Air Peace CEO Onyema Urges Tax Review Amid Jet-A1 Crisis

Fuel Costs and Operational Strain

Allen Onyema, founder and Chief Executive Officer of Air Peace, has issued a stark warning regarding the aviation fuel crisis in Nigeria, stating that domestic carriers are increasingly forced to borrow heavily just to maintain daily operations. In a June 23, 2026, interview, Onyema highlighted that the price of Jet-A1 aviation turbine fuel has surged by over 250%, rising from approximately N900 to N3,300 per litre. This escalation has caused the fuel cost for a single domestic flight to jump from an average of N3 million to N4 million to between N12 million and N13 million, placing extreme pressure on airline balance sheets.

The Financial Disparity

Beyond fuel volatility, Nigerian airlines are grappling with a prohibitive cost of capital. Domestic carriers currently face local bank interest rates of 29% to 33%, a stark contrast to the 3% to 4% rates available to their international competitors. Onyema argues that this disparity makes it nearly impossible for local operators to finance fleet maintenance or daily liquidity requirements. The Air Peace CEO also expressed dissatisfaction with the five per cent Ticket Sales Charge (TSC), imposed on air tickets by the Nigerian Civil Aviation Authority (NCAA), arguing that the levy acts as an unsustainable financial burden during periods of extreme operational distress. The Civil Aviation Act 2022 provides the statutory mandate for this charge, which the NCAA maintains is essential for funding safety regulation and agency operations.

Regulatory Pressure and Industry Stability

Onyema is calling on President Bola Tinubu to establish an Aviation Taxes and Charges Review Committee to evaluate the current fiscal framework. The Airline Operators of Nigeria (AON), where Onyema serves as Vice President, has long argued that the current tax structure, combined with high operational costs, risks triggering a wave of airline collapses. While the NCAA defends the TSC as a statutory component held in trust to ensure safety oversight, the industry maintains that the current economic environment requires immediate relief. Historically, this situation mirrors the May 2022 crisis, when AON members threatened to ground all domestic flights after fuel prices spiked from N190 to N700 per litre. That event resulted in temporary government intervention, a precedent that analysts suggest may be needed again to stabilize the sector.

Impact on Stakeholders

The current crisis has created a high-severity impact across the Nigerian aviation ecosystem. Domestic airlines are reducing flight frequencies and accumulating debt, while commercial banks face increased exposure to the sector. For passengers, the result has been a combination of higher ticket prices and reduced network connectivity as carriers prioritize routes that can cover the inflated fuel overheads. The ongoing dispute between the AON and the NCAA regarding the collection and remittance of the TSC remains a primary friction point that complicates near-term recovery efforts.

What Comes Next: The Review Committee Proposal

The aviation industry is now awaiting a potential response from the federal government regarding the establishment of an independent review committee. If approved, the committee would be tasked with assessing the feasibility of suspending or restructuring the 5% TSC and other levies to provide immediate liquidity to operators. Industry stakeholders are tracking whether the government will prioritize this intervention before further capacity exits the market. The timeline for such a policy shift remains subject to executive action by the administration, with no confirmed date for the formation of a review body.

Why Tax Reform Matters for Domestic Carriers

The call for a revised tax framework highlights the structural vulnerability of the Nigerian aviation market to global fuel price fluctuations and local currency volatility. By addressing the compounding effects of high interest rates and mandatory statutory charges, the government faces a critical decision point: whether to maintain existing revenue collection models or pivot toward a support-based framework to prevent systemic industry contraction. For the traveling public, the outcome of these discussions will directly influence the long-term availability and affordability of domestic air travel in Nigeria.