Tax reforms may push airfares above N1m — Air Peace CEO
The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has issued a warning that domestic flight prices in Nigeria could exceed N1 million starting next year if the Federal Government moves forward with the proposed new tax reform laws set to be enacted in January 2026.
Onyema shared this insight on Sunday during an appearance on The Morning Show on Arise News, linking the expected rise in airfares to the elimination of tax incentives that have supported airlines in managing their operating expenses over the years.
He pointed out that the suggested reforms would reverse multiple exemptions currently benefiting airlines under the 2020 Finance Act, specifically regarding the proposed reintroduction of Value Added Tax on aircraft, spare parts, and air tickets.
As per Onyema, the financial implications of the policy would be detrimental, explaining that importing an aircraft priced at approximately 80 million dollars would incur a 7.5 percent VAT, which would lead to billions of naira in additional costs for airlines.
He further noted that the situation is aggravated by the reality that airlines already function under extremely challenging financial conditions, with borrowing rates soaring as high as 35 percent, making it nearly unfeasible to absorb extra expenses.
Onyema cautioned that if the tax reforms come into effect as intended in 2026, the financial strain would inevitably be transferred to consumers, emphasizing that airlines simply do not have the capacity to bear such costs.
“If these reforms are put into action, the cost of operations will become substantial… your ticket prices could soon reach N1. something million,” Onyema stated.
He also warned that the survival of local airlines would be jeopardized by the policy, asserting, “If we implement that tax reform, Nigerian airlines might go under within three months.”
The Air Peace CEO maintained that any increase in airfares would solely be a reaction to rising operational costs and not an effort by airlines to take advantage of passengers.
He highlighted ongoing issues plaguing the aviation sector, such as high aviation fuel prices, foreign exchange limitations, and the burden of numerous statutory fees imposed on airlines.
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