Nigeria Airline Operators: 12.5% Ticket Tax Threatens Collapse

• Nigerian airline operators report that passengers pay approximately 12.5 percent in tax charges on every ticket, comprising 7.5 percent VAT and a 5 percent NCAA levy.
• The Airline Operators of Nigeria (AON) accuse revenue agencies of harassing members over the 7.5 percent VAT, despite assurances of its waiver.
• Allen Onyema, AON Vice President, warned that the aviation sector faces collapse due to the tax burden, 154 other charges, and soaring aviation fuel prices.
• Over 80 airlines have reportedly failed in Nigeria, with IATA comparing the operational environment to Afghanistan.
• The Tax Ombud, Dr. John Nwabueze, confirmed that federal tax reforms are underway to create a fairer revenue system and that his office offers free mediation for taxpayer complaints.

The economic strain is further compounded by volatile aviation fuel prices, which have seen a dramatic increase from N900 to over N2,000 per liter, at one point even reaching N3,500.

Nigerian airline operators have voiced significant concerns regarding the cumulative tax burden on air travel, asserting that passengers currently incur approximately 12.5 percent in tax charges on each ticket. These complaints were formally presented during a Tax Ombud town hall meeting held in Lagos on November 13, 2026, which convened various stakeholders, including business groups, operators, and tax officials. The event, themed 'Promoting fairness in tax and revenue administration in Nigeria,' also saw other private sector leaders lamenting excessive taxation, despite existing government policies aimed at harmonizing tax structures.

Mr. Allen Onyema, who serves as both the Chief Executive Officer of Air Peace and the Vice President of the Airline Operators of Nigeria (AON), was a prominent guest of honor at the gathering. He issued a stark warning, indicating that the nation's aviation sector faces imminent collapse without immediate intervention. Onyema highlighted that the 12.5 percent charge on tickets is primarily composed of a 7.5 percent Value Added Tax (VAT) and an additional 5 percent levy imposed by the Nigerian Civil Aviation Authority (NCAA), directly impacting passengers. He further expressed dismay that revenue agencies continue to pursue airlines for the 7.5 percent VAT, despite previous assurances to the contrary, leading to what he described as harassment of AON members.

Beyond the direct ticket taxes, the Nigerian aviation industry grapples with an overwhelming array of 154 other charges, significantly escalating operational costs. Onyema revealed that the International Air Transport Association (IATA) has reportedly informed operators that Nigeria presents one of the most challenging environments globally for running an airline, drawing comparisons to Afghanistan. This severe operational climate, exacerbated by the substantial tax burden, has been cited as the primary reason for the failure of over 80 airlines in the country.

The economic strain is further compounded by volatile aviation fuel prices, which have seen a dramatic increase from N900 to over N2,000 per liter, at one point even reaching N3,500. This surge in fuel costs places airlines in a precarious position, as they are unable to raise fares proportionally without risking a significant loss of passengers. The cumulative effect of these charges and rising input costs, according to Onyema, jeopardizes both employment within the sector and the affordability of air travel for the general public.

In light of these challenges, Allen Onyema appealed directly to Dr. John Nwabueze, the Tax Ombud and Chief Executive of the Office of the Tax Ombud, urging him to convey the operators' concerns to President Bola Tinubu. Onyema expressed confidence that the President, if fully apprised of the situation, would take decisive action, citing a previous instance where President Tinubu moved to eliminate a 4 percent Free on Board (FOB) charge and a 7 percent surcharge on airlines after the issue was brought to his attention. The airline operators emphasized that their objective is not to deprive the government of revenue but rather to advocate for a reduction and harmonization of taxes.

Dr. Nwabueze, in his address, acknowledged the ongoing comprehensive tax reforms being undertaken by the current administration, which he described as a crucial component of their vision to establish a more efficient, equitable, transparent, and sustainable revenue system. He commended the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, for leading these reform efforts. Nwabueze also highlighted the role of the Office of the Tax Ombud in resolving taxpayer complaints through mediation, assuring stakeholders that these services are provided free of charge to all Nigerians.

Lawyers advising clients in Nigeria's aviation sector should closely monitor the ongoing tax reforms and the engagement between the Airline Operators of Nigeria and the Tax Ombud regarding the 12.5% ticket tax and other charges. Compliance officers must be aware of the potential for changes in tax administration and the available avenues for dispute resolution through the Tax Ombud, especially concerning alleged harassment by revenue agencies or the application of waived taxes.

Source: Original reporting via Punch Newspapers