Aviation Stakeholders Warn of Sector Bankruptcy Under New 2026 Tax Regime, Urge Immediate Review

Nigerian aviation industry leaders have issued a strong warning that the federal government’s new tax regime scheduled for January 2026 could bankrupt airlines and cripple sector operations unless immediately revised to align with international aviation standards. Stakeholders raised these concerns following the Federal Inland Revenue Service’s announcement that commercial aircraft, engines, spare parts, and airline transportation will no longer be exempt from value added tax starting next year.

The International Air Transport Association representative for West and Central Africa, Dr. Samson Fatokun, emphasized that aviation operates within a global framework governed by treaties Nigeria has signed, including International Civil Aviation Organisation regulations that prohibit taxing international passenger transportation. He noted that ECOWAS is implementing a regional strategy to reduce air travel costs by eliminating non compliant taxes and cutting airport charges by 25 percent beginning January 2026, a move contradicted by Nigeria’s proposed tax increase.

Industry analysts detailed the existing heavy tax burden on airlines, which includes cargo sales tax at five percent, passenger sales tax at five percent, charter sales tax at five percent, passenger service charges from ₦3,000 to ₦7,500, company income tax at 30 percent, customs import duties, state taxes, and fuel tax at ₦2.50 per litre. These charges already constitute approximately ₦55,000 in additional costs on a ₦148,000 base airfare during off peak seasons.

Airline executives expressed grave concerns about the cumulative impact. Air Peace Chairman Dr. Allen Onyema stated the proposed taxes would cripple airlines, while Aero Contractors CEO Captain Ado Sanusi warned that increased fares would reduce passenger demand by 4 to 6 percent, leading to staff reductions, lower agency revenues, and negative effects on tourism and job creation. Sanusi referenced ICAO Document 8632, which prohibits double taxation and emphasizes that aviation revenues should be reinvested in industry development.

There are indications that the Federal Inland Revenue Service may engage with airline operators to reconsider the policy framework, aiming to prevent the collapse of aviation businesses while balancing national revenue objectives.