Chairman and Chief Executive Officer, Air Peace, Allen Onyema has stated that Ni- geria’s domestic aviation sector will face a crisis as new tax laws threaten to drive ticket prices beyond N1 million and force airlines out of business. In an interview with Arise News yesterday, Onyema warned that un- less urgent steps are taken to reverse the policy, the industry could begin to collapse within months, with severe consequences for passengers, banks and the wider economy.
Onyema said Nigerian airlines are weighed down by excessive taxa- tion, levies and charges that leave operators struggling to survive while being wrongly portrayed as profiteers.
He explained that the bulk of ticket revenue is lost to statutory deductions, leaving airlines with only a frac- tion of what passengers actually pay. “The Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about N350, 000. What comes to the airlines is about N81, 000. And people, everybody’s talking about the airlines as if they’re making a kill. It’s not true,” he said.
The Air Peace boss faulted what he described as multiple and overlap- ping charges imposed on airlines, including a man- datory five per cent deduction on every ticket sold. “We are suffering from multiple taxation, multi- ple charges. For example, the NCA charges five per cent for every ticket. That is to NCA alone.
There are so many other charges.” Onyema argued that these charges ultimately reduce passenger de- mand and contradict international aviation standards. According to him, global aviation best practice, as outlined by the International Civil Aviation Organisation, supports cost recovery rather than revenue gen- eration.
“That is, you charge ac- cording to the cost of the services you render to the airlines. Who are the ones suffering? The airlines; and that’s why the airlines are not growing,” he said. Onyema recalled that the 2020 tax law provided critical relief by removing customs duties and VAT on imported aircraft, spare parts, engines and ticket fares. He said that even with those conces- sions, airlines were still grappling with numerous other charges.
“Even then, airlines are still suffering from so many other multiple charges all over the country. Now, the new tax law has brought those things back. All of them,” he said. He explained that buy- ing an aircraft valued at $80 million would now attract 7.5 per cent VAT, while spare parts are similarly taxed. Onyema said the combined effect of high bor- rowing costs and renewed taxation makes airline operations unsustainable.
“Funds borrowed from the bank are 30–35%. So you bring in spare parts, you pay 7.5% on your spare parts. Ticket fares will hit $1.7 million soon. At 35% we are choking. You don’t do that.” He warned that the financial pressure would inevitably be transferred to passengers, predicting an unprecedented surge in domestic fares if the policy is implemented fully. “Because when you take 5% from what we charge, it reduces the de- mand. With this new tax regime?
Yes. From January? From January. With 7.5% on ticket fares, ticket fares will hit $1.7 million soon. If we implement that tax reform, Nigerian airlines will go down in three months. At the end of the day, economy class tickets will go to about N1.7 million if it hap- pens.” Onyema said airline operators, under the umbrella of the Airline Operators of Nigeria, have repeatedly submitted their concerns to government authorities, including the National Assembly and the tax reform committee.
He said lawmakers and consultants ex- pressed surprise at the scale of the burden on airlines and acknowledged the risks to the economy. Onyema urged the Federal Government to intervene, praising President Bola Tinubu and key eco- nomic officials for previously responding swiftly to industry complaints.
