Chairman of Air Peace, Dr. Allen Onyema, has issued a stark warning that Nigerian airlines could collapse within 48 hours if the federal government enforces a new tax regime imposing customs duties and VAT on aircraft and spare parts from January 2026.
Speaking during a panel session at the 29th League of Airports and Aviation Correspondents (LAAC) Conference held in Lagos, Onyema said the policy, combined with existing charges, would cripple local carriers already struggling under an unsustainable financial structure.
“This new tax policy is a death sentence. If implemented as planned, it will shut down the industry in two days,” Onyema declared.
The conference, themed “Aviation Financing in Nigeria: Risks, Opportunities and Prospects,” brought together aviation stakeholders to address the sector’s funding challenges. Onyema, known for his outspoken advocacy for the industry, described Nigeria’s aviation sector as one of the hardest places to do business.
“A $100 million investment in aviation barely yields 3–5% in returns. In other sectors like agriculture or trading, you’re looking at up to 70%. We’re not against taxes, but they must be based on cost recovery as per ICAO standards,” he said.
Industry Overburdened by Charges
Onyema criticized the 5% ticket sales charge remitted to the Nigerian Civil Aviation Authority (NCAA), noting that most airlines do not even earn a 5% profit margin.
“This charge limits our pricing flexibility. It should be collected directly from passengers by the NCAA, not from the airlines.”
He also pointed to infrastructural gaps at Nigerian airports, especially the absence of transit facilities, which discourages regional and international connectivity.
Onyema, citing a recent example of that Cameroonian passengers transiting through Lagos to Dakar were forced to pay $400 visa fees and undergo multiple security checks due to the lack of airside transfer systems.
“Even smaller nations like Togo have created regional hubs with seamless connectivity. Nigeria has the traffic but lacks the infrastructure. With the right systems, we can challenge Ethiopian Airlines in less than a decade.”
High Operating Costs, Global Bias
Onyema also raised concerns about the high insurance premiums slapped on Nigerian airlines, which he attributed to global “country risk” perceptions.
“One Nigerian aircraft attracts the same premium as six aircraft abroad. That’s discriminatory and unjust.”
He decried the glorification of foreign carriers over local ones, stating that Air Peace is larger than some African national airlines, with partnerships already in place with Emirates and Air Arabia.
“There’s a false narrative that Nigerian airlines don’t collaborate. We created our own Spring Alliance to support one another. We’re ready to compete globally, if given a level playing field.”
Call for Industry-Friendly Financing
Backing a call by economist Bismarck Rewane for consolidation in the industry, Onyema emphasized that access to affordable credit remains critical.
“Borrowing at 35% interest is a sure path to failure. Aviation is capital intensive. It needs single-digit loans to survive.”
He welcomed government plans to establish a national aircraft leasing company and backed the use of sovereign guarantees for airline loans, while urging operators to maintain financial discipline to avoid defaults.
Hope for Industry Turnaround
Onyema commended the administration of President Bola Tinubu and Minister of Aviation, Festus Keyamo, for their responsiveness to industry concerns.
“We’re beginning to see change. If the Lagos Airport upgrade goes as planned, we’ll see real impact within 22 months.”
Despite incurring N12.3 billion in losses while operating the India route — a move he described as strategic to secure rights for the lucrative London route — Onyema said Air Peace remains committed to flying Nigeria’s flag high.
“Every Nigerian airline that survives does so against incredible odds. Let’s support our own. The future of our aviation sector depends on it.”
@2025 The Ameh News: All Rights Reserved
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