Air Peace Chairman and Chief Executive Officer, Allen Onyema, has warned that Nigeria’s domestic aviation industry is on the brink of collapse, following the reintroduction of taxes and levies that could force ticket prices above ₦1 million and push airlines out of business within months.
Speaking during an interview on ARISE NEWS on Sunday, Onyema said Nigerian airlines are suffocating under excessive taxation, multiple levies and high borrowing costs, despite public perception that operators are profiteering. According to him, airlines retain only a small fraction of what passengers pay for tickets after statutory deductions.
“The Nigerian airlines are heavily overburdened by taxes and charges. If a ticket sells for about ₦350,000, what comes to the airline is roughly ₦81,000. Yet everyone assumes airlines are making huge profits. That’s simply not true,” he said.
Onyema criticised what he described as overlapping and excessive charges, including a compulsory five percent deduction on every ticket sold to aviation authorities, alongside numerous other fees. He argued that such practices violate global aviation standards.
“The International Civil Aviation Organisation is clear: aviation charges should be based on cost recovery, not revenue generation for government. What we have here is the opposite, and it’s killing airline growth,” he said.
He recalled that the 2020 Finance Act offered critical relief to the industry by removing VAT and customs duties on imported aircraft, spare parts, engines and ticket fares. However, he said the new tax regime has reversed those concessions, worsening the financial strain on airlines.
“Now VAT is back on imported aircraft and spare parts. If you buy an aircraft worth $80 million, you’re expected to pay 7.5 percent VAT on that. The same applies to spare parts,” Onyema explained.
Combined with bank lending rates of between 30 and 35 percent, he warned that airline operations are becoming unsustainable. He added that the pressure would inevitably be passed on to passengers, leading to a sharp rise in domestic airfares.
“With this tax regime, ticket prices will skyrocket. If fully implemented, economy-class fares could reach unimaginable levels. Nigerian airlines could start collapsing within one to three months,” he warned.
Onyema said the Airline Operators of Nigeria (AON) has repeatedly raised concerns with government authorities, including the National Assembly and the tax reform committee. According to him, lawmakers and consultants expressed shock at the scale of the burden on airlines and acknowledged the potential economic fallout.
He stressed that aviation is a strategic sector that drives economic growth, trade and national integration, noting that governments across the world support their airlines rather than overtax them.
“AON is simply asking that we return to the 2020 Act. Remove VAT on ticket fares to help the common man. Remove VAT on imported aircraft and spare parts. And if possible, create a special funding window for airlines. At 35 percent interest rates, we are choking,” he said.
Onyema warned that airline failures would also hurt Nigerian banks that financed aircraft acquisitions, triggering wider economic consequences. However, he expressed confidence that the federal government would act, praising President Bola Tinubu and key economic officials for previously responding to industry concerns.
“One thing I like about this government is that they listen. I know several issues we raised, and they acted on them. I believe they will do the same here,” he said.
