny the airline saves on a gallon of fuel translates into a $40 million saving.
Linenberg said: "The objective would be to achieve a 10 percent price reduction on a large portion of its fuel needs - which, if were achieved, would represent significant savings.”
Delta is likely to receive all of the jet fuel from the Trainer facility, but would also need to swap the gasoline and diesel for jet fuel in other locations near its hub locations.