Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has warned that Nigeria’s domestic aviation industry faces a severe crisis if newly introduced tax laws are implemented, predicting that airfares could rise beyond ₦1 million and several airlines could collapse within months.
Speaking in an interview with ARISE NEWS on Sunday, Onyema said excessive taxation, levies and statutory deductions are placing unsustainable pressure on local carriers, contrary to global aviation standards and best practices.
He said Nigerian airlines are routinely portrayed as profiteers, despite retaining only a small fraction of ticket revenue after mandatory deductions.
“For a ticket of about ₦350,000, what comes to the airline is roughly ₦81,000. Yet people assume airlines are making excessive profits. That is simply not true,” Onyema said.
He cited multiple and overlapping charges, including a mandatory five per cent deduction on every ticket sold, as key contributors to the industry’s financial strain.
“We are suffering multiple taxation and multiple charges. The five per cent alone goes to the aviation authority, and there are many others,” he said.
Onyema noted that the International Civil Aviation Organisation (ICAO) discourages governments from using aviation as a revenue-generating tool, recommending cost recovery instead.
“ICAO is clear: aviation charges should be for cost recovery, not revenue generation. You charge based on the services you render. What is happening here is the opposite, and that is why airlines are not growing,” he said.
He recalled that the 2020 Finance Act provided significant relief to the sector by removing customs duties and VAT on imported aircraft, spare parts, engines and ticket fares. According to him, the reversal of those concessions under the new tax regime has reintroduced financial pressures the industry can no longer absorb.
“The 2020 Act removed customs duties and VAT on aircraft, spare parts and ticket fares. Even with that relief, airlines were still struggling. Now, the new tax law has brought all of those charges back,” Onyema said.
He explained that under the revised framework, importing an aircraft valued at $80 million would attract 7.5 per cent VAT, in addition to similar taxes on spare parts, at a time when airlines borrow funds at interest rates of 30–35 per cent.
“With borrowing costs at 30 to 35 per cent, plus VAT on aircraft and spare parts, operations become unsustainable. You don’t run aviation like that,” he said.
Onyema warned that the cumulative effect of the taxes would be passed on to passengers, leading to unprecedented fare increases.
“If this tax reform is implemented, some airlines will collapse within one month, and bigger ones within three months. At the end of the day, economy-class tickets could rise to over ₦1 million,” he said.
He said airline operators, under the Airline Operators of Nigeria (AON), had repeatedly raised concerns with the National Assembly and the government’s tax reform committee.
“We went to the National Assembly and presented the facts. They were surprised by the scale of the burden. We also met the government’s tax consultants, who acknowledged the risks and expressed concern,” Onyema said.
He stressed that aviation is a strategic sector that supports economic growth, national integration and financial stability, noting that airlines worldwide receive government support.
“We are not asking for subsidies. We are asking that aviation be treated with understanding. Go back to the 2020 Act. Remove VAT on ticket fares to protect the common man. Remove VAT on imported aircraft and spare parts. Create a special window for airlines to access equipment,” he said.
Onyema warned that airline failures would also expose Nigerian banks to heavy losses, given their financing of aircraft acquisitions.
“If airlines go down, banks will take a serious hit because of their exposure. This is not just an aviation issue; it is an economic one,” he said.
He expressed cautious optimism that the federal government would intervene, citing previous instances where authorities responded to industry concerns.
“The government listens. The president is a businessman and understands that indigenous businesses should not be allowed to crumble. I believe this issue will still be addressed,” Onyema said.
