In what may soon evolve into a full-blown crisis in Nigeria’s aviation sector, airline operators and aviation industry stakeholders are sounding the alarm over the newly enacted Tax Reform Act, warning that its implementation could cripple local airlines, increase unemployment, and destabilize the already fragile economy.
At the centre of the controversy is the reintroduction of Value Added Tax (VAT) on airline tickets and the removal of long-standing customs duty exemptions on imported aircraft and spare parts. These policy shifts have sparked outrage among operators who argue that the reforms contravene international standards and threaten the viability of air travel in Nigeria.
Speaking exclusively to our correspondent, Captain Ado Sanusi, Managing Director of Aero Contractors and a seasoned pilot, described the situation as a “perfect storm” that may devastate the aviation ecosystem if not urgently reviewed.
“The aviation industry is already struggling under the weight of multiple levies and regulatory fees. Adding VAT on tickets and removing import duty waivers will significantly drive up operating costs,” Sanusi said. “Aircraft are not manufactured in Nigeria. Every spare part, every maintenance item — even things like seats or cabin materials — must be imported. That’s where the real burden lies.”
Sanusi emphasized that aircraft procurement often runs into tens of millions of dollars. Even a 10% import duty, he explained, could mean an additional $3–$4 million per aircraft, a cost that many local airlines simply cannot absorb.
Another flashpoint in the reform is the requirement for aviation agencies like the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA) to remit all Internally Generated Revenues (IGRs) into the Consolidated Revenue Fund before receiving allocations.
Sanusi criticized the move, saying it violates the International Civil Aviation Organization (ICAO) principle of cost recovery. “Regulatory bodies like NCAA are safety agencies, not commercial enterprises. Taking 50% of their IGRs and making them dependent on disbursement timelines is not just unsustainable — it’s dangerous.”
Industry consultant Chris Aligbe advised operators to engage government policymakers proactively. “This is the time to approach the authorities with constructive feedback before the law becomes operational,” Aligbe noted. “Policies, once implemented, are harder to reverse. The operators need to act now — as a united front.”
Amid the rising tension, aviation analyst Muhammed Badamosi drew attention to potentially dubious ticket charges levied by airlines. Using his recent flight ticket as an example, Badamosi listed over N75,000 in surcharges on a domestic Lagos–Abuja flight, raising questions about transparency in ticket pricing.
“If airlines are already imposing arbitrary charges, the government may feel justified in seeking more formal tax compliance,” Badamosi added. “Operators should not only push back against the policy but also clean up their house.”
The reintroduction of VAT on tickets directly contradicts ICAO’s recommended best practices, which discourage taxing air transport due to its strategic economic importance and role in facilitating mobility and trade.
Globally, countries like the United States, UAE, and Singapore offer significant tax exemptions and rebates to support their airlines. Nigerian operators argue they deserve similar support, especially amid post-pandemic recovery and rising fuel costs.
With air travel serving as a lifeline in a country plagued by poor road infrastructure and insecurity, analysts warn that excessive taxation could force airlines to increase ticket prices dramatically — effectively shutting out millions of Nigerians from air travel and forcing businesses to ground fleets.
Sanusi summed up the industry’s sentiment: “We’re not against reforms. We’re for sustainable policies that support job creation, safety, and economic growth. This current framework does the opposite.”