Air Peace Boss Warns of Dire Consequences for Nigerian Airlines Over New Tax Regime

…Urges Government Support, Single-Digit Loans, and Infrastructure Overhaul to Boost Industry Survival

Chairman of Air Peace, Dr Allen Onyema, has issued a stark warning that Nigerian airlines could collapse “within 48 hours” if proposed tax reforms imposing customs duties and value-added tax (VAT) on aircraft and spare parts are implemented from January 2026.

Speaking passionately during a panel session at the 29th League of Airports and Aviation Correspondents (LAAC) Conference in Lagos yesterday, Onyema said the reforms, coupled with existing heavy charges, would cripple the industry.

The conference, themed “Aviation Financing in Nigeria: Risks, Opportunities and Prospects”, brought together key stakeholders to address the sector’s financial challenges. Onyema, known for his forthright views, lamented that the return on investment in Nigerian aviation remains too low to justify the massive capital outlay.

“If you invest $100 million in aviation, you may get 3–5% profit. In agriculture or importation, you could make up to 70%. We’re not saying we shouldn’t pay government charges, but it must be cost recovery, as the ICAO principle states,” Onyema declared.

He criticised the 5% ticket sales charge paid to the Nigerian Civil Aviation Authority (NCAA), noting that airlines rarely make a 5% profit margin. “It limits our ability to price tickets realistically. This money should be collected directly from passengers by the regulator, not the airlines,” he argued.

Onyema also highlighted infrastructural deficiencies, particularly the absence of transit facilities at Nigerian airports, which discourages international passenger connections.

Citing an example from Lagos, he explained how transit passengers from Cameroon bound for Dakar were forced to pay $400 visa fees and undergo multiple checks simply because Nigerian airports lack proper transfer systems.

“Even Togo, with only one airport and no domestic operations, has created a hub system that connects passengers across Africa. If Nigerian airlines had similar infrastructure, we could rival Ethiopian Airlines within ten years,” Onyema said.

He also decried international stigma that inflates operational costs. “The insurance premium for one Nigerian aircraft equals what’s used to cover five or six aircraft abroad. This so-called ‘country risk’ is unfair and unjustified,” he added.

Responding to comparisons with foreign airlines, Onyema defended the resilience of Nigerian carriers despite hostile operating conditions.

He criticised the habit of praising foreign airlines at the expense of domestic ones, stressing that Air Peace is “three times bigger” than some African national carriers.

He revealed Air Peace’s partnerships with Emirates and Air Arabia, noting that Nigerian carriers are willing to join global alliances but often face “unholy alliances” and external resistance. “We have our own Spring Alliance locally, where airlines help each other. The narrative that we don’t cooperate is false,” he insisted.

On financing, Onyema supported economist Bismarck Rewane’s call for consolidation but stressed that meaningful reform requires affordable funding.

“Borrowing at 35% interest is like being dead on arrival. Aviation is capital intensive with low returns; it needs single-digit interest rates. If given such rates, no airline in Nigeria would fail,” he said.

He welcomed the Federal Government’s plan to establish an aircraft leasing company to provide Nigerian airlines with planes at competitive rates. He also endorsed the idea of sovereign guarantees for airline loans but urged operators to carry out “self-introspection” to avoid defaulting.

Onyema praised the current administration and Minister of Aviation, Festus Keyamo, for being responsive to industry concerns. He expressed optimism that ongoing infrastructure upgrades, especially at Lagos airport, would significantly improve operations within the next 22 months.

“If we fail, the industry will fail. But I believe we can succeed if given the right environment. The government is listening, and that is crucial,” he said.

Despite losses such as N12.3 billion from maintaining the India route under low passenger numbers – a strategic sacrifice to secure London flight rights – Onyema reaffirmed Air Peace’s commitment to flying the Nigerian flag high.

“Let us continue to appreciate and support our own. Every Nigerian airline that survives does so against incredible odds,” he concluded to resounding applause.