Allen Onyema, Chairman and CEO of Air Peace, has issued a stark warning that Nigeria’s domestic aviation industry could collapse within three months if the federal government proceeds with its planned tax reforms in 2026.
Speaking during an interview on Arise News on Sunday, December 28, 2025, Onyema argued that the reintroduction of taxes previously suspended to protect the sector could cripple airlines already battling soaring costs and weak margins.
His warning comes amid public outrage over record-high domestic airfares, with one-way tickets rising to between ₦350,000 and ₦500,000 during the festive period. While regulators blame market forces and peak-season demand, Onyema insists the real threat lies in fiscal policies that, if enforced, could ground local carriers in a matter of weeks.
Taxes Onyema Says Could Cripple Airlines
At the heart of Onyema’s argument is the expected full implementation of the New Tax Act in early 2026, which he says effectively reverses the relief granted to airlines under the 2020 Finance Act.
That earlier law removed customs duties and VAT on aircraft, engines, spare parts, and tickets in a bid to keep local airlines afloat.
According to Onyema, the new regime restores these charges at a time when airlines are already under extreme financial pressure. He highlighted the reintroduction of a 7.5 percent VAT on imported aircraft, engines, and spare parts, noting that a single aircraft can cost more than $80 million.
When combined with bank loans carrying interest rates of 30 to 35 percent, he said the numbers no longer add up.
Beyond aircraft acquisition, Onyema pointed to VAT on flight tickets and a 5 percent Nigerian Civil Aviation Authority (NCAA) charge on every ticket sold, alongside passenger service charges and other statutory levies.
He claimed that after all deductions, an airline may retain as little as ₦81,000 from a ₦350,000 ticket.
“If we implement that tax reform, Nigerian airlines will go down in three months,” Onyema warned, adding that smaller carriers could fold within 30 days. He described airlines as being turned into tax collectors for the government, while passengers are priced out of air travel.
Regulators Disagree with Airline Claims
The NCAA has strongly rejected Onyema’s claims, arguing that recent fare spikes are not linked to taxes. The agency’s Director of Public Affairs, Michael Achimugu, dismissed the narrative of excessive taxation as exaggerated, insisting that no new taxes were introduced during the December travel season.
According to the regulator, the surge in fares—some hitting ₦500,000 for short domestic flights—is the result of festive demand and limited capacity, not fiscal policy.
The NCAA has also challenged claims of “18 different taxes,” stating that airlines themselves have acknowledged in closed-door meetings that the figures often cited publicly are inaccurate.
Government officials further argue that recent reforms, including new rules allowing Nigerian airlines to access dry-leased aircraft for the first time in decades, are evidence of support rather than hostility toward the sector.
Still, Onyema maintains that unless aviation taxes are significantly reduced or exemptions restored, those reforms will not be enough to prevent a crisis.
With the House of Representatives already calling for a 50 percent cut in aviation-related taxes to curb rising fares, the clash between airline operators and regulators is intensifying.
As 2026 approaches, Nigeria’s aviation industry faces an uncertainty, caught between government revenue ambitions, regulatory assurances, and airline executives warning that time is rapidly running out.
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