Nigerian air travelers may soon face a sharp spike in ticket prices, with domestic airfares projected to surpass N1 million by next year, according to a stark warning from one of the country’s leading airline executives.
Allen Onyema, chairman and chief executive officer of Air Peace, Nigeria’s largest carrier, issued the alarm during a televised interview on Arise News’ The Morning Show on Sunday, painting a grim picture of an industry already struggling under the weight of operational challenges and now facing what he described as potentially crippling tax burdens.
The anticipated fare increases stem from sweeping tax reform legislation scheduled to take effect in January 2026, which will strip away key financial reliefs that have helped keep Nigerian airlines afloat in recent years. The reforms represent a reversal of exemptions granted under the 2020 Finance Act, exemptions that industry insiders say have been vital lifelines in an already punishing operating environment.
Tax Reforms Set to Reverse Critical Exemptions
At the heart of Onyema’s concern is the reintroduction of Value Added Tax on critical aviation components and services that were previously exempted. Under the new framework, airlines will be required to pay 7.5% VAT on aircraft purchases, spare parts, and even air tickets themselves—costs that were shielded under the previous tax regime.
The financial implications are staggering. Onyema illustrated the scale of the burden by citing the example of aircraft imports: a single aircraft valued at approximately $80 million would attract billions of naira in VAT charges alone. For an industry that operates on notoriously thin margins, such additional costs could prove insurmountable.
“By the time you bring these things in, at the end of the day, the cost of operation will be huge… Your ticket fares will hit N1. Something million soon,” Onyema stated bluntly, his assessment cutting through industry euphemisms to deliver an uncomfortable economic reality.
The Air Peace chief went further, warning that the survival of Nigerian carriers hangs in the balance. “If we implement that tax reform, Nigerian airlines could go down within three months,” he cautioned, suggesting that the reforms could trigger a rapid collapse of domestic aviation capacity.
International Standards Versus Local Policy
Onyema’s critique extends beyond mere financial concerns to questions of international aviation practice. He referenced guidelines from the International Civil Aviation Organization, the United Nations body that establishes global aviation standards, noting that ICAO annexes specifically state that VAT should not be levied on air transportation services.
This discrepancy between international norms and proposed Nigerian policy highlights what industry observers see as a fundamental misalignment—one that could place the country’s aviation sector at a competitive disadvantage while simultaneously making air travel prohibitively expensive for ordinary Nigerians.
An Industry Already Under Siege
The looming tax changes arrive at a particularly vulnerable moment for Nigerian aviation. Onyema painted a picture of an industry already buckling under multiple pressures, operating in what he characterized as one of the world’s most challenging aviation environments.
Nigerian airlines currently contend with borrowing rates that have soared to 35%, making aircraft financing and operational loans extraordinarily expensive. This stands in stark contrast to carriers in more developed aviation markets, where access to capital comes at a fraction of the cost.
The airline executive also broke down the economics of a typical domestic ticket to illustrate how little airlines actually retain. Of a N350,000 ticket price, he revealed, only approximately N81,000 reaches the airline’s coffers. The remainder is consumed by an array of taxes, levies, statutory charges, and operational fees—a complex web of obligations that leaves carriers with minimal revenue to cover fuel, maintenance, personnel, and other essential costs.
This revenue structure, Onyema argued, undermines the common perception that airlines are profiteering from high ticket prices. He pushed back forcefully against such characterizations, insisting that when converted to dollars, Nigerian domestic fares remain among the cheapest globally—a reflection not of affordability by design, but of an industry operating at the edge of viability.
Regional Disparities and Unprofitable Routes
The financial strain manifests unevenly across Nigeria’s domestic network. Onyema specifically highlighted routes serving the Southeast region as particularly problematic, noting that aircraft frequently return from these destinations with sparse passenger loads. Such routes, while important for national connectivity, represent a financial drain that profitable routes must subsidize—a cross-subsidy model that becomes increasingly untenable as overall costs rise.
Operational Challenges Beyond Taxation
While tax reform dominates current concerns, Onyema emphasized that Nigerian airlines face a constellation of operational hurdles that compound their difficulties. High fuel costs remain a persistent challenge, exacerbated by foreign exchange constraints that make it difficult to secure aviation fuel at competitive rates.
The airline chief also addressed frequent criticism over flight delays and cancellations, pushing back against the notion that such disruptions reflect poor management or indifference to passenger concerns. Instead, he pointed to structural factors often beyond airlines’ control: bird strikes that can ground aircraft for safety inspections, inadequate airport infrastructure that limits operational flexibility, and errors by ground handling companies that cascade into broader schedule disruptions.
These explanations, while perhaps offering little comfort to frustrated travelers, underscore the systemic nature of Nigeria’s aviation challenges—problems that cannot be solved by individual carriers alone but require comprehensive policy interventions and infrastructure investment.
A Call for Supportive Policy
Underlying Onyema’s warnings is an implicit appeal to policymakers: that aviation should be recognized as critical infrastructure deserving of support rather than viewed primarily as a revenue source for taxation. He argued that the industry’s role in ensuring connectivity and driving economic growth justifies preferential treatment, particularly given the unique challenges of operating in the Nigerian market.
The coming months will reveal whether these concerns resonate with lawmakers and government officials as the January 2026 implementation date approaches. For now, Nigerian travelers face the prospect of significantly higher airfares, while the country’s airlines confront an uncertain future in which survival may depend on policy decisions made in the corridors of power.
The stakes extend beyond airline balance sheets and passenger budgets. At issue is the viability of domestic air connectivity in Africa’s most populous nation—a question with implications for business, tourism, family connections, and the broader economy. Whether Nigeria’s aviation sector can weather this approaching storm may well depend on finding a balance between fiscal policy objectives and the practical realities of keeping airlines in the sky.
WHAT YOU SHOULD KNOW
Nigerian air travelers should brace for a potential financial shock: domestic flight tickets could exceed N1 million starting in 2026 due to new tax reforms that will eliminate crucial exemptions for airlines.
The removal of VAT waivers on aircraft, spare parts, and tickets—previously granted under the 2020 Finance Act—will add billions in operational costs that airlines cannot absorb in an environment where they already face 35% borrowing rates and retain only about N81,000 from every N350,000 ticket sold.
Air Peace CEO Allen Onyema’s stark warning is clear: if these tax reforms proceed as planned, Nigerian airlines could collapse within three months, leaving the country’s aviation sector—and its connectivity—in jeopardy.
