As domestic airfares surged across Nigeria during the peak holiday travel season, a public dispute has erupted between the Nigerian Civil Aviation Authority (NCAA), and Air Peace’s Chairman and CEO, Allen Onyema, over the causes of the price increases. Tax or Market forces?
Government Dismisses Tax Blame
In a statement released on social media, NCAA’s Director of Public Affairs and Consumer Protection, Michael Achimugu, categorically rejected claims circulating that high domestic airfares are driven by multiple government taxes. According to the regulator, there is no evidence that airlines are paying the 18 different taxes being alleged in public discourse, and no recent increases in levies that could explain the sharp rise in fares.
Achimugu clarified that while the NCAA does not control ticket prices, it invited all domestic carriers to shed light on the issue.
Collectively, airlines acknowledged they are not saddled with the alleged tax burden. He attributed the December fare hikes chiefly to normal market forces — namely demand outstripping available seat capacity — rather than government taxation.
“Nigeria’s airfares vary with demand. During high-travel periods like December, prices go up — just like hotel rates, bus fares, and other services,” Achimugu said, countering suggestions that excessive taxes or profiteering by airlines are to blame.
Air Peace Onyema Position: Tax Burden and Operational Reality
Allen Onyema, speaking on Arise News and to multiple news outlets, has painted a very different picture. He claims that a new tax regime — rolling back exemptions granted under the 2020 Finance Act — threatens to crush airlines’ capacity to operate without transferring costs to passengers.
Key Grievances from the Air Peace CEO:
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The reintroduction of Value Added Tax (VAT), on aircraft, spare parts, and air tickets — previously exempted — would significantly increase costs for airlines.
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Mandatory statutory deductions, including a 5% NCAA charge on every ticket sold, add to the financial strain, reducing the portion of revenue that actually accrues to airlines. Onyema has repeatedly cited that from a ₦350,000 ticket, carriers retain only around ₦81,000 after charges.
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He argued that rising operating expenses — including taxes, levies, high fuel and foreign-exchange costs — make it difficult to maintain affordable pricing without eroding airline viability.
Onyema has warned that if these new tax measures fully take effect from January 2026, domestic economy fares could climb to ₦1 million or more, potentially devastating both airlines and consumers. He even cautioned that the sector could “collapse within three months” if the reforms aren’t revisited.
What NCAA Says vs What Airlines Claim
While NCAA insists no recent tax hikes justify current fare spikes, Onyema and other industry voices maintain that the cumulative burden of charges, statutory levies, and regulatory fees has eroded airlines’ ability to operate without passing costs on to passengers.
Critically, NCAA points to the absence of official tax increases immediately preceding December’s fare surge, suggesting market demand as a more plausible reason for price inflation during the festive travel rush.
Impact on Passengers and the Aviation Sector
The back-and-forth has significant implications:
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Travelers – are feeling the pinch as ticket prices soar during peak periods, prompting questions about transparency and fare-setting mechanisms.
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Airlines – argue that without supportive fiscal policy, their capacity to sustain operations and expand connectivity will be further impaired.
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Regulatory clarity – is now under scrutiny, with stakeholders calling for harmonised engagement between industry operators, government agencies, and policymakers.
What’s Next?
While NCAA’s stance aims to quell misconceptions about taxes being the root cause of fare hikes, the aviation industry continues to press for deeper engagement on fiscal policy and cost structures affecting airlines.
As legislative changes loom in 2026, all eyes are on how government reforms will balance revenue generation with industry sustainability.
