Airline Chief Warns New Tax Laws Could Push Domestic Fares Above N1 Million

The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has issued a stark warning that Nigeria’s domestic aviation sector faces an existential threat from newly introduced tax legislation, which he claims could force airfares above N1 million and lead to multiple airline failures within months.

Speaking in an interview on Sunday, Onyema stated the industry is already strangled by excessive levies and that the revised tax regime would deliver a critical blow. He argued that airlines are unfairly perceived as profiteering when, in reality, a significant portion of ticket revenue is absorbed by government charges before operational costs are met.

“Take a ticket of about N350,000. What comes to the airlines is about N81,000,” Onyema said, criticizing a system of “multiple and overlapping charges.” He highlighted a mandatory 5% deduction on every ticket for the Nigerian Civil Aviation Authority (NCAA) as one of many such levies.

Onyema emphasized that this approach contradicts International Civil Aviation Organization (ICAO) principles, which advise governments to recover costs rather than use aviation as a primary revenue source. He noted that the Finance Act of 2020 had provided vital relief by removing Value Added Tax (VAT) and customs duties on aircraft imports, spare parts, and ticket fares, concessions now reversed by the new law.

The reintroduction of a 7.5% VAT on aircraft imports, spare parts, and ticket sales, coupled with bank loan interest rates of 30-35%, creates an unsustainable burden, Onyema explained. “You are choking an industry you want to survive,” he stated.

He warned that this cost would inevitably be passed to consumers, causing fares to reach “unimaginable levels” and potentially triggering airline collapses within one to three months. Such failures would have severe ripple effects, jeopardizing bank loans tied to aircraft financing and damaging economic connectivity.

The Airline Operators of Nigeria (AON) has actively engaged the Federal Government, the National Assembly, and tax reform committees, presenting their case for a return to the 2020 Act’s provisions. Onyema called for the removal of VAT on tickets and aircraft imports, alongside access to special, lower-interest financing.

Despite the grave warnings, Onyema expressed cautious optimism, citing the government’s history of responsiveness. “One thing I like about this government is that they listen,” he said, expressing hope for a corrective intervention to protect the strategic aviation industry.