Despite reforms under the Ministry of Aviation and Aerospace Development led by Mr. Festus Keyamo, Nigerian airlines continue to face significant challenges, largely due to multiple taxation and regulatory bottlenecks.

Throughout 2025, domestic carriers repeatedly urged the Federal Government to reduce fiscal pressures, warning that excessive taxes could force some operators to halt operations. The issue persists even after the new tax laws took effect on January 1, 2026.

Charles Grant, Chief Financial Officer of Aero Contractors, highlighted the problem during a Civil Aviation Cost Recovery and Revenue Optimisation Stakeholders’ Retreat in Lagos. He noted that aviation in Nigeria is a capital-intensive sector vital for connectivity, trade, tourism, and economic growth—but the current fiscal approach is suppressing demand and reducing domestic passenger volumes, which have declined by about 3% since 2022.

Grant cited a long list of overlapping charges, including ticket sales taxes, passenger service charges, VAT, customs duties, overflight fees, and ground handling levies. The cumulative effect of these costs leaves airlines absorbing expenses they cannot fully pass onto passengers, resulting in route reductions, aircraft downtime, and delayed maintenance.

The new tax laws, including the reintroduction of VAT on tickets, spares, and aircraft, are particularly concerning, as they make Nigerian carriers less competitive internationally. Customs waiver non-implementation further delays critical spare parts, grounding planes and causing financial strain.

Grant emphasized that Nigeria’s fiscal approach to aviation is out of step with international norms, which typically zero-rate inputs like spare parts, maintenance, and fuel to encourage growth. He called for policy adjustments, including restoring VAT exemptions, enforcing Customs waivers, and streamlining layered taxes across federal, state, and agency levels, to allow the aviation sector to thrive.