The Chief Executive Officer of Air Peace, Allen Onyema, has issued a stark warning that Nigeria's domestic aviation industry is on the brink of collapse due to a newly enacted tax law. He stated that the financial strain could force ticket prices to skyrocket beyond one million naira and lead to the suspension of airline operations.
An Unsustainable Burden of Taxes and Charges
Speaking during an interview on ARISE NEWS on Sunday, December 28, 2025, Onyema detailed the severe pressures facing carriers. He emphasized that Nigerian airlines are heavily overburdened by multiple and overlapping taxes, levies, and charges. To illustrate, he broke down the revenue from a sample ticket priced at ₦350,000, revealing that the airline retains only about ₦81,000 after all deductions.
"People, everybody’s talking about the airlines as if they’re making a kill. It’s not true," Onyema asserted. He specifically criticized the mandatory five percent deduction on every ticket paid to the Nigerian Civil Aviation Authority (NCAA), noting it is just one of many such charges. This system, he argued, stifles passenger demand and contradicts global standards set by the International Civil Aviation Organisation (ICAO), which advocates for cost-recovery models rather than revenue generation.
The Contrast with 2020 and the Impact of the New Law
Onyema contrasted the current situation with the provisions of the 2020 tax law, which offered significant relief to the industry. That act removed customs duties and Value Added Tax (VAT) on imported aircraft, spare parts, engines, and even on ticket fares. However, the new legislation has reinstated a 7.5% VAT on aircraft purchases and spare parts.
The CEO provided a concrete example of the crushing financial impact. He cited the purchase of an $80 million aircraft, which would now attract substantial VAT. This burden is compounded by the high cost of borrowing from Nigerian banks, with interest rates ranging between 30 and 35 percent. "At 35% we are choking. You don’t do that," he stated.
Dire Consequences for Passengers and the Economy
Onyema warned that these costs will inevitably be transferred to the flying public. He predicted that if the new tax regime is fully implemented from January, economy class ticket fares could reach approximately ₦1.7 million. He painted a grim picture for the industry's survival, forecasting that some airlines could fail within a month, with even larger carriers potentially collapsing within three months.
"If we implement that tax reform, Nigerian airlines will go down in three months... and the banks in Nigeria will take a hit because of what they had invested," Onyema cautioned. He revealed that the Airline Operators of Nigeria (AON) had presented these concerns to the National Assembly and the tax reform committee, where officials were reportedly surprised by the scale of the burden.
Despite the grave warnings, Onyema commended the federal government and President Bola Tinubu for their previous responsiveness to industry issues. "One thing I like about the government is that they’re listening... I know so many things we’ve asked them to do and they did it for us," he said. His urgent appeal is for a return to the 2020 Act's provisions and a reconsideration of how airlines procure essential equipment to safeguard the strategic aviation sector.
