Nigeria's aviation industry is in a state of financial distress, with airline leaders and experts warning that excessive taxes and government charges are pushing carriers to the brink of collapse. The president of the Aircraft Owners and Pilots Association, Dr. Alex Nwuba, recently revealed that over 70% of the cost of an airline ticket in Nigeria is made up of various fees and taxes . This heavy tax burden is making air travel unaffordable for millions of Nigerians and threatens the survival of domestic airlines.
Industry executives are calling for immediate government action to overhaul the sector's cost structure. They say the current system is unsustainable. Obiora Okonkwo, Chairman of United Nigeria Airlines, has described the situation as "killing and suffocating" local carriers . The high costs also make Nigerian airlines uncompetitive on regional routes. Captain Ado Sanusi, Managing Director of Aero Contractors, states that multiple taxation remains a major threat to airline survival . He argues that if the government reduces taxes and charges, airlines could lower fares. This would stimulate demand and help carriers recover lost revenue .
The financial pressure on airlines comes from several areas. Dr. Nwuba points to high financing costs as a key problem. Airlines pay up to 37% interest on loans for equipment because of Nigeria's high central bank rate . This is passed on to passengers. Fuel is another major expense, making up over 40% of operating costs. Nigerians pay 17% more for aviation fuel than many other markets . These issues combine with a long list of government charges. Local carriers pay nearly 20 different charges on each ticket sold .
The problem is made worse by the country's foreign exchange crisis. Airlines must pay for aircraft maintenance, spare parts, and training in US dollars. However, they earn revenue in the local Naira currency. The widening exchange rate gap pushes operating costs to levels that are hard to manage . Senator Musa Adede, owner of King Airlines, emphasizes that sending aircraft abroad for maintenance is expensive and inefficient. He supports building more local Maintenance Repair and Overhaul (MRO) facilities to reduce capital flight and create jobs .
The government is planning to add a new security levy. The Nigerian Civil Aviation Authority (NCAA) will charge $11.50 on all international tickets starting December 1, 2025 . This levy is expected to raise $1 billion over 20 years for security upgrades . However, airlines like Air Peace and Aero Contractors warn it will push airfares even higher. They fear it will reduce passenger numbers . This new charge comes at a bad time. International Air Transport Association (IATA) data shows Nigeria's international departures are already declining .
A deeper tax change is scheduled for 2026. The new Tax Act 2025, signed into law in June, will remove VAT exemptions for the aviation sector . This means commercial aircraft, engines, spare parts, and airline tickets will now be subject to Value Added Tax. Stakeholders at a recent industry webinar voiced strong concerns. Dr. Samson Fatokun of IATA noted that this contradicts international norms. He said there is no VAT on air tickets in most of the world . Experts like Captain Samuel Caulcrick warned that additional taxes would "kill the industry" . All money in the sector ultimately comes from passengers and shippers.
Image 3 Alt Text: A graphic showing the breakdown of a typical Nigerian airline ticket cost, highlighting the 70% tax component.
Image 3 Title Text:Infographic: Breakdown of airline ticket costs in Nigeria. Credit: Aviation Business Journal.
The government is aware of these concerns. The representative of Aviation Minister Festus Keyamo said discussions are underway with the Tax Reform Committee. The minister is pushing for adjustments to the new tax law for aviation . In a separate matter, Minister Keyamo has also taken a hard line on airline failures. He suggested the government might sell the assets of the suspended Dana Air to repay passengers who are owed refunds . He stated that safety concerns led to the airline's grounding in April 2024 .
Experts propose several solutions to fix the sector. Dr. Alex Nwuba has urged the government to create a national leasing company with 500 aircraft. This would let airlines lease planes at about 4% interest instead of paying 28-34% on loans . This would dramatically lower finance costs. He said the government could borrow money at low rates from other countries to buy the planes . Captain Caulcrick also highlighted that limited access to affordable capital is the main challenge for African airlines. He suggested exploring new financing like Islamic finance or an aviation development bank .
The high cost of flying in Nigeria has a direct impact on the tourism and hospitality industry. More expensive airfare makes it harder for international tourists to visit the country. The Nigerian Tourism Development Corporation reported slight growth with over 1.2 million tourists visiting from abroad. However, the new taxes could stop this growth . The hospitality sector in cities like Lagos, Abuja, and Calabar may suffer from fewer international visitors .
The future of Nigerian aviation depends on a balanced approach. The government needs funding for security and infrastructure. However, it must also consider the economic effects of high taxes. Making air travel too expensive hurts airlines, tourism, and the overall economy. Industry leaders agree that without urgent reform, the sector could see more airlines fail. This would reduce competition, drive fares even higher, and weaken the country's connectivity . The call for a full review of the tax regime and charging structure is growing louder.