Nigeria’s domestic aviation sector could be pushed into crisis if newly implemented tax laws are not urgently reviewed, according to Allen Onyema, Chairman and Chief Executive Officer of Air Peace.
Onyema warned that ticket prices on domestic routes could rise beyond ₦1 million, forcing airlines out of business within months and triggering losses for banks, passengers, and the wider economy.
Speaking during an interview on ARISE News, Onyema said Nigerian airlines are being crushed by multiple taxes, levies, and statutory deductions that leave operators with only a fraction of ticket revenue while exposing them to public criticism as profiteers.
Multiple Taxation and Shrinking Airline Revenues
Onyema argued that the structure of aviation charges in Nigeria leaves airlines financially strangled.
According to him, a large portion of ticket revenue is lost to statutory deductions before airlines can cover basic operating costs.
“Take a ticket of about ₦350,000. What comes to the airline is about ₦81,000,” he said. “Yet people talk as if airlines are making excessive profits. That is not true.”
He cited mandatory deductions such as the 5 percent charge imposed by the Nigerian Civil Aviation Authority, alongside numerous other federal and airport-related levies, which he described as overlapping and unsustainable.
Onyema added that the approach contradicts global aviation norms.
He referenced International Civil Aviation Organization, which recommends cost recovery rather than revenue generation by governments from aviation.
“You are not supposed to use aviation to generate revenue for government,” he said. “You charge according to the cost of services rendered. What we have here is the opposite.”
Reversal of 2020 Tax Reliefs and Rising Operating Costs
The Air Peace chairman said the aviation industry is now facing renewed pressure following the reversal of tax concessions introduced under the 2020 Finance Act.
That legislation removed customs duties and VAT on imported aircraft, spare parts, engines, and ticket fares—measures Onyema described as critical to airline survival.
He noted that even with those exemptions, airlines were already contending with high operating costs and expensive financing.
Under the new tax regime, VAT has been reintroduced on aircraft and aviation components.
Onyema explained that purchasing an aircraft valued at $80 million would now attract 7.5 percent VAT, with spare parts similarly taxed.
At the same time, airlines are borrowing at interest rates of between 30 and 35 percent.
“You bring in spare parts, pay VAT, service loans at 35 percent, and still try to keep fares affordable. At that point, you are choking the industry,” he said.
Impact on Passengers, Banks, and the Wider Economy
Onyema warned that airlines would have no choice but to pass rising costs on to passengers, sharply reducing demand and accelerating airline failures.
“With VAT on ticket fares and aircraft imports, domestic airfares could hit ₦1 million and beyond,” he said, warning that some airlines could collapse within one month, while larger operators may last only three months under the new regime.
He added that Nigerian banks, which have financed aircraft acquisitions and working capital for airlines, would also face significant losses if carriers default.
According to Onyema, the Airline Operators of Nigeria (AON) has repeatedly presented these concerns to the National Assembly, tax reform committees, and government consultants, many of whom were reportedly surprised by the scale of the financial burden on airlines.
He urged the federal government to revert to the 2020 tax framework, remove VAT on ticket fares and aircraft imports, and consider a dedicated foreign exchange window for airlines.
“Aviation is a catalyst for economic growth and national integration,” Onyema said. “All over the world, airlines are supported by governments.
We are not asking for handouts—just policies that allow the industry to survive.”
He expressed confidence that President Bola Tinubu’s administration would ultimately intervene, citing past instances where government acted swiftly in response to industry concerns, but warned that time was running out.
