Allen Onyema: FG Tax Reform Could Topple Nigerian Airlines in 90 Days
Nigeria’s aviation sector is facing an existential threat, with industry leaders warning that the implementation of the Federal Government’s tax reforms could push domestic airlines to the brink of collapse within months. Speaking in an interview on Sunday, December 28, 2025, the Chairman of Air Peace and Vice Chairman of the Airline Operators of Nigeria, Allen Onyema, painted a grim picture of an industry already operating on razor thin margins and now confronting what he described as a potentially fatal fiscal squeeze.
Onyema cautioned that the reintroduction of multiple levies and Value Added Tax on key aviation assets could unravel the fragile financial structure of local carriers. He argued that the new regime effectively overturns the relief measures introduced under the 2020 Finance Act, which were designed to keep airlines afloat in a challenging operating environment. With profit margins reportedly hovering between 3 and 5 percent, he warned that additional taxes would amount to taxing the industry into extinction.
At the center of the concern is the cumulative weight of statutory charges and regulatory fees that significantly erode airline revenues. Onyema disclosed that from an average ₦350,000 domestic ticket, airlines retain only about ₦81,000 after deductions, with the balance absorbed by charges payable to multiple government agencies, including the mandatory Ticket Sales Charge collected by the Nigeria Civil Aviation Authority. Under the tax reforms set to take effect on January 1, 2026, airlines would also be required to pay 7.5 percent VAT on imported aircraft, engines, and spare parts. For a single aircraft valued at $80 million, this would translate into an immediate tax obligation of roughly $6 million, a burden Onyema said is untenable given domestic lending rates ranging between 30 and 35 percent.
Industry analysts warn that the ripple effects could be severe and far reaching. Onyema projected that economy class fares could soon exceed ₦1 million, placing air travel beyond the reach of many Nigerians. He noted that local airlines are particularly exposed due to their dependence on foreign exchange for maintenance, leasing, and fleet expansion. In his view, the policy direction runs counter to international aviation standards, which discourage the use of the sector as a revenue cash cow and emphasize cost recovery instead.
Beyond the airlines themselves, Onyema warned of broader economic consequences if the reforms proceed unaltered. Banks with significant exposure to aviation assets could face heightened risk, while thousands of jobs across ancillary services such as ground handling, catering, and airport operations would be endangered. The Airline Operators of Nigeria has therefore renewed its call for a return to the tax exemptions provided under the 2020 framework, arguing that aviation remains a strategic enabler of trade, investment, and national integration.
With the clock ticking toward implementation, stakeholders are appealing for urgent intervention to recalibrate the reforms. Onyema cautioned that without swift adjustments, smaller carriers could succumb within weeks, triggering a cascade of failures across the sector. As the industry awaits a response from the Presidency, the warning from operators is unambiguous. Without relief, Nigeria risks dismantling its domestic aviation ecosystem at a time when connectivity and economic resilience are more critical than ever
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