Chairman and Chief Executive Officer of Air Peace Airline, Mr Allen Onyema has warned that the new tax laws which implementation is expected to commence in January 2026, would drive air ticket prices beyond ₦1 million and possibly force airlines out of business.
This was as he said that Nigeria’s domestic aviation sector is facing a looming crisis, stressing that unless urgent steps are taken to reverse the policy, the industry would begin to collapse within months, with severe consequences for passengers, banks and the wider economy.
He pointedly said that if the new tax reform is implemented, Nigerian airlines will go down in three months, stressing that at the end of the day, economic class tickets will go to about 1.7 million Naira if it happens.
Onyema, who stated these when he featured in an interview with ARISE Television News on Sunday, December 28, 2025, noted that Nigerian airlines are already weighed down by excessive taxation, levies and charges that leave operators struggling to survive while being wrongly portrayed as profiteers.
According to him; The bulk of ticket revenue is lost to statutory deductions, leaving airlines with only a fraction 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 350,000. What comes to the airlines is about 81,000 Naira. And people are talking about the airlines as if they are making a kill. It’s not true,” he stressed.
Onyema particularly faulted what he described as multiple and overlapping charges imposed on airlines, including a mandatory 5 percent deduction on every ticket sold.
He further said; “We are suffering multiple taxation, multiple charges. For example, the NCAA, 5% for every ticket, mandatorily. That is to NCAA alone. There are so many other charges”.
The Air Peace chairman noted that the charges ultimately reduce passenger demand and contradict international aviation standards, stressing that the International Civil Aviation Organisation (ICAO), states that airlines are not supposed to go into revenue generation for government, adding that what is expected is to cost recovery.
Onyema said; “Global aviation best practice, as outlined by the International Civil Aviation Organisation, supports cost recovery rather than revenue generation. That is, you charge according to the cost of the services you render to the airlines. Who are the ones suffering? The airlines. And that is why the airlines are not growing”.
Onyema noted that the 2020 tax law provided critical relief by removing Customs duties and VAT on imported aircraft, spare parts, engines and ticket fares.
In the words of Onyema; “Now, the tax law of 2020 removed Customs duties, removed on imported aircraft and imported aircraft spares and engines, removed VAT on imported aircraft and other spare parts, removed VAT on ticket fares. That is the 2020 Act.
“Even with those concessions, airlines were still grappling with numerous other charges across the country. Even then, airlines are still suffering so many other multiple charges all over the country.
“Now, the new tax law has brought those things back. All of them. Buying an aircraft valued at $80 million would now attract 7.5 percent VAT, while spare parts are similarly taxed. “There is VAT now on importation of aircraft. So, if you buy an aircraft of $80 million, you are supposed to pay 7.5% of $80 million,” he said.
Onyema stressed that the combined effect of high borrowing costs and renewed taxation makes airline operations unsustainable, as funds borrowed from the bank are 30–35%. He said; “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”.
The Air Peace chairman therefore warned that the financial pressure would inevitably be transferred to passengers which translate into unprecedented surge in domestic fares if the policy is implemented fully.
In his words; “Because, when you take 5% from what we charge, it reduces the demand. With this new tax regime? Yes. From January? From January. With 7.5% on ticket fares, ticket fares will hit $1.7 million soon.
“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. Nobody listened to us. The AON, the airline operators went to the National Assembly. We addressed them on this issue and they saw reasons with us. They were surprised as the kind of facts we were bringing out.
“The lawmakers and consultants expressed surprise at the scale of the burden on airlines and acknowledged the risks to the economy.
“We went to the tax consultant, the government hired, the chairman of the taskforce, fantastic gentleman. He gave us audience and said he is going to look at it. He agreed with us. He was even worried”.
Onyema said According aviation is a catalyst for economic growth and national integration, and not a sector to be exploited for short-term revenue.
“One thing I credit this regime for is our president is a businessman and from the most I know, he doesn’t want indigenous businesses to crumble. And when it comes to the airline business, it is a peculiar one. Airlines all over the world are supported by governments, even private airlines. We’re not asking them to give us money, even though in other climes they are given money.
“What AON is asking, is, let us go back to 2020 Act. That Act respected aviation. That is how it is done. Remove VAT on ticket fares to help the common man. Remove VAT from imported aircraft. Remove those things. And of course, if possible, create a different window for airlines to buy their equipment. At 35% we are choking. You don’t do that,” he said.
Onyema warned that failure to permanently amend the law could trigger a chain reaction, including airline collapses and heavy losses for Nigerian banks that have financed aircraft acquisitions.
According to him; “If we implement that tax reform, Nigerian airlines will go down in three months. Within one month, some will go down. Some big ones might go down in three months because if you’re bringing, you won’t be able to, and the banks in Nigeria will take a hit. Because of what they had invested”.
Onyema expressed the hope that the federal government would intervene, and praised President Bola Tinubu and key economic officials for previously responding swiftly to industry complaints.
