Nigerian airlines earn less than $1m profit as costs squeeze mar

No Nigerian airline made as much as $1 million in profit in 2025, according to Air Peace Chief Executive Officer, Allen Onyema, as high aviation fuel costs, multiple taxes and regulatory charges continue to squeeze the already thin margins of domestic carriers.

Onyema, who is also President of the Airline Operators of Nigeria (AON), disclosed this at the 30th Annual Conference of the League of Airport and Aviation Correspondents (LAAC) in Lagos, where he warned that the industry’s cost structure was undermining airline profitability, passenger demand and long-term investment.

“If Air Peace, the biggest carrier and the biggest revenue generator, could not make $1 million in profit at the end of 2025, I don’t think there is any other airline that would have done so,” he said.

According to Onyema, the direct operating cost of running an airline in Nigeria has risen to about N180,000 per seat, while aviation fuel accounts for more than 40 per cent of total operating costs.

He said airlines also face about 54 taxes, fees imposed across the Nigeria Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) and the Nigeria Revenue Service.

Several of the charges are directly passed on to passengers through air tickets, including Passenger Service Charge, CUTE charge, Passenger Terminal Facility Charge, the five per cent Ticket Sales Charge, five per cent Excess Baggage Charge and a $20 security levy.

An additional $11.50 APIS levy was introduced in December 2025.

Onyema said these charges could add about N25,000 to domestic tickets, while charges on international journeys could reach between $150 and $180.

He warned that the combination of high fuel prices and multiple charges was creating a cycle in which rising costs force airlines to raise fares, weakening passenger demand and further reducing the ability of carriers to generate sufficient profits for fleet maintenance and expansion.

According to him, middle-class passengers were increasingly limiting air travel because of high fares, while some companies and government agencies were replacing business trips with virtual meetings.

Onyema called for the harmonisation of aviation taxes and levies and urged the National Assembly to abolish the five per cent Ticket Sales Charge, Cargo Sales Charge and charter sales charge, replacing the percentage-based system with a fixed charge per ticket.

He said a fixed levy would provide airlines with greater certainty over their operating costs.

He also called for measures to eliminate double taxation and greater use of public-private partnerships to finance airport infrastructure and safety facilities.

“Aviation should be treated as an economic catalyst rather than primarily as a source of government revenue,” Onyema said, arguing that a stronger aviation industry would support tourism, trade, employment and other sectors.

The concerns were echoed by LAAC Chairman Idris Sulaiman, who urged the Federal Government to consult aviation stakeholders before introducing major fiscal and regulatory measures.

He said the critical question was not whether government should generate revenue from aviation, but how much the sector could absorb without undermining its ability to grow.

“The more important question is: How much revenue can the sector reasonably bear without undermining its capacity to grow?” Sulaiman said.

He also called for greater transparency in the use of revenues collected from aviation and renewed calls for stakeholder dialogue over the TSC, Cargo Sales Charge and infrastructure funding.

The cost pressure comes as Nigeria seeks to build a sustainable domestic airline industry. With fuel accounting for more than two-fifths of operating expenses and dozens of taxes and charges layered onto airline businesses, the profitability crisis is increasingly becoming a question of whether carriers can remain commercially viable while keeping air travel affordable.