Requirements For Setting Up And Operating Commercial Aviation Services In Nigeria | Adeola Osifeko

INTRODUCTION

In Nigeria, aviation services like any other business are regulated and administered by legislation which sets the course for legal and governance frameworks required to legitimately carry on aviation services classified as air transport or air operating services and allied aviation services in Nigeria. This article shall further consider the categories of air operations, registration and licensing requirements spelt out by the Corporate Affairs Commission Checklist 2022, and the Nigerian Civil Aviation Regulation 2022, (Nig. Cars 2022). For the purpose of this article, focus shall be given to Part 18 of Nig Cars 2023, (“IS 18 Nig Cars 2023”) which addresses civil aviation air transport economic activities.

REGULATORY FRAMEWORK

The aviation industry in Nigeria is primarily overseen by the Federal Ministry of Aviation, which is responsible for the formulation of aviation policies. There are also other government bodies governing and regulating other aviation services in Nigeria such as:

• the Nigerian Airspace Management Agency, established under the Nigerian Airspace Management Agency (Establishment, etc) Act 1999 (NAMA), which provides air traffic and navigation services; and
• the Federal Airport Authority of Nigeria, established under the Federal Airports Authority Act 1996 (FAAN), is responsible for the development, provision and maintenance of airports and associated services.
• the Nigerian Civil Aviation Authority (NCAA), established under the Nigerian Civil Aviation Act 2022 (CAA). It is worthy to note that the CAA empowers the NCAA to among other things make Regulations for air operations and issue the required license, permit, and certificate once the air carrier establishes that it has complied with the requirements of the Corporate Affairs Commission, (CAC).

As a matter of fact, while the CAC[1] prescribes the share capital thresholds for carrying out aviation services, the type of authorization issued establishes compliance with the precursory requirements. These thresholds are as follows:

• Air transport (Local): NGN 500 million
• Air transport (Regional): NGN1 Billion
• Air transport (International): NGN 2 Billion
• Air ambulance, fumigation and private jet: NGN 20 Million
• Air transport training institutions: NGN 2 Million
• Aviation (Ground Handling Services): NGN 500 Million
• Agents of foreign Airlines: NGN 1 Million
• Travel/Tours: NGN30 Million.

LICENSING

Having satisfied the registration requirements, authorization for commercial air operations could be in form of a license, permit and/or any other authorization depending on the nature of the aviation services.

IS 18.2 Nig. Cars 2023 prescribes four types of authorisations issued by NCAA for commercial flight operations’ discussed below:

1. Air Transport License (ATL).

ATL is obtained and renewed by the grant of written application and compliance with the requirements for grant and renewal respectively. The said license is issued by NCAA for carriage of passengers, mail, and cargo by air. ATL is valid for a period of five (5) years and is subject to renewal every five years on expiration of the initial term. Amongst other things, the ATL holder may be required to demonstrate its ability to continue to meet the terms and conditions set forth in the CAA, otherwise, the NCAA can suspend or revoke an ATL if the holder of the ATL contravenes the terms and conditions set forth in the Act, Nig. Cars, rules and orders made thereunder.

2. Air Operating Permit (AoP).

This applies to the permit issued by NCAA for commercial carriage of passengers, mail, and cargo for non-scheduled and charter services, it is usually obtained and renewed by the grant of written application and compliance with the procedures for grant or renewal required by NCAA. The AoP is valid for a period of three years and is subject to renewal every three (3) years. However, the NCAA can suspend or revoke an AoP if the holder contravenes the terms and conditions set forth in the CAA, Nig. Cars, rules and orders made by NCAA.

3. Air Travel Organiser License (ATOL).

ATOL is applicable to tour organisers who are engaged in holiday travels, tour packages, special events, and religious pilgrimages, and can be obtained and renewed by the grant of a written application and compliance with the requirements for grant or renewal submitted to NCAA. An ATOL is valid for a period of 2 years and subject to renewal every two years. However, NCAA can suspend or revoke an ATOL, where the holder contravenes the terms and conditions provided by the in the CAA, Nig. Cars, Rules and orders made by the NCAA.

4. Permit for Aerial Aviation Services, (PAAS).

PAAS is applicable to aerial work operations, flying club, flying school and such other services as may be designated by the NCAA from time to time. It can be obtained and renewed by the grant of written application and compliance with the requirements for grant or renewal required by NCAA. A PAAS is valid for a period of three (3) years and subject to renewal every three (3) years on expiration of the initial term. NCAA can suspend or revoke a PAAS in the format specified in the Regulations where the holder contravenes the terms and conditions provided by the CAA, Nig Cars, Rules, and order made by the NCAA. An applicant of a PAAS shall not be incorporated under Part C of the Companies and Allied Matters Act and any amendments, thereof. Also, the issuance of a security clearance by the relevant agency should precede the issuance of a PAAS.

On 10 July 2023, the NCAA released a public statement directing all right holders to among other things comply with the following[2]:

1. Renew current license/certifications pursuant to Nig.CARs 2023 except for subsisting certificates, licenses, permits, authorisations issued under Nig.CARs 2015, which will remain valid until expiration.
2. Submit all applications for variation and renewal of licenses/certificates before the effective date pursuant to Nig.CARs 2023.
3. Submit all applications for variation and renewal of licenses/certificates before the effective date which is currently at the document evaluation phase of the licensing/certification process pursuant to the Nig.CARs 2023.
4. Ensure all applications for initial issue of licenses/certificates at the document evaluation phase of their licensing/certification are processed from the effective date pursuant to the provisions of the Nig. CARs 2023.

In addition to the above directive, on 11th August 2023, NCAA further directed all air operators to comply with the Nig. CARs 2023 on insurance coverage[3].

Specifically, IS 18.14.1.1 of the Nig. Cars 2023 provides amongst other things that all airlines and other allied aviation service providers must NOT operate without:

1. Adequate and valid insurance cover;
2. Submit to the NCAA copies of valid insurance certificates, evidence of payment of premium and other policy documents of insurance cover of not less than three (3) months as specified in provision.
3. Have adequate insurance documentation which must be renewed before the expiration of the current policy and be submitted to the NCAA as soon as such renewal is effective.

It should further be stated that non-adherence with these obligations will attract immediate sanctions which extends to grounding the specific aircraft and taking enforcement action against any defaulting airline/service provider.

AIR OPERATIONS.

The scope of air operations for the purpose of this article shall be limited to commercial air operations classified into three categories now discussed as follows:

1.Domestic Operations[4]

Generally, commercial domestic operations are classified as scheduled air transport, aerial aviation services, and organized package tours.

Where the operator carries on scheduled air transport between two or more states in Nigeria, such operator is expected to notify the NCAA of its operational routes, the frequency(ies) of operations and the fares to be charged before commencement of operations.

It shall also be required to apply for the relevant applicable license alongside obtaining an Air Operator Certificate (AOC); ensure compliance with the provisions of the CAA, Nig. Cars and other directives made thereunder; show proof of adequate insurance cover for passengers, cargo and third party. However, holders of AOC are not required to obtain flight clearances from the Authority prior to undertaking non-scheduled international operations, however, they are required to depart and enter the country through designated customs aerodromes. In addition, non-scheduled operators shall submit the passenger and cargo manifests, airway bills and client services invoices to the NCAA.

1.1Aerial Aviation Services, (AAS).

AAS are services which include aerial mapping, aerial survey, crop spraying, aerial advertisement, flying club, flying school and such other services as may be designated by the NCAA from time to time. Domestic operators who are holders of Permit Aerial Aviation Services, (PAAS) qualify to carry on AAS and are further required to obtain Safety Certificates from the NCAA before commencing this service. They are also restricted from engaging in any form of carriage of passengers, cargo or mail for hire and reward and any form of operation different from those specified in their Permits.

1.2Self-Handling Services, (SHS).

SHS is a situation in which airport users directly provide one or more categories of ground handling services to the exclusion of contracts with third party providing such services. For the purpose of this regulation, the airport users shall not consider one another as third parties if a private entity holds a majority in another entity and where a single entity has a majority holding in each i.e domestic airlines are considered to operate independently. These operators are required to obtain approval from NCAA after duly fulfilling the statutory requirements as specified by IS 18.12 Nig. Cars 2023 which is applicable to the collection and remittance of all sale and sundry charges.

1.3Organized Package Tour, (OPT)

OPT applies to holders of Air Travel Organiser License (ATOL). OPT are expected to operate within the conditions specified in their license and shall not engage in aircraft operations. They are to have current and adequate bank/insurance bonds to cover their operations.

Before operation commences, license and permit holders must obtain an air operator certificate and meet certain requirements, including providing adequate insurance cover for passengers, cargo and third parties. Permit holders engaged in cargo operations must obtain air operator certificates from the NCAA before operations commence.

2.Regional and International Operations by Nigerian Airlines

An air carrier permit (ACP) is issued by the NCAA to designated Nigerian airlines on regional and international routes, subject to the airline fulfilling the requirements specified in this Regulation. The Nig.Car also mandates all Nigerian airlines designated on regional and international routes to obtain safety certificates to maintain adequate financial standing for their flight operations and show evidence of domestic operations for at least six (6) months.

3.Foreign Airline Operations in and out of Nigeria

IS 18 Nig.Cars 2023 contains specific regulations for commercial air transport by foreign air operators within Nigeria. This regulation sets forth Foreign Carrier Operating Permit (FCOP) as the requisite authorisation issued by the NCAA. A foreign air carrier operating in and out of Nigeria engaging in scheduled international air services, is required to fulfill specified standards i.e desists from operating sale offices and outlets in cities other than the point(s) of entry specified in the subsisting bilateral air services agreement under which a foreign carrier is designated, and shall be limited to the aerodromes and restricted from distributing tickets through banks and other financial institutions as well as engaging in self-handling.

ALLIED AVIATION SERVICES, (AAS).

AAS are services rendered in support of aircraft operations, aerodromes and such support services which enhance the business of air transportation. The regulations[5] provides for the nature ofbusinesses classified as allied aviation services[6] such as: ground handling, agent of foreign airlines, travel agency, cargo agency and air freight forwarding, inflight catering services, aviation fuel supply, air transport training institutions, aircraft sale or leasing and other aviation related services. Nig Cars 2023 further profiles entities qualified to run these businesses[7], prescribes the relevant resources required to discharge actual and potential obligations, and protects service providers from discrimination against or decline of access to any airline, allied service provider in provision of services or facilities at the airport whilst mandating submission of monthly financial obligations to the NCAA.

CONCLUSION.

Compliance with the provisions of IS 18 Nig. Cars 2023 amongst other things establishes consistency and uniformity across the global aviation industry, allowing for seamless operations, in addition to promoting economic growth. It also reflects the strengths and weaknesses of our domestic aviation policy. For instance, due to the global nature of aviation services strong compliance indicates recognition and adherence to international practices, efficiency in harmonising aviation industry laws within our local context and effective enforcement mechanisms through the imposition of sanctions, penalties and fines, which invariably promotes safety and security of investment within the sector. On the other hand, non-compliance reflects inadequate understanding of the industry and inability to compel stakeholders to uphold the law and practices of the industry. The essence of compliance is strongly rooted in predictability, and enforcements, therefore, potential and existing stakeholders are encouraged to adhere to the provisions of the Nig Cars 2023.

Author: AdeolaOsifeko

[1] Corporate Affairs Operations Checklists 2022 pages 19 and 20

[2] Nigeria Civil Aviation Authority Website, ‘Publication & Implementation of Nig. Cars 2023 – Fourth Amendment to Nigeria Civil Aviation Regulations’ 12 July 2023 https://ncaa.gov.ng/media-center/news/publication-and-implementation-of-nig-cars-2023-fourth-amendment-to-nigeria-civil-aviation-regulations/ Accessed on 4 August 2023

[3] Nigeria Civil Aviation Authority Website, ‘ NCAA Demands Compliance with the Civil Aviation Regulation on Insurance Cover 14 August 2023 ‘ https://ncaa.gov.ng/media-center/news/ncaa-demands-compliance-with-civil-aviation-regulation-on-insurance-cover/ Accessed on 14 August 2023

[4] 2023 Nig Cars, Regulations 18.4.2

[5] 2023 Nig. Cars, Part 18.12

[6] 2023 Nig. Cars, Part 18.12.1.2

[7] 2023 Nig. Cars, Part 18.12.1.3

Adeola is an IP lawyer, transactional and corporate governance practitioner with indigenous legal practice experience and global outlook.She curates corporate commercial content on legal advisory and regulatory compliance needs for startups, SMEs and corporate entities seeking to establish,run and scale their businesses in Nigeria. Her contents are customised to provide pragmatic and relevant answers and legal solutions to Nigerian and foreign entrepreneurs/executives seeking corporate-commercial services.