Allen Onyema, Air Peace’s chief, on Sunday stated that the newly introduced tax policies would inflate airfares and drive airlines out of business.
Mr Onyema, speaking during a television show on Arise TV, warned of an imminent aviation crisis and called on the relevant authorities to urgently reverse the tax policy. According to him, the newly introduced tax laws risk pushing ticket prices beyond ₦1 million.
Mr Onyema noted that portraying airline operators as profiteers misrepresents the reality of Nigerian aviation. He stated that the bulk of the airfare paid by passengers is deducted for statutory charges, including excessive taxation and levies, leaving operators with only a fraction.
Mr Onyema said, “Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about ₦350,000. What comes to the airlines is about ₦81,000. And people are talking about the airlines as if they’re making a kill. It’s not true. We are suffering multiple taxation and multiple charges. For example, the NCA takes 5% from every ticket, mandatorily. That is to NCA alone. There are so many other charges.”
Recalling the 2020 tax law, Mr Onyema, despite the concessions that guaranteed the removal of customs duties and value-added tax on imported aircraft, spare parts, engines, and ticket fares, noted that airlines still struggled with multiple taxation.
He said, “The tax law of 2020 removed customs duties on imported aircraft, aircraft spares and engines, removed VAT on imported aircraft and other spare parts, and removed VAT on ticket fares. That is the 2020 Act. Even then, airlines are still suffering from many other multiple charges all over the country. Now, the new tax law has brought all those things back.”
Faulting the new tax law, the CEO of Air Peace revealed that purchasing an aircraft valued at $80 million would now attract a 7.5 per cent value-added tax.
Mr Onyema said, “There’s VAT now on the importation of aircraft. So if you buy an aircraft for $80 million, you are supposed to pay 7.5% of $80 million. Funds borrowed from the bank attract interest of 30 to 35%. You bring in spare parts and pay 7.5% VAT on them. Ticket fares will hit $1.7 million soon. At 35%, we are choking. You don’t do that.
“With 7.5% on ticket fares, if we implement that tax reform, Nigerian airlines will go down in three months. At the end of the day, economy-class tickets will go to about ₦1.7 billion if it happens.”
He disclosed that airline operators, under the aegis of the Airline Operators of Nigeria, had presented their concerns to the federal government, including the National Assembly and the tax reform committee.