The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has warned that Nigeria’s domestic aviation industry faces an existential crisis as new and overlapping taxes threaten to drive airfares to as high as ₦1 million per ticket and force major airlines out of operation within months.
Speaking on ARISE NEWS on Sunday, Onyema said Nigerian airlines are already “choking” under an unsustainable burden of charges imposed by multiple government agencies, adding that the proposed tax regime could collapse the sector if urgently reviewed.
According to him, airlines currently retain only a fraction of ticket revenue, with the bulk swallowed by regulatory fees, statutory deductions and taxes.
“Out of a ₦350,000 ticket, the airline keeps just about ₦81,000,” Onyema disclosed. “Everything else goes to various government agencies. That is not sustainable for any business.”
Airlines Hit by Multiple, Overlapping Charges
Onyema identified multiple taxation and double charging as the biggest threat to the industry, noting that domestic airlines are subject to deductions from several agencies, including the Nigerian Civil Aviation Authority (NCAA), airport authorities and other service providers.
He explained that the NCAA alone deducts a mandatory five per cent charge on every ticket sold, before airlines contend with landing fees, parking charges, navigation fees and passenger service charges.
The situation, he said, has worsened with the reintroduction of Value Added Tax (VAT) and customs duties on aircraft, spare parts and aviation-related imports.
VAT Reversal Undermines Previous Reliefs
Onyema recalled that the 2020 Finance Act had provided critical relief to the aviation sector by removing VAT on domestic airfares and imported aircraft parts, a move widely praised as necessary to stabilise the industry.
However, he said the new tax provisions reverse those gains and threaten to undo years of fragile recovery.
“Now we are being asked to pay 7.5 per cent VAT on aircraft purchases and spare parts,” he said. “On an aircraft costing about $80 million, add VAT, add customs duties, then add bank interest rates of up to 35 per cent. No airline can survive that.”
‘Policy Contradicts Global Aviation Standards’
The Air Peace boss argued that Nigeria’s tax approach contradicts international best practices as outlined by the International Civil Aviation Organisation (ICAO).
According to him, ICAO guidelines recommend that aviation authorities operate on a cost-recovery basis, not as profit centres for government revenue.
“Aviation is not meant to be milked as a revenue cow,” Onyema said. “Globally, governments support aviation because of its multiplier effect on the economy. Here, we are taxing it to death.”
Risk of Sector-Wide Collapse
Onyema warned that the collapse of domestic airlines would have far-reaching consequences beyond air travel, including job losses, reduced national connectivity and financial sector stress.
He noted that most Nigerian airlines are heavily leveraged, with aircraft financed through bank loans and leasing arrangements.
“If airlines shut down, banks will be exposed. This is not just an aviation issue; it is a systemic economic risk,” he said.
He predicted that without urgent policy intervention, several domestic airlines could go under within three months, leading to mass layoffs and reduced access to air transport across the country.
Airfares Could Hit ₦1 Million
According to Onyema, airlines faced with rising taxes, high fuel costs, foreign exchange volatility and interest rates would have no option but to pass costs to passengers.
“If these policies continue, a domestic ticket could easily rise to ₦1 million,” he warned. “At that point, air travel becomes the preserve of the very rich, and the industry dies.”
Lawmakers Yet to Act
Onyema disclosed that the Airline Operators of Nigeria (AON) has presented detailed, data-backed submissions to the National Assembly and the government’s tax reform committee, outlining the risks posed by the new tax regime.
While acknowledging that lawmakers appeared receptive during consultations, he expressed frustration that concrete policy adjustments have yet to follow.
“We submitted our facts. They understood our position. But implementation is still hanging over our heads like a sword,” he said.
Call for Urgent Policy Review
Onyema called on the Federal Government to urgently reconsider its tax policies toward aviation, warning that short-term revenue gains could destroy a strategic sector critical to national development.
“Aviation is an enabler of trade, tourism, investment and national unity,” he said. “If we allow it to collapse, the cost to Nigeria will be far greater than whatever taxes the government hopes to collect.”
Naija247news Staff ✔
Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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