Domestic air travel in Nigeria may become significantly more expensive from 2026, with economy-class tickets potentially climbing above ₦1 million, according to Allen Onyema, Chairman and Chief Executive Officer of Air Peace. Onyema issued the warning during an interview on The Morning Show, where he linked the looming fare increase to the implementation of Nigeria’s new tax reform laws scheduled to take effect in January 2026.
According to Onyema, the new tax regime reverses several incentives previously granted to airlines under the 2020 Finance Act—exemptions that had helped to cushion operating costs in an already challenging business environment. He argued that the removal of these reliefs would substantially increase the cost of doing business for local carriers, leaving airlines with little choice but to pass the additional burden on to passengers.
Explaining the implications of the reforms, Onyema said the new laws reintroduce Value Added Tax (VAT) on aircraft imports, spare parts, and even air tickets. These items were previously VAT-exempt, a policy that airlines considered critical for survival given the capital-intensive nature of aviation. He illustrated the impact with a practical example, noting that importing an aircraft valued at around $80 million would now attract a 7.5% VAT, translating into billions of naira in additional costs for a single transaction.
He stressed that Nigerian airlines operate in one of the most difficult aviation environments globally, facing borrowing rates as high as 35%, persistent foreign exchange shortages, and rising fuel costs. Under such conditions, Onyema said it would be impossible for airlines to absorb new tax burdens without adjusting ticket prices upward. He also referenced provisions of the International Civil Aviation Organization (ICAO), which discourage the imposition of VAT on air transportation services, arguing that such taxes undermine affordability and connectivity.
“If we implement that tax reform the way it is, economy-class fares could rise sharply,” Onyema warned. “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 ₦1 point something million soon.” He went further to caution that the financial strain could be existential for local carriers, stating bluntly that Nigerian airlines could collapse within months if the reforms are enforced without safeguards.
Onyema was quick to counter accusations that airlines are exploiting passengers through high fares. He insisted that rising ticket prices reflect structural costs rather than profiteering. According to him, aviation is a critical enabler of trade, tourism, and national integration, and policies should aim to support, not stifle, the sector. He argued that when adjusted for exchange rates, domestic airfares in Nigeria remain among the cheapest globally.
Beyond taxation, Onyema highlighted a range of operational and financial pressures confronting airlines. These include the high cost of aviation fuel, multiple statutory charges, and inefficiencies within airport infrastructure. He revealed that for a domestic ticket priced at about ₦350,000, only roughly ₦81,000 goes to the airline, while the remainder is consumed by taxes, levies, and ancillary charges. This, he said, leaves carriers with thin margins and limited room to maneuver.
Addressing frequent complaints about delays and cancellations, Onyema noted that many disruptions stem from factors beyond airlines’ control. These include bird strikes, inadequate airport facilities, and errors by ground handling companies. He maintained that airlines are often unfairly blamed for systemic issues that require broader industry reforms and government investment.
The warning comes amid broader debates about the sustainability of Nigeria’s aviation sector. For years, local airlines have raised concerns about the cumulative impact of taxes and charges on their operations. In December 2025, an additional $11.5 security levy under the Advance Passenger Information System (APIS) came into effect, pushing the total charge on international tickets to $31.50.
However, there is also a potential countervailing development on the horizon. Under a 2024 agreement by ECOWAS member states, all air ticket taxes across the sub-region are set to be abolished from January 1, 2026, in an effort to reduce fares and improve regional connectivity. How this regional policy will align with Nigeria’s domestic tax reforms remains uncertain.
Data from International Air Transport Association (IATA) showed that Nigeria earned $62 million from airline ticket taxes in 2024, part of the $1.97 billion collected across Africa. As 2026 approaches, airlines, regulators, and passengers alike will be watching closely to see whether upcoming reforms ease or intensify the cost pressures that threaten to make domestic air travel unaffordable for many Nigerians.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
