Air Peace Chairman and Chief Executive Officer, Allen Onyema has stated that Nigeria’s domestic aviation sector is facing a looming crisis, as newly introduced tax laws threaten to drive ticket prices beyond ₦1 million and force airlines out of business, warning that unless urgent steps are taken to reverse the policy, the industry could begin to collapse within months, with severe consequences for passengers, banks and the wider economy.
Speaking during an interview yesterday, Onyema said Nigerian airlines are weighed down by excessive taxation, levies and charges that leave operators struggling to survive while being wrongly portrayed as profiteers. He explained that the bulk of ticket revenue is lost to statutory deductions, leaving airlines with only a fraction of what passengers actually pay.
“The Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about ₦350,000. What comes to the airlines is about ₦81,000 Naira. And people, everybody’s talking about the airlines as if they’re making a kill; it’s not true”.
He faulted what he described as multiple and overlapping charges imposed on airlines, including a mandatory 5 percent deduction on every ticket sold. “We are suffering from multiple taxation, multiple charges. For example, the NCA, 5% for every ticket, Mandatorily. That is to NCA alone. There are so many other charges”.
Onyema argued that these charges ultimately reduce passenger demand and contradict international aviation standards. He said: “The International Civil Aviation Organisation, (ICAO), says that you are not supposed to go into revenue generating for government. What you do is cost recovery”.
According to him, airlines were still grappling with numerous other charges across the country. He said, “Even then, airlines are still suffering so many other multiple charges all over the country.” Now, the new tax law has brought those things back; all of them”.
He explained that buying an aircraft valued at $80 million would now attract 7.5% VAT, while spare parts are similarly taxed. Onyema said the combined effect of high borrowing costs and renewed taxation makes airline operations unsustainable. “Funds borrowed from the bank are 30–35%. So, you bring in spare parts, you pay 7.5% on your spare parts. Ticket fares will hit $1.7 million soon. At 35% we are choking. You don’t do that”.
He warned that the financial pressure would inevitably be transferred to passengers, predicting an unprecedented surge in domestic fares if the policy is implemented fully.
Onyema said airline operators, under the umbrella of the Airline Operators of Nigeria, (AON) have repeatedly submitted their concerns to government authorities, including the National Assembly and the tax reform committee. He said lawmakers and consultants expressed surprise at the scale of the burden on airlines and acknowledged the risks to the economy.
He warned that failure to permanently amend the law could trigger a chain reaction, including airline collapses and heavy losses for Nigerian banks that have financed aircraft acquisitions.
Onyema explained that the federal government would intervene, praising President Bola Tinubu and key economic officials for previously responding swiftly to industry complaints.
