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Every so often, Nigeria’s aviation industry seems to challenge key airline operators to show the stuff they are made of. This is because the sector has become like riding a tiger. You must keep riding on or be swallowed. Some have taken up the challenge. Chairman/CEO of West and Central Africa’s largest carrier, Air Peace, Barr. Allen Onyema, is answering the call. The success story of Air Peace mirrors the exceptional operational leadership quality of the man. His is a unique story that follows a path of passion, purpose, patriotism and progress. Anyone who decides to, as Onyema has done, to play in the capital-intensive turf of the aviation industry, must have the guts and forward-thinking approach to make tough decisions.
The challenges of the sector have occupied increasing amount of his time and energy. This is the reason: Operating in what has become an ever-tightening sector – squeezed by multiple taxes, regulatory charges, uncertain business environment and global competition on one side, and a rapidly changing, technology- driven business landscape on the other – it’s only natural not to look for comfort. It’s also expedient to learn the hard way – why many airlines in the country collapsed in the last three decades – and how not to repeat the mistakes of the past. These are the concerns that people like Chief Onyema and other domestic airline operators carry on their shoulders every day. The constraints are not for the fainthearted. It’s for the brave, the thoughtful who are inspired to make enduring impact on the industry.
Looking at Air Peace’s strong market position in the last 12 years, how it has maintained its leadership position, beginning with just few Dornier aircraft, and now with the largest aircraft in West and Central Africa, that boosts a mixed fleet that includes wide-body Boeing 777 aircraft, modern Embraer 195-E2 jets, covering domestic, regional and international routes, grossing over 4 million passenger traffic in 2025. This is a clear demonstration of its strategic investments in fleet modernisation and capacity expansion. But it comes with its own challenges. Therefore, one should not rush into conclusion that Air Peace or any other domestic carrier, is having things easy, or posting astonishing profits in their balance sheets.
Look beyond the veil. Truth is, airline operators in Nigeria are groaning under predatory operating space. Consider this, for example. Few days before Christmas, Air Peace’s brand new Embraer Aircraft 190-100, with registration number:5N-BYH, purchased at over $85 million, with structural reinforcement features that allow for higher takeoff and landing weights and an increased range compared to the standard model, had its thrust reverser cowling engine damaged during ground handling by the luggage conveyor belt vehicle operated by the Nigerian Aviation Handling Company(NAHCO)at the Murtala Mohammed International Airport, Lagos.
The Embraer aircraft was scheduled to operate Flight P47750 from Lagos to Accra when the collision occurred. The conveyor belt vehicle collided with the aircraft’s engine while while it was on ground after passengers had completed boarding. The impact caused serious visible damage, prompting an immediate safety assessment and grounding of the aircraft. About 150 passengers already on board were asked to disembark, resulting in operational delays and disruptions. Nine scheduled flights assigned to the aircraft for that day were affected, leaving passengers either stranded or rebooked on alternative services.
According to Chairman of Air Peace, the damaged engine alone is estimated to cost about $18 million. Onyema also recounted a similar incident involving one of the airline’s Boeing 777 last year. The aircraft was grounded for some years due to the unavailability of a new engine. It took the airline three years to get a new engine. When the new engine arrived, the ground handler reportedly pierced through the centre of the new engine bought at a hefty cost. Smells like a sabotage, isn’t it? Well, investigation into the Embraer incident is still ongoing. Unfortunately, NAHCO is yet to make any official statement since the incident happened.That’s one of the numerous challenges facing airlines operators in Nigeria.
Besides this, Air Peace and other domestic carriers are facing outrageous multiple taxes and other high operating costs that have put them at a highly disadvantaged position compared to their foreign competitors who enjoy greater support from their host governments. These are challenges that threaten the survival of domestic airlines. It’s a major concern that has attracted the attention of not only Air Peace chairman, but also that of United Nigeria Airline, Obiora Okonkwo, and the Managing Director of Ibom Air, George Uriesi. The threats include multiple taxes, scarcity of foreign exchange(FX), operating cost(fuel, maintenance), poor infrastructure, limited Maintenance, Repair and Overhaul facilities, aircraft financing hurdles and other regulatory bottlenecks.
The implications of these problems often lead to frequent flight delays and possible high rate of airline failure which will hinder growth and international competitiveness. FX scarcity, for example, makes it difficult to obtain the needed Forex for essential aircraft parts and maintenance. Apart from Air Peace, that is investing N32bn in MRO facility at the Murtala Muhammed Airport, Lagos, no other Nigerian airline has such facility. Also, soaring fuel(Jet A-1) prices, high insurance premiums and increased handling charges are squeezing the airlines’ profit margins. Statistics show that Nigerian airlines pay higher insurance cost despite that they use the same equipment as their international competitors. In addition, securing loans from Nigerian banks at reasonable interest rate is rare. This is driving cost of running airline operations.
While European carriers can secure aircraft financing at about 4 percent interest rate over a 15- year period, Nigerian airline operators pay as high as 30 percent interest for a 7-year maximum period. Also, while international airlines usually use their aircraft for up to 10 hours per day, the average time Nigerian airlines use theirs is between five and six hours a day. This leads to fewer flights per aircraft annually, says Ibom Air MD, Uriesi. According to him, domestic operators lose about N32bn annually to aircraft underutilization. For the multiple taxes and other regulatory charges, a larger percent of the flight tickets cost go to various government agencies. They include the Federal Airport Authority of Nigeria(FAAN), the Nigerian Civil Aviation Authority(NCAA), and the Nigerian Airspace Management Agency(NAMA), leaving minimum margin for the airlines. Isn’t this a case of “robbing Peter to pay Paul”? It will make aviation business unsustainable.
Many Nigerian airlines may fizzle out as a result of the multiple taxes. Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele recently admitted the burden of the multiple taxes and levies on the operations of airlines. However, his claim that these charges were not created by the new tax law that came into effect on January 1, seems more like a political rhetoric that is not grounded on economic reality. Oyedele’s response followed Onyema’s alarm on Arise TV interview that the new tax laws might worsen the problems facing airlines. This, he said, may drive air fares to unacceptable levels. The new tax law has brought back the 7.5 % Value Added Tax(VAT).
It will be recalled that on December 1st , 2025, NCAA issued a statement to airlines that it would henceforth charge international passengers $11.50 to and fro. That means $23 for both legs. It implies that the airlines’ pricing will have to cover ground handling, fuel, the operating cost of flights, landing fees and overflight charges. This makes travelling for an average air traveller very expensive. President Tinubu had last year, following complaints by airline operators, removed the 4% import tariff. But, with the new tax laws, what the government has given with one hand, the new tax regime has taken away with two hands.
The immediate outcome is additional burden on airline operators. Which is why Okonkwo, Chairman of United Nigeria Airline, says domestic airlines will be suffocated by this multiple taxes. Accordingly, he urged the federal government to quickly intervene before the airlines are “taxed to death”. His concern reflects that of other airline operators like Air Peace, Ibom Air, among others. Undoubtedly, the Tinubu administration has done well for domestic airline operators in the last few years. Still, he needs reminding that the aviation industry is a vital economic pillar and catalyst for development. It is not just a business for the operators. Taken as a whole, without a drastic reduction in the number of taxes and other regulatory charges, domestic airlines will not be profitable. Some of them may collapse after a relatively short operating cycle. Sustainable growth and global competitiveness are anchored on a resilient aviation industry and customer service satisfaction.
