December 29, (THEWILL) — The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has warned that Nigeria’s newly introduced tax reforms could drive domestic airfares to ₦1 million or more, threatening the survival of local airlines and making air travel unaffordable for most Nigerians.
Speaking on the implications of the new tax regime, Onyema stated that the aviation industry is already overburdened by multiple charges, rising fuel prices, foreign exchange pressures, and high maintenance costs. He warned that the reintroduction of certain taxes would significantly raise operating expenses, forcing airlines to pass the cost on to passengers.
According to him, a domestic ticket that currently sells for about ₦350,000 gives airlines only ₦81,000 after statutory deductions, with the balance going to various government agencies through taxes, charges, and fees. He said this reality is often overlooked, creating a false perception that airlines are making excessive profits.
Onyema expressed particular concern over the reintroduction of Value Added Tax (VAT) at 7.5 percent on imported aircraft, spare parts, and aviation equipment items that were previously exempted under the 2020 Finance Act. He said the removal of these exemptions contradicts global aviation practice and places Nigerian airlines at a disadvantage.
To illustrate the impact, Onyema noted that applying 7.5 percent VAT to an aircraft costing $80 million significantly increases acquisition costs, especially at a time when local borrowing rates range between 30 and 35 percent. He warned that such costs are unsustainable for domestic operators already grappling with forex scarcity and dollar-denominated obligations.
The Air Peace boss further cautioned that if the tax policy is not urgently reviewed, domestic airfares could rise to between ₦1 million and ₦1.7 million for economy tickets, depending on distance and operating conditions. He said this would drastically reduce passenger traffic and could push many Nigerians out of air travel entirely.
Ogochukwu Onwaeze
