The reintroduction of Value Added Tax (VAT) on airline tickets, aircraft, and their spare parts in Nigeria has ignited a fierce debate, with local air carriers vehemently warning that the accumulating fiscal burden is rapidly pushing the country's aviation sector to a critical breaking point. Despite recent efforts by the Minister of Aviation and Aerospace Development, the fundamental grievance within the industry persists: a multitude of overlapping taxes and levies are actively stifling growth, contracting essential route networks, and severely eroding Nigeria’s competitive standing within the African skies.

Effective from January 2026, the Nigerian government's updated tax laws have controversially reversed a five-year exemption period, thereby reinstating a 7.5% VAT on all domestic airline tickets, along with new aircraft acquisitions and vital spare parts. This new charge is not isolated; it is imposed on top of an existing 5% ticket sales charge, various customs duties, and a host of other miscellaneous levies. Collectively, this creates a staggering cumulative tax load that can often surpass 12% on a single airline ticket. Furthermore, airlines grapple with additional operational costs such as ground handling fees, navigational charges, and even taxes imposed on inflight catering services, all of which significantly cut into their already razor-thin profit margins. This complex and heavy cost structure is widely regarded by many operators as utterly unsustainable, especially when benchmarked against the more supportive and enabling fiscal environments prevalent in other comparable African markets.

Empirical industry data corroborates this grim outlook. Domestic passenger volumes have experienced a precipitous decline of 13.6% since 2022, plummeting from 14.5 million to a mere 12.5 million passengers by 2024. This significant reduction in air travel occurs even as Nigeria's population continues to expand and the inherent demand for travel, particularly given the nation's vast geographical expanse and often challenging road infrastructure, remains robust. The decline, therefore, is not a symptom of waning public interest in air travel, but rather a direct consequence of demand suppression caused by excessively high ticket prices. Average airfares have surged by nearly 20% year-on-year, with some last-minute tickets on crucial routes now exceeding N200,000. For instance, out of a N350,000 ticket sold, airlines may be left with as little as N81,000 after the deduction of all taxes and charges, leaving virtually no financial capacity for essential reinvestment or the much-needed renewal of their fleets.

The profound impact of these policies is evident across all facets of the sector. Airline route networks are visibly shrinking, as carriers are compelled to discontinue flights to marginal destinations and reduce service frequencies in an effort to contain escalating losses. Aircraft utilization rates have fallen, and critical maintenance operations are frequently delayed due to intractable customs bottlenecks. Furthermore, airline staff are facing intensified wage pressures. Disturbingly, some carriers have been forced to ground aircraft entirely, rendered unable to clear essential spare parts through customs, despite possessing valid waivers. This domestic financial distress is further exacerbated by the fact that foreign airlines, often operating under significantly more favorable tax arrangements, now command over 90% of Nigeria’s international aviation market, further diminishing the local sector's market share and influence.

Nigeria's current approach is particularly contentious due to its marked divergence from established international aviation norms and global best practices. Both the International Civil Aviation Organization (ICAO) and the International Air Transport Association (IATA) strongly advocate for the zero-rating or complete exemption of aviation inputs from VAT. This policy is widely embraced by Nigeria's regional counterparts, including Ethiopia, Kenya, and Rwanda. These nations have pragmatically recognized that imposing taxes on aviation inputs inherently suppresses demand, diminishes vital connectivity, and ultimately shrinks the overall tax base—a direct contradiction to the very objective of revenue growth. In stark contrast, Nigeria's current fiscal regime not only levies VAT on tickets and spares but is also plagued by inconsistent enforcement of customs waivers, leading to severe operational delays and significantly increased financial risks for local operators.

In response to this escalating crisis, industry leaders have issued a unified and urgent call for comprehensive policy reform. Their demands are unequivocal: the immediate reinstatement of the VAT exemption on airline tickets and all critical aviation inputs, consistent and reliable enforcement of customs waivers to ensure aircraft remain operational, and the complete elimination of