The Chairman and Chief Executive Officer (CEO) of Air Peace, Mr. Allen Onyema, has warned that Nigeria’s domestic aviation industry is heading toward a severe crisis, as newly introduced tax laws threaten to push airfares beyond N1 million and force airlines out of business.
Speaking in an interview with Arise TV on Sunday, Onyema said that unless urgent steps are taken to reverse the policy, the aviation sector could begin to collapse within months, with grave consequences for passengers, financial institutions, and the wider economy.
He lamented that Nigerian airlines are overburdened by excessive taxes, levies, and statutory charges, noting that operators are often wrongly portrayed as profiteers despite receiving only a fraction of ticket revenues.
According to him, from a ticket costing about N350,000, airlines retain roughly N81,000 after deductions. “Taxes, levies, and all manner of charges heavily overburden Nigerian airlines, yet people talk as if airlines are making huge profits. That is not true,” he said.
Onyema criticized what he described as multiple and overlapping deductions imposed on operators, including a mandatory five per cent charge on every ticket sold to the Nigerian Civil Aviation Authority (NCAA), alongside several other levies.
He said such charges contradict international aviation standards, stressing that the International Civil Aviation Organization (ICAO) discourages governments from using aviation as a revenue-generating tool. Instead, ICAO recommends cost recovery based strictly on services rendered.
“Who are the ones suffering? The airlines. And that is why the airlines are not growing,” Onyema stated.
The Air Peace boss recalled that the 2020 tax law provided major relief to the aviation sector by removing customs duties and Value Added Tax (VAT) on imported aircraft, spare parts, engines, and ticket fares. However, he said the new tax law has reversed those gains.
Under the new regime, aircraft and spare parts importation will now attract 7.5 per cent VAT, significantly increasing operating costs.
Onyema explained that purchasing an aircraft worth $80 million would now require paying 7.5 per cent VAT on the value, in addition to other costs.
He added that the renewed taxation, combined with high borrowing rates of between 30 and 35 per cent, has made airline operations unsustainable.
Warning that the burden would inevitably be passed on to passengers, Onyema predicted unprecedented increases in domestic airfares if the policy is fully implemented. He said economy-class tickets could rise to as much as N1.7 million within months.
“If we implement that tax reform, Nigerian airlines will go down in three months,” he warned.
Onyema disclosed that airline operators, under the Airline Operators of Nigeria (AON), have repeatedly presented their concerns to government authorities, including the National Assembly and the tax reform committee. He said lawmakers and government consultants acknowledged the risks after engaging with operators.
Describing aviation as a catalyst for economic growth and national integration, Onyema urged the Federal Government to stop treating the sector as a revenue source and instead revert to the 2020 Aviation Act, which he said recognized the peculiar nature of the industry.
He expressed confidence that the current administration, led by a businessman-president, would not allow indigenous airlines to collapse, noting that governments around the world support their aviation sectors to ensure sustainability and economic growth.
