Tax: Ticket fare to surpass N1m, Air Peace CEO warns
The Chairman and CEO of Air Peace, Allen Onyema, has warned that domestic airfare prices could surpass N1 million starting next year.
In an interview on The Morning Show on Arise News this past Sunday, Onyema linked the anticipated price hikes to the upcoming implementation of new tax reform laws which are scheduled to come into effect in January 2026.
He explained that this legislation removes many of the tax exemptions that were previously provided to airlines under the 2020 Finance Act, exemptions that helped to reduce operating expenses.
Onyema cautioned that the elimination of these incentives would significantly raise the operating costs for airlines, a burden that would ultimately be transferred to passengers.
He specified that the new tax reform reinstates Value Added Tax on aircraft, spare parts, and airline tickets—items that were previously tax-exempt under the 2020 Finance Act.
For instance, Onyema noted that airlines importing aircraft valued at around $80 million would incur a 7.5 percent VAT, which would add billions of naira to their costs.
He highlighted that Nigerian airlines already face a challenging financial environment, with borrowing rates reaching as high as 35 percent, making it unfeasible to absorb the additional expenses.
Onyema also referenced the International Civil Aviation Organization annex, which specifies that VAT should not be imposed in these circumstances.
He warned that if the law is enacted in 2026, economy-class ticket prices could surge considerably.
“By the time you factor these elements in, at the end of the day, the operational costs will be substantial… your ticket prices will soon reach N1. something million,” Onyema remarked.
He added, “Should we go ahead with that tax reform, Nigerian airlines could face severe challenges within three months.”
He emphasized that any fare increases would result from escalating operational costs rather than efforts to exploit passengers, arguing that it is vital to support the aviation sector to maintain connectivity and foster economic development.
In addition to the forthcoming tax reforms, Onyema pointed out the ongoing challenges that Nigerian airlines face, including high fuel costs, foreign exchange issues, and numerous statutory charges.
He explained that out of a domestic ticket priced at around N350,000, only about N81,000 actually goes to the airline, while the rest is consumed by taxes, levies, and other fees.
Onyema dismissed allegations that airlines charge excessive fares, asserting that Nigerian domestic ticket prices remain among the lowest globally when converted to dollars.
He also emphasized that several domestic routes—particularly to the Southeast,
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