VAT on Aircraft, Spare Parts Threatens Survival of Nigerian Airlines, says Allen Onyema

VAT on Aircraft, Spare Parts Threatens Survival of Nigerian Airlines, says Allen Onyema

The Air Peace CEO, Allen Onyema, has warned that Nigeria’s new tax laws threaten the survival of local airlines, arguing that the legislation reinstates taxes removed under the 2020 reforms. The taxes include customs duties on imported aircraft, aircraft parts, engines, and Value Added Tax (VAT) on tickets, which Onyema says will impose unsustainable financial burdens on airlines.

Speaking in an interview with Arise News on Sunday, Onyema stressed the high cost implications for airline operators.

“There is VAT on the importation of aircraft. For an aircraft worth $80 million, you are supposed to pay 7.5 percent. With bank loan interest rates at 30–35 percent, plus VAT on spare parts, it is unsustainable,” Onyema said. “If we implement that tax reform, Nigerian airlines will go down in three months.”

The Air Peace CEO also announced that the airline industry will no longer tolerate unruly passengers starting January 1, 2026. Onyema cited instances of disruptive behaviour by passengers on flights, including smuggling alcohol into the cabin, forcing upgrades to business class without payment, and threatening fellow travellers.

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He referenced a recent incident on a flight diverted to Manchester, UK, due to bad weather, where passengers staged a viral video accusing Air Peace of misconduct, despite British authorities confirming that over 200 flights were diverted that day.

Onyema emphasised that airlines will now enforce stricter measures, including blacklisting unruly passengers, asserting that the behaviour is currently being “supported by the system unnecessarily.”

The statement comes amid growing concerns over rising domestic airfares. On December 10, the Senate summoned the Aviation Minister, Festus Keyamo, and industry stakeholders over soaring ticket prices. Subsequently, on December 11, the House of Representatives called on the federal government to reduce aviation taxes by 50 percent to ease costs for travellers.

Onyema’s comments highlight both the financial pressures on Nigerian airlines due to aviation taxes and the sector’s new stance on passenger discipline to safeguard safety and service standards.

VAT on Aircraft, Spare Parts Threatens Survival of Nigerian Airlines, says Allen Onyema