The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has warned that Nigeria’s aviation industry could be heading toward a severe crisis as fresh tax policies threaten to drive domestic airfares to as high as ₦1 million per ticket and force airlines out of operation within months.

Speaking during an interview on ARISE NEWS on Sunday, Onyema said the sector is already under extreme pressure from multiple taxes, charges and levies imposed by various government agencies. According to him, the introduction of new tax measures could be the final blow for many local carriers.

Airlines “Choking” Under Multiple Charges

Onyema explained that airline ticket prices do not reflect actual earnings by operators, as the bulk of passenger fares is taken up by statutory deductions. He disclosed that from an average domestic ticket priced at about ₦350,000, airlines retain only around ₦81,000 after all charges are deducted.

According to him, the remaining amount is shared among regulatory agencies, service providers and other government bodies, leaving airlines with limited funds to cover operational costs such as fuel, maintenance, aircraft leasing and staff salaries.

“The industry is choking,” Onyema said. “People assume airlines are making huge profits, but that is far from the truth. The cost structure is unsustainable.”

VAT, Customs Duties Return to the Sector

A major concern raised by the Air Peace boss is the reintroduction of Value Added Tax and customs duties on aviation-related items. He recalled that the 2020 Finance Act had provided significant relief to airlines by removing VAT on ticket sales and exempting aircraft, spare parts and components from certain import duties.

However, Onyema said the latest tax reforms reverse those incentives, placing additional financial strain on an already fragile industry.

Under the new regime, airlines are expected to pay 7.5 percent VAT on aircraft purchases and spare parts, alongside existing charges. He described this development as a form of double taxation that undermines the survival of domestic operators.

Regulatory Fees and High Interest Rates Add Pressure

Beyond VAT and customs duties, Onyema highlighted other compulsory deductions that airlines must contend with. He noted that the Nigerian Civil Aviation Authority collects five percent of every ticket sold, regardless of the airline’s operating costs or financial position.

He also pointed to the impact of Nigeria’s high interest rate environment, which he said compounds the burden on airlines that rely on bank financing to acquire aircraft.

According to Onyema, purchasing an aircraft valued at about $80 million, while facing bank interest rates of up to 35 percent, makes long-term sustainability nearly impossible when combined with new taxes and regulatory charges.

Conflict With Global Aviation Standards

Onyema further argued that Nigeria’s tax approach contradicts international best practices in aviation regulation. He cited guidelines from the International Civil Aviation Organisation, which recommend that aviation authorities operate on a cost recovery basis rather than treating the sector as a major source of government revenue.

According to him, countries that have thriving aviation industries typically support airlines through tax incentives and policy stability, recognising aviation as a critical driver of economic growth, trade and tourism.

Wider Economic Risks Loom

The Air Peace chairman warned that the collapse of domestic airlines would have consequences far beyond air travel. He said many airlines are heavily financed by local banks, meaning a wave of shutdowns could expose financial institutions to significant losses.

He also warned that reduced air connectivity would hurt business activity, restrict regional movement and lead to job losses across the aviation value chain, including ground handling, catering, travel agencies and airport services.

“If airlines go down, the ripple effects will be massive,” Onyema said. “Banks will feel it, workers will lose jobs, and the economy will suffer.”

Call for Urgent Government Action

According to reports, airline operators have already presented detailed data and analysis to the National Assembly and the committee overseeing tax reforms. Onyema said the Airline

Operators of Nigeria has consistently engaged policymakers to explain the implications of the proposed taxes.

While he acknowledged that some lawmakers appeared receptive to the industry’s concerns, he expressed frustration that the policy direction remains unchanged.

Onyema warned that without swift intervention, Nigeria could witness the collapse of domestic airlines within as little as three months, forcing remaining operators to raise fares sharply in a bid to survive.

“Without urgent action, ticket prices will skyrocket,” he said. “A base fare of ₦1 million is not impossible under this structure, and that will shut ordinary Nigerians out of air travel.”