The Nigerian aviation sector is bracing for severe turbulence as a proposed new tax framework threatens to send domestic flight fares soaring to unprecedented heights, potentially exceeding one million naira. Allen Onyema, the Chairman and Chief Executive Officer of Air Peace, issued this stark warning, calling for immediate government action to prevent a total collapse of the industry.
A Perfect Storm of Taxes and Charges
Speaking during an interview on ARISE NEWS on Saturday, December 27, 2025, Onyema detailed the crippling financial pressures already facing airlines. He dismissed the notion that carriers are profiteering, revealing that out of an average ticket price of ₦350,000, the airline receives only about ₦81,000. The rest, he explained, is consumed by a web of statutory deductions and charges.
A significant portion is taken by the mandatory five percent deduction paid to the Nigerian Civil Aviation Authority (NCAA) on every ticket sold. Onyema described this as just one of many overlapping levies that stifle growth and reduce passenger demand. He argued that this practice contradicts international standards set by the International Civil Aviation Organisation (ICAO), which recommends cost-recovery models instead of revenue generation.
The Devastating Impact of VAT Reversal
Onyema contrasted the current situation with the relief provided by the 2020 Finance Act, which removed Value Added Tax (VAT) and customs duties on imported aircraft, spare parts, engines, and ticket fares. This policy, he said, offered vital breathing room for operators.
The new law represents a dangerous reversal, reinstating a 7.5% VAT on aircraft purchases and spare parts. For an industry already borrowing at exorbitant interest rates of 30 to 35 percent, this additional cost is unsustainable. Using the example of an $80 million aircraft purchase, Onyema illustrated how the combined burden of high-interest debt and new VAT could cripple airlines.
"At 35 percent interest, we are choking," he stated, warning that these costs would inevitably be passed on to the flying public.
Fare Explosion and Sector Collapse
Onyema predicted that if the new tax regime is enforced from January 2026, the consequences would be dire. Economy-class fares could reach historic highs, effectively pricing a vast majority of Nigerians out of air travel. He issued a grave forecast for the industry's survival.
"If we implement that tax reform, Nigerian airlines will go down in three months. Some will go down in one month," Onyema declared. He further warned that the collapse would send shockwaves through the financial sector, affecting banks with significant exposure to aviation.
The Airline Operators of Nigeria has reportedly presented these concerns to the National Assembly and relevant tax reform committees, with lawmakers said to be alarmed by the data. Onyema acknowledged the federal government's past willingness to listen, praising President Bola Tinubu's engagement with stakeholders. His urgent appeal is for a return to the 2020 tax framework to avert a catastrophic blow to Nigeria's aviation sector and the broader economy.
